Jamie Rowles, leader of Climate Investments at Founders Factory and co-leader of Planet Positive Lab, discusses innovations in climate tech and research and how they can help us reach net zero.
The solution to climate change? We are still quite a way away.
The International Energy Agency tracks the technology we currently have to help us address climate change and predicts the technology we’ll need to overcome this colossal challenge. As of its most recent report, they believe we are only halfway there in developing the novel technologies needed to reach net zero.
Climate change is a hard science and atoms-based problem and requires physical solutions to address it. This includes everything from developing new ways to create steel to understanding how to re-engineer ammonia production without creating carbon emissions, just to name a few. Almost every industry is impacted.
So, where are climate research breakthroughs going to come from? By and large, it will be from primary research in universities. Some of the core building blocks of the first generation of climate tech – that have driven the adoption of renewable energy – can all be traced back to university labs. This new generation of climate innovation is likely to be no different. I’ve invested in climate businesses for the best part of a decade, and at least a quarter of the businesses I’ve backed have come from universities.
Academic institutions are the primary conduit for hard science innovation because primary research is required in order to prove climate tech fundamentally. As a result, universities often sit on a treasure trove of intellectual property – potentially groundbreaking discoveries that could unlock the solution to climate challenges and potentially trillions of dollars in value in the process.
There’s something going wrong, however. Why is this research failing to materialise into scalable solutions? The challenge lies in understanding how to spin research out of the laboratory and scale it into commercially viable businesses.
Out of the research lab and into the real world
The challenge around spinning out university-based IP goes far beyond climate research. It’s a wider problem around incentives, which is stifling university venture creation.
The US does this much better than the UK – our academic institutions take far too high an equity stake in businesses, reducing the incentives for founders and making it considerably harder to attract follow-on investment. We’re seeing progress in the UK – the government recently acknowledged the guidance of a Spinout Review – but we still have some way to go.
On top of this, there has always been friction between the incentives of primary research and the incentives for commercialising science. We often see ‘research for research’s sake’ developing new ideas without tying them to commercial outcomes. This isn’t wrong per se – but if universities are to be relied upon as a source of technological breakthroughs, it feels like a huge missed opportunity.
One model I like is the growing prominence of the Venture Science Doctorate. Much like your typical doctorate, this is a three-year, fully-funded programme in which a scientist receives a PhD at the end. But rather than ‘research for research’s sake’, your central thesis concerns designing and developing a venture-scale business.
Overcoming the challenges of commercialising climate tech
Over the last three to four years, we’ve seen a considerably renewed focus on climate innovation and solutions. Legislative commitments have increased, public awareness has grown, and investors are returning to the sector.
But we’ve learned from our climate tech failures of the past. There are unique challenges that climate founders need to overcome in order to make this a more sustained and successful innovative wave.
One question is, are founders thinking creatively about the different funding routes they’ll need to take in order to scale? Hardware businesses, especially in climate, don’t fit as comfortably into the venture capital paradigm of rapidly scalable, repeat-revenue software businesses—and will require a compelling narrative to get investors on board. This is combined with the public funding (grant) routes available.
Other considerations and challenges include how they’re thinking about environment data and what investors will need to see to prove impact, how they’re approaching policy and regulatory transition, and what role you might play with corporates in order to tap into their networks and global scale.
On the Planet Positive Lab, the ten-week boot camp I co-led last year with Founders Factory in partnership with the University of Oxford, we tried to distil these problems and turn them into actionable playbooks for founders from one of the best universities in the world. You can learn a lot over ten weeks, and having this shorter, more intensive approach means we can stimulate the volume needed to get us back on track with our climate goals.
There will be inevitable failures, but we have been seeking to make a further impact by empowering more scientists to build companies that can drive real climate outcomes.
Being able to prove that universities can produce groundbreaking research and innovation and successfully spin it out as ventures will have a huge knock-on effect. As it stands, there is a smaller universe of investors willing to bet on these sorts of companies.
Proving that we can build commercially viable businesses in this space will convince more investors, boosting the sort of early-stage capital needed to fund these solutions and solve the biggest climate-related challenges.
