February 10, 2025

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Climate Tech Needs A New Sales Strategy

Climate Tech Needs A New Sales Strategy

Climate tech solutions need to get into the market as fast as possible. Of course, more funding and policy are needed to finance and enable this growth, but these instruments can only do so much without there being validated and repeatable customer demand, as well as an efficient strategy to reach them, for the solutions themselves.

To date, most sales efforts have focused on the urgency surrounding global warming, an appeal to investors and buyers’ altruism or the threat of bad PR. However, companies need a much more thoughtful, nuanced approach to selling climate solutions into the market.

As much as it is a funding and policy game, the “Great Deployment” is also an enormous, global sales effort. Absent an effective sales strategy, we will have a long, long road ahead of us.

We still have a long way to go

There is still a long way to go in the green transition. In 2023, the share of renewables in the global power mix was roughly 30%, up 10% from 2010. By 2025, the total global penetration of electric vehicles is expected to reach 16.7% of global light vehicle sales. This is important progress and an enormous achievement, but a reminder that we are still in the early days.

For a while, we have relied on pitches like “doing well and doing good” to sell climate and sustainability products. We assumed that the urgency to decarbonize our economy and society, would compel businesses and consumers to buy and manufacture sustainably sourced and produced products. However, these consumers and producers are in the minority. According to a 2024 Ernst & Young survey, 70% of consumers are unwilling to spend more time or money on sustainable energy actions. For instance, only 11% of consumers consider heat pumps a first choice for investment. Looking at sustainability more broadly, while 78% of consumers feel that they are important, only 55% are willing to pay more for sustainable products.

In parallel, large investment banks are leaving climate coalitions, which may suggest that the themes of climate and sustainability-focused companies and products on their own are not enough to attract many investors.

As much as we need more funding and enabling policies, to make a dent in the green transition we will need a more nuanced understanding of end-users and buyers and more sophisticated strategies to reach them.

Market access for climate tech startups is a challenge

Most climate entrepreneurs are focusing on customers that are hard to reach and even harder to sell to.

Consider the typical buyers: energy and water utility companies, real estate and construction corporations, manufacturing and chemicals conglomerates, local and national government agencies, to name a few. The solutions we need are not simply disrupting, but reinventing and reworking the economy at a fundamental level, which can only be done by partnering and transacting with enormous public and private firms that operate with a slow and steady mindset, often having little to no incentive to change.

Securing partnerships with such massive players is at best laborious. Nina Ali, founder of First Matter, says ““As a general rule of thumb, the markets that climate tech companies are selling into are a lot more challenging. These customers are often slow moving and have a very low risk tolerance. For instance, electric and water utilities are important players for the green transition, yet the critical and non-competitive nature of their operations means they are more concerned with minimizing risk than keeping up with innovation. Such conservative companies don’t make big changes unless there is some form of pressure that is effectively forcing them to.”

Similarly, Ben Margolis, the head of the Maryland Energy Innovation Accelerator (MEIA) says “Climate tech is fundamentally different from other types of technology. For a while the tech sector has been able to operate at a loss and just wait for an acquisition. That can’t happen in climate tech. The business models and underlying assets are too different. Unprofitable and unproven technologies simply won’t be acquired. Entrepreneurs have to show traction.”

Navigating the bottlenecks is possible with the emergence of new strategies and talent

A decades-old cement manufacturer will not buy a low carbon solution simply because it is “good for the planet”. Any company that is successful in not simply building a competitive climate tech product but getting it into the market will need to know the ins and outs of their target customer and industry – their decision-making processes, risk tolerance, procurement procedures, as well as senior leaders who can be internal allies.

According to Ali, “Climate tech companies often overlook a significant number of key hidden risks, which are only known to people who have been in those industries for a long time. The most obvious risk is knowing how long it will take and the many steps that stand between you and a sale. Another example is that there is often an incumbent solution and even if a startup offers a better one, customers will only buy if there are conditions in place that create strong motivation. Even if that is the case, we have identified several other systematic risks that are typically not an issue for more conventional tech companies that can hinder success for a climate tech company.”

To help companies navigate these risks, Ali and her firm, First Matter, have pioneered the Goldilocks Startup Approach, a methodology to help climate tech startups create customized and effective commercialization strategies. Ali says “Navigating climate tech is certainly complex, but there are strategic considerations and proven steps that founders can take to find their focus, and when the stakes are so high, and resources are so limited, it’s important that climate tech founders find a product and market focus that will optimize for traction.”

According to Ali and the First Matter team, climate entrepreneurs need to decide on the optimal market strategy early on. For example, it can be tempting to be opportunistic and pursue a market due to the allure of a single enthusiastic champion customer instead of taking a step back to do a broader analysis with a longer-term view. By the same token, knowing your customer, their needs, motivations, decision processes and risk tolerance are critical. At a minimum, companies will need to have a solid team of advisors to understand and deliver on the relevant regulations (e.g. EU sustainable product regulations) and the required technical, quality, and performance standards (e.g. ISO, IEEE).

Accelerators are also taking note of these needs, and adjusting accordingly. To help founders find the right product-market fit, Margolis and MEIA bring in industry experts to work directly with founders as part of their “Energy Executive in Residence (EEIR)” program. He says, “our teams often have tremendous depth in their technology field but sometimes need specific industry expertise or support. The EEIR program was designed to do just that.” It’s a structure that helps early-stage entrepreneurs quickly understand their target industry and devise an effective approach to sales.

To move forward we have to go back to the basics

What could a climate tech sales playbook look like?

Each company will have to build its own strategy, but we can at least help in shaping the mindset that they need to be in, and how they should be thinking about their process.

First, much of the playbook will focus on hard asset infrastructure, sold to and adopted by large public and private organizations, which often have long, tortuous sales processes. In the words of Ali, “if startups are speedboats, corporations are cruise ships, and the corporations that climate startups have to sell to are freightliners.” Mammoth incumbent firms feel little incentive to change, and if they do it can take years to close deals.

Second, a suite of solutions is likely needed in the sales process, not just one core product. Margolis says that the most successful climate tech companies will offer customers a complete solution and not just a single product or technology. Case in point: Ion Storage – not just an electrolyte company but a storage solution for mobility applications. The markets will need innovations across the board, not just targeted inputs here and there, and any successful sales process will need to adopt this systems-thinking mindset.

Third, know the customer inside and out, and be hyper-focused on the problem that they need solved. No customers are asking entrepreneurs to solve climate change itself. For instance, a cement manufacturer needs to know if a decarbonized cement solution is cheaper and can last for decades. Policy incentives, voluntary frameworks and PR can be helpful forcing functions, but are no substitute for solving a real customer pain point.

Fourth, as Ali would say, find your “Goldilocks” – the customer and channel that is just right for your company to develop a sustained foothold in. There are methods out there to help companies build these inroads and not simply enter the market, but stay there. Focus on profitability from day one, conduct rigorous user discovery and build a team and network with strong connections into your target industry.

Last, but not least, we will need to be very intentional with building the climate tech salesforce. As much as we need more climate funding and policy, we need the know-how to get these solutions into the market. We will need specialized training and thought leadership, a stronger emphasis on developing sales talent for climate tech and more advanced programming to help get these solutions into the market. As Margolis says, climate tech won’t simply “happen” it needs to be “pushed into the market”.

No matter how urgent the climate crisis may be, or how much buying cleaner and greener products may be the “right” thing to do, few customers are motivated by these forces alone, if at all.

Without viable, tailored sales strategies that get these products into the market, and stay for the long-run, the progress and promise of climate tech will stay aspirational.

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