'Price parity is the name of the game': Where Speedinvest's climate tech lead spots big opportunities for founders

Depressed liquidity, subdued exits and high-profile growth stumbles like France’s Ÿnsect, not to mention the anti-climate and net zero backlash emanating from the US – it's hard to deny that the European climate tech sector has had it's challenges the last six months.

"It does feel different," says Namratha Kothapalli, one of Speedinvest’s leads for Climate Tech investments. "I don't know if there's been a fundamental shift as such, but there has definitely been a bit of uncertainty [over] which direction will persist long term."

One of the biggest seed- and pre-seed investors

With over €1bn in assets under management across Europe and the UK, Speedinvest is one of the biggest investors in seed and pre-seed stage startups on the continent. Ticket sizes for climate tech are typically around €100 thousand to €3 million ($108k - $3.2m).

Among the companies investments are dozens of climate tech companies, covering e-mobility, renewable energy, resource efficiency and circular economy efforts. There's ESG analytics giant apiday, machine-learning backed carbon emissions tracker Sylvera, and the much buzzed-about battery tech startup Breathe.

"A trend of not bragging"

Having worked the climate tech desk quite a while now (as well as covering Speedinvest's Industrial Tech desk), Kothapalli says she’s used to the cyclical nature of the sector.

Always on the lookout for the next innovation to invest in, "there was definitely a point, I think, January or February, where it did feel like a little bit of a slum," she says. "But the job is so seasonal that sometimes we see a lot of really good opportunities at the same time, and sometimes it is really like you're not happy about anything you come across."

Aside from the fundamentals and trends, she suggests as well that narratives in the climate tech world can play a big role in these intermittent slumps. "I think we generally have a trend of not bragging about our accomplishments loudly, as some others do, and it probably trickles down across the industry and manifests in a lot of different ways."

Many opportunities

Despite these ups and downs, she says there are still many opportunities out there to be found, not least because the realities of climate change are forcing markets open, regardless of sentiment. Looking at energy markets, she says she’s been seeing a lot interesting happening in tech to make data centres more energy efficient, as well as overhauls in manufacturing processes.

Rather than the current geopolitics being a problem for such sectors – which are typically measured in the trillions of dollars – Kothapalli points out that the efforts going into energy sovereignty, resilience and reducing critical infrastructure dependency represent big opportunities for founders who can come up with more efficient solutions.

"This is one of my biggest learnings in VC really, both personally and professionally. Having to manage those high highs and low lows and staying rather optimistic, but equally pragmatic, on the opportunities we come across, because if you're not in the right state of mind, not able to imagine and be creative, it is difficult to spot good opportunities."

Keeping the green premium down

Impact investing is of course about showing that social and environmental ambitions can be aligned with returns. As a final thought, Kothapalli says – once an opportunity has been found – that a focus on keeping the ‘green premium’ down can help win investors over to it. "Price parity is the name of the game," she says.

What’s needed is founders building companies "where the story is all about efficiency, cheaper cost, better performance. I think that needs to be the framing and the selling point for customers, rather than it being just good for the planet."