The Climate Capital Stack

Question 1

How much do we need to invest annually to avoid a climate disaster?

Answer 1

To avoid a climate catastrophe, we must invest an estimated $4T annually (just in infrastructure!) into the clean energy transition globally. This year, we invested $800b - and a mere $32b in venture capital. (2021)

The IEA’s annual World Energy Outlook warns clean energy and infrastructure need a $4 trillion a year investment.Such an outlay would mean the world could limit the rise in global temperatures to 1.5 degrees above pre-industrial levels, as agreed in Paris six years ago. (2015)

Question 2

Different Capital for Different Businesses

Answer 2

Different industries and stages of business require different types of capital.

Startups: Often rely on venture capital due to their high growth potential and need for significant funding without established cash flows.

Mature Companies: More likely to use retained earnings or debt financing. They have more predictable cash flows and may prefer to avoid diluting ownership.

Key Idea: The nature of the business often determines the most suitable form of capital