How to align VC models with climate innovation

Impact startups in MENA are growing fast but funding strategies must evolve just as quickly. One of the questions I’m asked most often by founders is: “Where do we start when it comes to raising funds for climate or sustainability-focused ventures in this region?” Here’s how I usually break it down in 4 key pathways I’ve worked with or closely observed, each requiring a clear narrative, regional awareness, and the right positioning: 1. Government-backed innovation platforms These are not just about incubation, they are increasingly designed to de-risk startups and connect them to capital. 🔹 Example: Hub71 (Abu Dhabi) offers access to corporates, sovereign investors, and a growing base of VC partners through its Incentive Program. It's a launchpad for startups aligned with national priorities. 2. Climate-aligned positioning Framing your solution around climate resilience or adaptation is no longer optional—it’s a strategic funding move. 🔹 Example: ALTÉRRA, the $30B climate investment fund launched by the UAE at COP28, is designed to mobilize capital into areas like clean energy, food security, and nature-based solutions. Startups that clearly align with these priorities stand a stronger chance of attracting institutional and private funding. 3. Corporate sustainability partnerships Corporates in MENA are increasingly partnering with startups to accelerate their ESG goals—often offering pilot funding, technical support, or access to infrastructure. 🔹 Example: PepsiCo Middle East has launched several open innovation challenges in the region, focusing on sustainable packaging, water reuse, and food system transformation. These partnerships are a valuable entry point for startups ready to co-create scalable solutions. 4. Strategic VC alignment Venture capital in MENA is increasingly aligning with long-term sustainability themes—especially in climate tech and resource efficiency. 🔹 Example: VentureSouq, a MENA-based VC, launched its Climate Tech Fund I to invest in technologies tackling the climate crisis—from energy and mobility to the circular economy. They’re actively backing companies that blend strong commercial potential with measurable impact. The takeaway? It’s not just about raising funds, it’s about raising strategically. That’s how you align with where capital is moving in the region. If you found this useful, share it with a founder or ecosystem builder working on climate and impact in MENA. Let’s make these conversations more visible ;-) #ClimateFinance #MENA #ImpactStartups #StrategicFunding #GreenTransition #BusinessWithPurpose

Alastair Marsh's recent thought-provoking piece in @Bloomberg highlights critical challenges with the current climate tech investing landscape Climate tech projects are capital-intensive with long timelines. Unlike software, much of climate tech requires massive upfront capital for R&D, pilot plants, and manufacturing before significant revenue. This demands longer development and deployment cycles (often 7+ years to scale) that exceed typical 5-7 year VC exit horizons. The classic VC model - built for rapid, asset-light scale-ups - often misaligns with the realities of many climate tech solutions, especially "hard tech." While there’s an abundance of early-stage VC capital for entrepreneurs, later-stage growth that bridges these projects from venture to infrastructure stage is basically absent—that’s called the missing middle. We need to adapt and supplement that approach by layering in other types of capital and bridge the "missing middle." A broader array of financing instruments is essential for climate tech to scale, including patient equity and growth capital, project finance, blended finance, and specialized debt models. Marsh’s piece lays out how family offices are uniquely positioned to be catalyzing players in this space. Their flexibility allows them to deploy capital across diverse segments, filling the gap and driving significant financial returns alongside impact. https://lnkd.in/gUf85Bwy

Founders – these are the 4 criteria climate VCs care about most. 🌍📈 If you’re looking to raise funds from climate-focused venture capital, it’s critical to understand what drives their decisions. Here’s what they prioritise: 1️⃣ A Team with a Mission to Drive Positive Impact → Is your venture born out of a genuine commitment to solving a significant environmental challenge? Investors are drawn to founders who are deeply motivated by purpose and have a clear vision for creating meaningful change. 2️⃣ Alignment with the Fund’s Investment Thesis → Every climate VC is guided by a specific thesis. Does your company’s mission and strategy resonate with its focus areas? Being in sync with their goals is often the first hurdle to cross. 3️⃣ Quantifiable Carbon Reduction Potential → Can your solution deliver measurable and scalable reductions in carbon emissions? Climate VCs value ventures that prioritise data, track impact rigorously, and show commitment to continuous improvement. 4️⃣ A Strong Connection Between Impact and Profitability → Does your business model ensure that financial success is tied directly to delivering positive environmental outcomes? Climate VCs look for ventures where impact and revenue grow hand-in-hand. Understanding these criteria will not only help you tailor your pitch but also build a business that aligns with the ethos of climate-focused investors. #startups #investing #VC #fundraising #climate #environment #future #growth #success

🚀 HAPPY NEW YEARS ✨ do you know why traditional metrics aren't enough for Climate VC's? .... Let me explain. The VC business seems simple, at first. LPs (Limited Partners) give money to smart fund managers who put money into startups and get really high returns. The traditional metrics used by LPs to evaluate & compare fund performance make sense when viewing the VC from a financial asset class perspective. 🟢 Financial metrics 📈 Internal Rate of Return (IRR avg. 12-15% target): Measures the rate of return on investments before deducting expenses. 💸Multiple on Invested Capital (MOIC avg. 3-5x typical): Reflects the ratio of total value (realized + unrealized) to invested amount, showing overall profitability but not the timing of the cash flows. 💲Gross Total Value to Paid-in-Capital (TVPI avg 1.5-2.0x): Combines realized returns (DPI) and unrealized returns (RVPI) to provide a holistic view of a fund’s overall performance. A TVPI > 1, we want that! 🤔 But is this enough for a Climate fund? The IRR, MOIC, TVPI often do not fully reflect the real impact of Climate VC funds. While LPs are investing for financial returns they are also today looking at the environmental impact on the long term. Climate VCs are holding onto untapped value in terms of the measurable change that Climate startups are delivering towards a positive world, which is something more and more LPs are interested in. This needs to be a basis for fund performance. Today some funds do have 📊 Scope 1-3 GHG Emissions, Green energy and efficiency metrics in the ESG playbook and are termed dark green (Article 9 funds). 📌 However, we need a systemic & updated metric system to compare fund performance that includes Climate and System impact. 🟢 Climate Impact Metrics: 🌍 Carbon-Adjusted IRR: This considers rising carbon prices and provides a more accurate measure of returns. It's vital as carbon markets change. 💡 Impact & Scope 4: It evaluates avoided emissions from new technologies, Land use, biodiversity restored, air pollution reduced etc. ⚡ Decarbonization Velocity: Highlights how quickly emissions are cut across sectors. Speed is crucial for urgent climate goals. 🟢 System Change Metrics: 🔍 Technology Cost Curve Reduction: This checks if climate solutions are becoming more affordable like Solar PV which dropped from $4.75/W in 2010 to $0.27/W in 2023. 🌿 Green Supply Chain Impact: Encourages markets for sustainable suppliers. ex. 50+ suppliers of low-carbon materials 🏗️ Infrastructure Enabled: Supports new systems' development, like the charging network startups that unlocked $500M in additional EV infrastructure investment A holistic approach provides a true picture of Climate VC's potential. It also aligns with the goals of attracting the right investors on board. 📌 Leading a new era in climate solutions is essential. Could better metrics incentivize and revolutionize climate investment evaluation? 🚀 Thanks Included VC

🇫🇷 France isn’t just playing catch-up in climate tech — we’re setting the pace. After backing 72 climate startups and building the Techstars Sustainability Paris ecosystem from scratch, I’ve seen firsthand what real, long-term impact actually requires. Spoiler alert: it’s not just capital. In my recent conversation with Sarah Chen-Spellings on the Billion Dollar Moves Podcast, we talked about what it takes to build the next generation of climate solutions — and why 🇫🇷 France’s bold €54B commitment is such a game changer. Here are 3 big takeaways: 1️⃣ VC models must evolve. 10-year fund cycles and SaaS-style traction don’t fit the pace of climate hardware or deep tech. We’re talking microreactors, CO₂-into-fabrics, circular battery systems. These aren’t apps — they’re atomic. We need patient capital, not just fast exits. 2️⃣ Government + private sector = momentum. France2030 is more than a funding plan — it’s a roadmap. Sovereign backing (Bpifrance), deep corporate support (TotalEnergies, VINCI, Renault Group), and founders from around the world are finding a uniquely founder-ready ecosystem here. 3️⃣ Support doesn't stop after writing a check At Techstars, my belief is simple: be the constant in a founder’s journey. The real work starts after the accelerator ends and we invested. Building in climate takes a village — and a long view. 💥 Some standout French climate startups I’m watching: ✅ Back Market — circular electronics at scale ✅ Innovafeed — insect protein transforming agri-food systems ✅ Fairbrics — turning CO₂ into sustainable textiles ✅ Verkor — €2B gigafactory powering low-carbon EVs ✅ newcleo — reimagining nuclear with next-gen innovation Let’s fund the future, not just the fastest exits. 💬 Know a woman-led climate tech startup we should be watching? Drop it in the comments. 🔗 Full episode link in comments! #France2030 #ClimateTech #DeepTech #Techstars #BillionDollarMoves #ImpactInvesting #VC #Sustainability #WomenInClimate #ParisTech #BeyondTheBillion

Venture Capital is not set up for Climate tech. You don't need to spend a lot of time fundraising as an early-stage startup to know this. The rate of VC funds shot up between 2010-2020, valuations were at an all-time high and we started to think we could throw money at anything and it will give us 20 to 30% return annually (IRR). Well just about anything. As long as it was SaaS. Hard tech is a whole new ball game. Green steel and CO2 capture, for example, require substantial investment at an early stage and need more time to break even and scale. VC may eventually come in and play an important role but the early capital stack for climate tech startups looks different than traditional VC-backed companies. To get to product market fit Climate tech start-ups need a combination of the following in their capital stack: -Non-dilutive project Grants: from governments, philanthropic foundations, private grants and prizes -Angel Investors / Syndicates : High net worth individuals, previous founders etc Catalytic Capital: These are funds prioritizing impact potential over financial returns -Rolling funds: funds raised on a rolling quarterly basis, minimizing the hurdle to fund launch. Typically thematically or community-focused, with similar terms to VC deals  -Accelerators/ Incubators/ Fellowships: Programs offering funding and resources such as strategic partnerships, advisors, and workshops to help founders build and iterate on their ideas and technology.  (Kinda like what we are doing with Energy Tech Nexus) You should talk to VCs, but do so knowing that many may not ready to take the cost burden until you have sufficiently derisked your solution. And if that is the case, you have other options. #founder #climatetech #VC #entrepreneurs