Zero Emission Investing + COVID

How the climate tech investing landscape has changed in 2020

12 min readDec 2, 2020


This is an adapted transcript of a talk from the Environmental Defense Fund’s Climate Tech Series. A recording can be found here.

We’ve got half an hour together and a lot of ground to cover.

Back in January, I gave a presentation on the arc of climate investing. It was a look back on the pace, the hard lessons learned, and the road ahead.

Things felt really great in at the start of 2020.

In January, EDF got a hundred of us together — investors, company builders, researchers, policymakers, and advocates — focused on how we advance climate investing, especially on early stage technologies.

At the same time, if you turned on the news, you saw that Davos became a climate change conference. With the largest banks and companies of the world trying to out climate each other on the air.

Then, COVID happened. And the world’s attention rightfully shifted. So what has happened since then? What was COVID’s impact on emissions? What was COVID’s impact on clean technology investing? At the earliest stage? At the latest stage?

We’ll dig into that right now.

As a reminder, our North Star as an investment community is simple. It’s finding, investing, and deploying zero-emission technologies at scale.

When COVID hit, it shocked our way of life. It halted human activity. We had country-wide shutdowns. Flights canceled. Factories stopped. It resulted in economies crashing. It also led to the largest drop of CO2 emissions on record. 1.6 gigatons. It was a drop in emissions, but not one to celebrate.

These charts were produced by a global group of researchers from China to France to the US. They show how each sector’s distress mapped to a drop in emissions.

In the United States, we are living through our third wave of COVID. Peak cases. Peak hospitalizations.

For COVID, there is an exit strategy. Test. Masks. Quarantining When Sick. Avoiding crowded spaces. Sharing data on where the virus is.

A handful of countries around the world have shown it’s possible to beat this virus — New Zealand, Taiwan, Australia, South Korea.

In the United States, we are waiting for a miracle. A vaccine.

Unfortunately, there’s no vaccine for our emissions crisis. No silver bullet.

COVID is a warning. It shows us how bad an exponentially compounding problem can be. Our climate crisis will be worse.

I’m preaching to the choir, but collectively, we produce over 55 gigatons of CO2 equivalent emissions each year. Our task as innovators is to hone in on those sources of emissions and remove them.

We are in the displacement business. This is a flow diagram representing energy flows in the United States by Lawrence Livermore National Laboratory.

On the left are energy sources. On the right are how it is being used.

While history is rooting for us and our companies, our competition is not.

If your business is closer to the left, you are likely in the commodity business because you are generating energy. PV. Wind. The only way to compete is for you to win on cost and total cost of ownership. Either going toe to toe. Or through an assist or subsidy.

If your business is on the right, the pink boxes, you are likely building products. EVs. New foods. Deployment of solar. Thermostats. You win because you perform better than the alternative. You are faster, more convenient, or more resilient. You often have to be cheaper too.

Over 10 years ago, on January 7th, 2009 in front of the Senate — my boss — John Doerr made the case that green technologies would be the next great global industry. He called it the “mother of all markets”.

This economic transformation is underway, and we are still at the beginning of capturing that value. Especially if our north star is zero-emissions.

Some number to convey this opportunity…

60% of installed energy capacity around the globe is still fossil-based.

There are 1.2 billion passenger vehicles on the road. And less than a percent of those miles driven are in electric vehicles. Only a percent!

We know progress is possible. According to BloombergNEF, 18% of the miles driven by 2-wheelers are electric and busses are at 30%.

I keep going back to it: “Mother of All Markets”

Look at how many batteries we would need to produce if every vehicle sold were EV. 10,000-gigawatt hours worth. Each year. We only produce 100-gigawatt hours today…just 1%…

In the world of foods. There’s every opportunity to swap and shift away from carbon-intense foods.

These markets are tough though. Gasoline is a convenient form of energy, incredibly-dense, portable, and cheap. And to many, beef and dairy products are delicious.

There are more markets than these too: concrete, steel, cooling, carbon capture. So much opportunity.

We know the markets, now we need the technology breakthroughs, supportive policies, and successful companies.

The stages of innovation in cleantech are different. Building any kind of company is hard. But the physics that go into scaling them is different.

For software companies, as you get more demand, you can provision servers with ease. For marketplace companies, like a Lyft, AirBnb, or Postmates, going into new markets requires a ground game recruiting both supply and demand.

For clean technology, things are “physically harder”. Companies tend to move through three different phases.

The first is the idea to product phase. Seed to Series B capital is spent on iterating and creating a demonstration that works. Possibly even selling in very low volumes.

The second phase is proving you can build or create larger amounts of it. Showing there is a path to reduce costs. Likely not economically, so contracts and pricing is hard.

Then the final phase, the holy grail, if it is a commodity the price you’ve hit is competitive or if it is a product that people want, you are able to unlock larger amounts of later stage capital or project financing.

Making it through these hurdles is challenging, but with the right teams and technology, it is possible.

These are all companies valued today or exited at incredible valuations and multiples. At Kleiner, we’ve been fortunate to be a part of the history of Beyond Meat, Enphase, and Nest.

Looking across all of these companies, none of these stories were ever as clear as a straight line. The amount of grit the founders each had. The capital they needed to raise. The headwinds they all faced. But when you step back, as an investor, these are incredible returns.

So how has investing been in 2020? Especially during COVID?

Doing analysis on this kind of data is tough. We did our best to tag, prune, filter and analyze Crunchbase deal data. We focused on companies leading the charge towards zero-emissions: clean energy, electric vehicles, sustainable materials, new proteins & more efficient agriculture. Early Stage & Late Stage. We looked at all financings over $250K. If we are erring in any direction, it’s likely we are undercounting.

Over the past 5 years, we’ve been in a period of urgent optimism. This chart shows cumulative investing by year. You can see in 2016, $6B was invested. Increasing year over year. Reaching a high last year of $13.6B.

The blue line is 2020. You can see we are a little behind our highs from the past 2 years.

You’ll see a lull between February and June. Very likely because of COVID. But remember, these are “announcements” of deals. And what you can see is that likely many were taking place during that time, and you can see the pop in July when they were announced.

I’m optimistic that we’ll end this year higher than in 2018, maybe getting to 2019’s peak. There are quite a few deals that have been completed recently, but not announced yet.

Here you can see how the $52.7B was invested across different financing rounds in clean technologies over the 5 years.

  • $5B was invested across 1,200 Seed and Series A deals.
  • $10B was invested across almost 300 Series B and Series C deals.
  • $25B was invested across 177 later-stage financings. These were Series D, E, F and beyond.

You’ll see we added a grouping called “Exceptional”. There was a pattern to a group of deals, making up $11B, that appeared to be an exception to the norm.

There were 28 deals that were early-stage: Seed, Series A, and Series B that were over $100M. 7 of them were north of $500M. These were predominantly EV companies out of Asia.

So we kept them separate. These are bold bets on companies at their formation.

When it comes to average check size from the past 2 years. Clean tech seeds were a little under $2M. Our As, $11M. Our Bs, $17M. Our Cs, $87M.

As an industry, our average round size in the A and B are less than our technology/software counterparts.

There the industry is seeing As around $15M…Bs around $32M…

C rounds though, for technology companies were lower at $59M. Compared to $87M for clean tech companies.

You can also see the split. Where the competition is unfolding. 90% of the capital in this space is deployed in the United States and Asia. Most of that 45% in Asia is in China.

Europe is at 7%.

Africa and South America don’t make up much of the venture dollars. But you’ll find a healthy amount of project financing being deployed there

Where did the big dollars go this past year? In these $50M+ rounds.

In Q1, we saw it being invested in agriculture and new protein companies like Indigo and Nature’s Fynd.

In Q2, we saw it being deployed towards new energy sources like Commonwealth Fusion and improved solid-state batteries from Quantumscape.

In Q3, Indigo raised additional financing. Perfect Day raised for its dairy protein fermentation technology. EVs were on a tear with Rivian raising $2.5B, WM Motors for $1.4B, Xpeng Motors for $500M, and Chargepoint for $127M.

In our current quarter, Q4, Proterra announced a $200M financing for its electric busses. Plenty, Ripple, and v2food are disrupting foods.

I have no doubt a few more will make this list before the end of the year as announcements are made.

In the world of project financing for new solar and wind — 2020 has been steady. We may not beat last year’s $300B, but the dollars being deployed this year are going farther because costs are cheaper.

We’ve reached an important crossroad. Politically and economically we should be saying *no* to any new coal and gas.

According to BloombergNEF, “In 2020, both subsidized and unsubsidized renewable energy are already cheaper than new coal and gas-fired on a $/MWh basis.”

In public markets, indexes in particular, clean energy companies have been resilient through COVID. After the collective market drop in April, they have powered ahead, even ahead of the technology sector.

We’ve started to pull together a public comp sheet. Only including truly zero-emission companies. This is still very much a work in progress.

Some observations. There are 10 electric-only public automakers. What’s interesting is half of them went public via a SPAC, with little to no revenue.

For the revenue producers, the multiples are high for EVs, Solar, and Fuel Cells. Averaging 33x 2020 earnings.

For the moment, wind trades at lower multiples. 1.2x 2020 earnings.

When we do a refresh of this data, we’ll add in more categories. So we include agriculture and alternative protein companies like Beyond Meat.

Overall though, these public companies fared well. On average, more than doubling since the start of the year.

This EDF series is titled the “Road to Zero Carbon Transportation”. I can’t let you go without one slide on where automakers are at with their electric pursuits.

This chart focuses on output. Unfortunately, production won’t reach 2019’s high because of COVID.

At the moment, EVs make up 2% of all car sales. In California, Gavin Newsom recently signed an EO with a target of every new car sold to be zero-emission by 2035. That’s 2 million cars. More countries and states need to be setting ambitious goals like these.

Globally, in output, Tesla is in the lead. An American car company. They produced 32% of all EVs this year. VW, a European company, at 16%. BYD, a Chinese company, at 10%. And…BMW, a European company, at 9%.

If you are an automotive manufacturer and have not produced at least 50,000 electric vehicles next year, I would be worried.

Tesla, BYD, and VW had their first 50,000 cars a year milestone five years ago. The pacesetter…Tesla did 389,000 last year.

These companies are setting a new bar for what competition will look like a decade ahead: battery range and density, charging networks, speed, and cost.

Let’s wrap on the year ahead. We’ve got a lot of work to do.

This talk is US-centric. So it’s fair for me to say, we are ahead in so many ways: in ambition, researchers, philanthropy, venture capital. But we risk squandering it. To get to zero, it is going to take all of us. It is going to take more.

More ambition. More research. More philanthropy. More capital.

As we debate the scientific merits of climate change in the United States and coddle oil, coal, and gas interests, other countries are plowing ahead.

China went bold at the UN, aiming to peak emissions in 2030 and achieve neutrality by 2060. And they’ll follow-through using their 5-year planning process.

I would not be surprised if Asia overtakes North America in dollars invested in the next few years.

I would not be surprised if Europe sets even more ambitious targets.

These are not climate plans, they are economic plans.

Thankfully, learning curves have gotten us to a place where making the emission-free choice is cost-competitive and creates jobs, jobs, jobs.

But, we can’t take all of this for granted. In closing, I want to bring it back to “people”. My old boss, Megan Smith used to say “people do things”.

These presentations are full of numbers, stats, and trends. But at the end of the day, people do things.

Moore’s Law. PV cost curve. Lithium-Ion cost curve. These curves happen because people invent, iterate, invest, pass policies, and pour their hearts into advancing technology.

As investors, we’ve got a pivotal role to play here.

Our community continues to get bigger. More funds have announced their launch or commitment to invest in this space: from Amazon to Lowercarbon Capital.

As investors, let’s continue to find people doing audacious things and invest in them.

Let’s close the year strong. Thank you.



Ryan Panchadsaram

Venture @ Kleiner Perkins // Former U.S. Deputy Chief Technology Officer at the White House.