Climate-tech startups are putting profits before the planet.

Oct 12, 2022 | Aliya Ramji, Co-Founder and Head at MT>Ventures

The Canadian climate tech ecosystem understands that central to climate change mitigation is a delicate balance where profits are required for the planet to matter. By focusing on growth and scale, we can force the money markets to take notice. 

At the turn of the century, economists coined the triple bottom line, where profits were one of three equal factors in determining organizational health and success. Today, many climate-focused startups recognize profits as the singular, most important metric to determine success. Canadian Venture Capital has quickly come to understand that in order to make a meaningful impact on climate change, startups must not be charitable organizations or not-for-profits, but rather venture capital-backed corporations focused on shareholder returns. 

Nationally, BDC’s Cleantech practice leads to profit-centred investing in cleantech companies. In 2018, BDC committed to deploying $600 million by 2023, in both debt and equity, to high-potential companies with proven technology, market traction, and the capability to scale to more than $100 million annually in revenue. Similarly, ArcTern Ventures has invested in companies with positive environmental impacts while proving profitability. 

The Canadian ecosystem also includes accelerators focused on helping startups validate their business models, advance technologies, and create global impact. Mission from MaRS, the climate accelerator at MaRS Discovery District, is doing this by identifying, implementing, and scaling Canadian climate-tech solutions with the highest potential to reduce GHG emissions while economically meeting industry needs. 

What’s most impressive is that with profitability in mind, Canadian startups are winning the investment game. Montreal-based BrainBox AI has developed a way to efficiently use a building’s HVAC system to reduce energy consumption (increasing net profits), leading them to raise over $38 million USD.  Using the Brainbox AI technology, building energy consumption can be reduced by up to 25%, a key driver in helping to reduce an overall carbon footprint by 20-40%. Similarly, Toronto-based startup e-Zinc has raised over $25 million USD in Series A financing to establish production capabilities for its zinc-based long-duration energy storage tech. Both startups have real potential to continue on a high growth trajectory and provide effective means of reducing GHG emissions.

As an early-growth company building Smart Forests™, Canada’s Forest Trust has launched into the climate tech ecosystem to provide a solution for businesses, organizations, schools, communities and individuals to offset their carbon impact. In addition to providing a means to invest in building a forest, Canada’s Forest Trust provides a convenient way for anyone to calculate their investment path to reducing their carbon footprint with the power of nature-based carbon sequestration. Recognizing that addressing climate change has no short-term solutions, Canada’s Forest Trust is reducing societal carbon footprints with multi-generational change that requires a balance between clean tech, reforestation and biodiversity. 

When we look at the Canadian startup ecosystem, climate-based goals often fare better when they come second to profits, while the planet, profit, and people evaluation still remain effective at assessing corporate success. . What is clear is that climate change needs to be attacked at every angle, from incremental decarbonization to reforestation. And, to make this happen, we need to see bold innovation and significant investments into the climate-tech space. 

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