We’ve all heard the news by now. Earlier this month, Silicon Valley Bank closed its doors in what was the largest U.S. bank failure since the 2008 financial crisis (and the second largest EVER). SVB was widely used throughout the startup community, hailed for its focus on technology and the nuances of startup-style banking. While the dust has settled a bit (and there has been news this week of First Citizens Bank entering into an agreement with the FDIC to acquire SVB), there’s still lots of questions about when (if?) startups will get a hold of their money.
SVB was home to over 1,500 climate tech clients
While the tech sector has been struggling through rounds of layoffs over the past year (including cutting over 100,000 employees so far in 2023 alone), #climate has been having its shining moment. Globally, climate tech venture capital reached $70.1 BILLION in 2022, an astounding 89% jump from the previous year. SVB played a large role in that, housing over 1,500 of today’s most innovative startups in the climate space. Since the collapse, there’s been lots of speculation on whether or not the failure will affect newfound progress toward net zero.
Will SVB’s failure derail our efforts to fight climate change?
Perhaps a few decades ago, but not today. Climate as an industry has gained incredible momentum in the recent past, a momentum that will not easily be slowed. Climate progress stems from more than just VC – it also comes from governments pushing billions toward clean energy projects or large corporations investing in net zero solutions or a whole slew of other financing schemes. In total, this added up to over $1 TRILLION toward solving our collective climate problem in 2022. That’s not to belittle the seriousness of the SVB collapse – if the FDIC didn’t step in, many startups (climate-focused or not) would be in more serious trouble. But the closure of one bank isn’t enough to derail the energy transition. We’re already too far along.
Solar, EV, heat pumps: we already have the solutions we need to reach net zero
The startup space is inventing incredible tech to alleviate our climate woes (what about clean gasoline made out of thin air? Or turning CO2 in sunglasses?). But reaching our net zero goals will largely involve scaling up existing solutions. We already have all of the tools we need to transition to a cleaner world. And we’re well on our way there. Solar capacity has expanded tremendously in recent years, tripling since 2017. Wind power has grown by over 60% in that same time frame. In 2022, heat pump purchases surpassed those of gas furnaces. And pretty much every major automobile manufacturer has committed to eliminating gas-powered engines by 2040. The solutions are here today. We just need the scale and reach to make the energy transition a reality.
A low carbon future is inevitable (unless we want to spend $14.5 trillion)
Climate solutions aren’t only good for the planet — they make economic sense. A Deloitte analysis found that inaction on climate change could cost the U.S. economy a whopping $14.5 TRILLION by 2070. On the other hand, a smart transition toward low-carbon solutions could buy $3 trillion. So no, the SVB collapse will not tank our climate progress. It won’t even stop the burgeoning climate tech startup industry. It just doesn’t add up.
