While 2023 was a difficult year for deal-making in venture capital, climate tech fared better than most verticals.
According to PitchBook data, climate-tech companies have grown faster and increased their share of patents filed more so than their tech peers.
Within Chicago, the city hosted the Future of Climate Tech Venture Summit in October. The recent announcement of new funding for Great Lakes ReNew, a six-state collaboration to turn the region into a hub for water innovation, also suggests the sector could be uniquely positioned in Chicago to capitalize on ongoing developments.
Amy Francetic, managing general partner and co-founder of Buoyant Ventures, an early-stage venture fund focused on climate tech, certainly thinks so.
"One of the things that Chicago needs to do a better job of or needs to embrace is how the Great Lakes area is better situated for climate change," Francetic told Chicago Inno. "We have an abundance of fresh water, we don't have extreme temperature swings, we don't have wildfire risk. We still saw thunderstorms and tornadoes in February, so there's no escaping climate change, but I think that this area is better positioned to be more resilient to climate change compared to the coasts and compared to dry regions."
Earlier this week, Madison, Wisconsin-based Gener8tor launched a new local accelerator for startups developing products and services addressing climate resilience. Francetic thinks one indication of the sector's growth locally is all of the spinouts that have come from legacy companies.
"Just like what you see in San Francisco or Boston, these big companies shed workers and they birth new companies," she said. "Jennifer Holmgren was at Honeywell before launching LanzaTech. That now has its own spinoff, LanzaJet. Generationally, these companies are birthing other companies, creating a great concentration of talent."
Francetic added that accelerators like Evergreen Climate Innovations and Gener8tor — entities that are standing by to fund companies with a first check — are helpful to venture investor like her because they're taking the risk to help get a company started and develop their technology.
She said the real game-changer for Chicago is the Great Lakes ReNew announcement and the $160 million of federal funding over the next 10 years that comes with it.
"The funding is going to a broad spectrum of companies, projects and research, and we'll be looking for high-growth companies that might come up with new ways to lower the carbon intensity of treating wastewater or new technologies that will help clean water," Francetic said. "There's going to be some interesting research that could be commercialized into startup companies, and we'll be excited to see what comes out of that."
One specific area in which Francetic thinks Chicago could become a leader is the decarbonization of data centers, especially since the emergence of artificial intelligence has made data centers more carbon-intensive than ever before.
