Climate-tech investing heats up

Is a global economic recession imminent? That question has been giving many market watchers sleepless nights. One group, however, seems less worried: investors in climate tech, who are often younger people with an interest in the environment.

Typically, recessions see investors fleeing to safer assets like government bonds and mature companies. And they start investing less in or even divesting from riskier assets, such as venture capital, which bets on early-stage companies fully expecting many to fail.

Things are different now. Mark Cupta, managing director of Prelude Ventures, says 2022 is on pace to set a record for venture-capital fundraising with the trend “amplified” for climate-tech investing.

Climate tech covers a huge swathe of industries from electric cars and carbon-free cement to green hydrogen and technologies for removing carbon dioxide from the air. Investors see that funding these technologies will help avoid a hotter planet, which would have worse, long-lasting economic impacts than the short-term recession we might be about to face.

“I find it very hard to look into a crystal ball and say selling pet food on the internet is going to be a big deal,” says Dipender Saluja, a partner at Capricorn Investment Group, who has reaped huge returns on electric-car giant Tesla and satellite-company Planet Labs. “But on the other hand, if I look at what are the kinds of things that the world can’t do without and if I can find a company to build it, that to me is actually quite easy.”