ARTICLE

Energize Presents: 10 Ways to Win in Climate Software

A playbook for sustainability SaaS entrepreneurs

by:
Tyler Lancaster
October 24, 2022

After years of being under-resourced, the field of climate technology – from EVs to carbon sequestration – is finally in full bloom. As entrepreneurs and venture capitalists flock to the space, barriers like soft costs, red tape and constricting finances still threaten the ecosystem. The market conditions have led our Energize team to one core belief: There has never been a better time for climate software businesses. At Energize, we firmly believe climate software can help solve, or at least minimize, the bulk of barriers the climate tech sector faces. Our team has spent nearly a decade building, backing and scaling climate software companies, witnessing firsthand the efficiencies and impact that SaaS can unlock:

- Climate software is squashing down soft costs for technologies like solar, EV charging, batteries, carbon removal and more by streamlining sales, automating design and optimizing O&M schedules.

- Climate software leveraging AI is compressing permitting review timelines for electrical transmission infrastructure from months or years to weeks or days.

- Climate software is activating massive amounts of institutional capital into climate tech by luring banks and financial institutions that are climate curious but lack the internal capability or confidence to underwrite financing for novel climate projects.

Source: NREL; Mckinsey; Rocky Mountain Institute; BNEF; Energize Analysis

In short, climate software can make otherwise lofty decarbonization goals viable today by dramatically accelerating the deployment of proven climate solutions. Like with money, there is a time-value of carbon: Greenhouse gases avoided or removed today are worth exponentially more than impact generated decades from now. And entrepreneurs, capital allocators and corporates have been catching on: real companies with real revenues are emerging in climate tech at a rapid clip, and we are seeing the long-underestimated total addressable market for climate software balloon. We believe climate software is poised to become a multibillion, if not trillion-dollar category in and of itself.

Yet founders and investors who don’t understand the intricacies of scaling a climate software company may struggle to translate this opportunity into commercial success. Climate software is different than traditional enterprise IT or consumer software, full stop. There are nuances in how to best develop, market, sell, price, implement and maintain climate software. Here is a taste…

Strategies that work in traditional software don’t always translate to success in climate software

Shaping your growth mindset:

- Traditional SaaS entrepreneurs might go for a triple-triple-double-double-double.

- Climate SaaS entrepreneurs oftentimes need to embrace being an enduring compounder to build a successful company.

Developing your sales strategy:

- Traditional SaaS entrepreneurs might employ a land grab strategy to attempt to blitz-scale a company.

- Successful climate SaaS entrepreneurs understand that hype cycles don’t drive sales cycles.

Sharpening your pitch deck:

- Traditional SaaS entrepreneurs might prioritize spending time at tech events like TechCrunch Disrupt.

- Climate software hustlers are more likely to be found at The NECA Show 2022 or World of Concrete.

Determining your pricing model:

- Traditional SaaS entrepreneurs might have success with a milquetoast user- or seat-based pricing model.

- Climate SaaS entrepreneurs can capture increased revenue by leveraging usage-based pricing.

Interested in learning more about our view on successfully scaling a climate software company? We polled our team on their biggest advice for climate SaaS entrepreneurs, and we're counting down their most common refrains in our new series: “10 Ways to Win in Climate Software: A Playbook for Sustainability SaaS Entrepreneurs.” We’ll dissect age-old enterprise software adages and propose revised best practices based on our experience helping some of the most successful climate software companies to date commercialize and scale. Each blog will reframe the traditional playbook to reflect climate SaaS's nuances – from tweaking tried-and-true approaches to completely dispelling the latest advice you’ve seen on VC Twitter.

First up? When SaaS Metrics Fail in Climate Tech: Climate software scales differently than traditional SaaS  – Coming soon on Energize's blog!

This article represents the views of the author and is provided for informational purposes only. It is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Readers should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities.  Information is subject to change based on market or other conditions.