Why we have to rethink climate tech investment for long-term impact

The VC-driven approach to climate tech mirrors the broader startup ecosystem: rapid scaling, aggressive fundraising cycles, and a focus on exits. Yet, the unique nature of climate tech makes this model particularly problematic.

Unlike software startups that can achieve product-market fit quickly, climate tech requires long development cycles, regulatory approvals, and significant infrastructure investment.

The current investment landscape forces scientists and engineers to divert time away from research to chase investors and prove commercial viability – often to the detriment of their innovations.

If we are serious about supporting climate solutions, we must rethink how we finance these enterprises beyond the constraints of traditional venture capital.

Having attended numerous climate finance events across Europe, I’ve observed that most are designed around receiving feedback and guidance from capital holders, while selected capital-seekers are given a platform to pitch.

Frankly, I find these events frustrating – perhaps because my focus is on climate tech startups and innovations. In other industries, where financial transactions are the primary concern, these events might be more fitting.

However, when it comes to climate tech, the social and environmental impact is critical and urgent. It feels self-serving when capital holders, whether public or private, scrutinise these innovations purely through the lens of financial viability, even when legally mandated to do so.

The structural challenges of climate tech funding

These investment-focused events and initiatives are structured to serve capital holders rather than the innovators who develop solutions to pressing climate challenges.

Entrepreneurs – often highly skilled researchers – are expected to conform to financial expectations rather than receiving support tailored to the realities of deep-tech innovation.

This results in several fundamental issues, namely a system that serves investors and not innovators, short-term thinking, and a limited focus on market demand.

This environment discourages risk-taking and slows the deployment of climate solutions, as many brilliant minds are trapped in a cycle of trying to meet financial criteria rather than focusing on their core research and product development.

These investment-focused events are structured to serve capital holders rather than the innovators

Prioritising public good over financial returns

I would prefer a more equitable environment where inventors and the public also have the opportunity to question capital holders about how they allocate their funds and why they fail to support urgent, brilliant solutions.

I also find it perplexing that fundamental economic principles are absent from these discussions. Why do we not simply examine demand-supply dynamics and activate the demand side?

After all, these products and services will eventually enter the market, where businesses, public institutions, and individuals will purchase them, generating profits for the companies and their investors.

Instead of continuously organising thousands of events across Europe for VCs and startups to meet (even at saunas in Finland), we might be better off prioritising the inclusion of broader stakeholders – consumers, public agencies, UN bodies, corporations, and cooperatives – so they can provide insights into how these products could succeed in the market. This would also increase public awareness and appreciation for these innovations.

I feel a sense of frustration when I see brilliant minds struggling to answer basic financial questions, even though they can eloquently discuss their work in an academic setting.

If an entrepreneur is developing a solution for air pollution, why should they spend years chasing investors when they could be engaging directly with municipalities and local councils to pilot their technology?

If an entrepreneur is developing a solution for air pollution, why should they spend years chasing investors?

Furthermore, many investors underline the significance of market validation, customer acquisition, and the need for feedback from clients and expect entrepreneurs to demonstrate market demand.

However, climate tech entrepreneurs may not naturally possess the skills or knowledge to identify potential clients or navigate commercial landscapes. By including additional stakeholders who represent the public, we could create pathways for these innovations to become sustainable businesses rather than chasing unicorn valuations.

What if we could give climate tech startups a second chance after they quit following years of investor rejection?

Redefining success in climate tech

The current system penalises those who develop solutions for a crisis created by profit-driven industries. If we truly want climate innovations to thrive, we must create an ecosystem where researchers and entrepreneurs are supported not just as financial investments, but as essential contributors to society.

This means shifting away from an investor-dominated landscape and embracing models that prioritise public benefit, long-term resilience, and real-world impact. We must move beyond venture capital and towards a funding paradigm that serves both people and the planet.

Many entrepreneurs are not in this game to build the next billion-dollar company. They simply want to secure funding – whether from a government grant or private investment – so they can return to their labs, continue their research, and earn slightly better salaries.

That, in itself, is not the classic entrepreneurial spirit. Perhaps we need a different model – one that allows these brilliant minds to focus on solving the world's most pressing challenges without being forced into a system that values financial acumen over scientific and technological excellence.

A radical rethinking

The climate crisis demands a radical rethinking of how we finance and support climate tech innovations. By shifting the focus from short-term financial returns to long-term impact, we can create an ecosystem that empowers researchers, connects innovations with real-world demand, and ensures that essential technologies reach the market.

Public institutions must play a central role in this transformation, providing patient capital and de-risking investments to accelerate the deployment of climate solutions. Only by prioritising public good over profit can we hope to address the urgent challenges of climate change and build a sustainable future for all.

Dr. Emre Eren Korkmaz

Founder-Director, Oxford Centre for Technology and Development