<aside> 💡 Reasons we are excited by Climate Hardware Solutions (CHS)

• It is attracting the world’s top tech talent, with founders increasingly driven by a purpose beyond profit to solve significant challenges;
• Billions in subsidies and grants are creating strong tailwinds for hardware investments;
• Recent software developments have significantly accelerated hardware iteration cycles;
• Current trends indicate promising prospects for returns on climate hardware investments;
• The net-zero transition represents this generation's most significant societal and economic shift, offering huge opportunities for those involved. </aside>

1. Introduction

There are mountains of resources available for startups building in software. From “managing CAC”, over “increasing retention”, all the way to “product-layer strategies”. This is not surprising, as most venture-backed success stories are within B2B SaaS (Salesforce), marketplaces (Airbnb) and social networks (Facebook). And still today, VC investments into software account for over 90% of total funding in Europe.

In recent years, however, we have seen a return to the origins of VC (after all, Silicon Valley is named after chips). Companies like Northvolt and H2 Green Steel have raised some of the biggest rounds in Europe in 2023, [Tesla has become the most valuable automotive company](https://companiesmarketcap.com/tesla/marketcap/#:~:text=As of October 2023 Tesla,cap according to our data.) and, overall, investment in hardware solutions has increased by about 240% between 2021 and 2022.

Increasingly, both founders and VCs realise that in order to decarbonise our economy and adapt to the consequences of climate change, we need climate hardware to reach scale rapidly. In fact, hardware solutions and engineering-led innovations in the deep tech space will enable some of the most significant climate action.

Still today, VC investments into software account for over 90% of total funding in Europe.

Fortunately, we are witnessing increased interest in climate hardware solutions from founders and investors alike. Therefore, we decided to create this collection of resources for:

• Founders, who want to build the solutions we so desperately need
• Investors, who deploy capital into new climate hardware startups
• Job Seekers, who want to move into climate tech
• Everyone, who is curious about climate hardware solutions

2. What are Climate Hardware Solutions?

Climate Hardware Solutions as we define them comprise a range of technologies and innovations based on physical systems or devices which address the climate crisis. This includes everything from electric vehicles and solar panels to direct air capture systems and fermentation-based technologies. We generally cluster them into 3 categories: Technology Providers (i.e. Production), Manufacturers (i.e. Assembly), and Developers (i.e. Deployment) of hardware technologies.

3. Why Build and Invest in Climate Hardware Solutions?

First and foremost, because if we don’t, we’re utterly buggered. Getting to net zero is the biggest challenge of our time, and we’re not going to get there just with fintech and SaaS. There’s hundreds of technologies that need to be deployed to decarbonise the hardest-to-abate sectors, and we haven’t even begun to build resilience into our infrastructures and societies in the face of a changing climate. All of that requires hardware, ideally turbo-charged by the best that software has to offer.

That’s all very well, but some of you may be asking, why should I get into it, as a founder or investor? Why shouldn’t I let others do the hard(ware) stuff while I focus on software? Great question. Here’s why:

Because it’s a lot of fun:

The excitement of making ****a real-world impact is a huge draw for top tech talent, and supported by a survey showing 75% of millennial workers at big companies are willing to take a pay cut for a role at environmentally conscious firms. We are witnessing a significant shift among founders who are motivated by more than just profit — they're uniting to tackle problems larger than themselves, emphasising teamwork in their pursuit to make a substantial difference in the world.

Because there has never been a better time to do so:

We are currently witnessing an inflection point where tighter regulation, declining cost curves and corporate climate targets level the playing field for climate hardware. With half of global GDP and a quarter of carbon emissions under net zero targets we are witnessing a new competitive reality. Companies, particularly in hard-to-abate sectors, have real pressure to reduce emissions but are too stuck in the fossil-based world to innovate.