In the race to build green infrastructure, VCs are having to get comfortable backing a whole new kind of company.
"VCs are waking up to the fact that the battle against climate change can’t be solved with escooters or software — two areas they’ve ploughed billions into in recent years. The problem is that VCs aren’t set up to back capital-intensive plays. VCs bet on technology — and love software. Software can scale quickly without needing any inventory or physical infrastructure".
Whilst the above is a slight exaggeration, VCs, as an asset class has done well investing in SaaS and platforms.
Some have ventured into deeptech, hardware and greentech and they're comfortable with the risks.
However, Private Equity need to scale but aren't comfortable with the scientific or the technological risks.
I would argue we need a hybrid between the two. Those investors which have large enough pockets to fund big infrastructure projects whilst still comfortable with the innovation and R&D required to produce the next truly disruptive companies which can potentially produce exponential returns.
Even that may not be enough. We may also need more involvement from state banks, asset managers, developers, sovereign wealth fund, pension funds, OEMs, private equity, and most importantly, the public markets.
The next 10 years will see a new asset class.... One which has yet to be invented. I can't wait!
This Blog was written as an extension of an article by Sifted.