How climate tech start-ups can quickly scale up and get funding

EQT, Contrarian Ventures, and McKinsey shared insights on scaling journeys and critical unlocks for success.

As climate technologies hold the potential to lessen 90% of man-made emissions globally by 2050, McKinsey, along with EQT Ventures and Contrarian Ventures, discussed how climate tech start-ups can scale up and quickly get funding.

The three companies have developed The Climate Brick, a playbook designed to guide climate tech companies through the complexities of fundraising and scaling.

The analysis focused on over 3,000 companies from 2020 onward, presenting examples of successful scaling strategies along with their critical unlocks.

One of the bricks is ‘gigascaling’, a company that builds capital-intensive and large-scale plants which has a road map to cost competitiveness, the ability to execute seamlessly and scale rapidly, and committed offtakes.

Another is ‘moonshot’, a company that works with highly novel technologies. This type needs to prioritise ensuring grants and public funding, proving technological readiness, and locking in commercial partners and customers early on.

EQT and Contrarian Ventures pointed out that a crucial insight applicable to all seven scaling journeys is the importance of understanding the capital stack. They advised considering nondilutive finance early in the financing process, as this can significantly alter a company’s trajectory.

This also affects the type of talent a start-up may require. For instance, due to the complexity of the capital stack, a company needs an experienced chief financing officer with a strong understanding of financial structuring.

Additionally, there is a need to unite stakeholders and collaborate more than companies in other sectors.