Meet McKinsey's Newest Partner That's Changing Climate Tech

Climate technologies are crucial in the battle against climate change.

Research conducted by The Climate Brick suggests that climate technologies have the potential to mitigate 90% of anthropogenic emissions globally by 2050.

Furthermore, McKinsey projects that a successful transition will necessitate the establishment of 1,000 climate tech unicorns — start-ups valued at US$1bn or more — and 300 climate tech decacorns — start-ups valued at US$10bn or more — by 2030.

Nevertheless, nurturing an innovative idea into a scaled-up solution often presents a complex challenge for climate tech companies.

To tackle this issue, a group of venture capitalists — with assistance from McKinsey — has developed The Climate Brick.

What is The Climate Brick?

The Climate Brick is an open-source guide designed to assist climate tech entrepreneurs in navigating the intricate landscape of funding and scaling.

A group of venture capitalists examined the trajectories of 3,000 climate tech start-ups and conducted more than 100 interviews with a diverse range of stakeholders, with their findings informing and shaping the guidance provided by The Climate Brick.

It outlines seven distinct scaling and fundraising journeys based on factors such as speed to scale, risk profile and capital sources. Each journey — or 'brick' — offers specific guidance on financial, commercial and product dimensions, along with critical unlocks for success.

The manual aims to save time for climate tech companies in fundraising, enabling them to focus more on scaling their businesses. It serves as a comprehensive resource for entrepreneurs, investors, universities, established companies, and policymakers in the climate tech ecosystem.

Sandra Malmberg, a Founding Creator of The Climate Brick, says: "Some of the smartest, most brilliant brains in the world are working on climate technologies, but they spend so much time trying to understand what they need to deliver on in order to unlock financing.

"Common questions that we get from climate tech entrepreneurs are: 'How do I raise the next round?' and 'What are the most critical milestones on our scaling journey?' Fundraising is a dance — particularly in the relatively new climate tech space, where it can take months to find the right match between an investor and a founder.

"So we thought, 'What if we could help companies save time on fundraising, so they can shift that time toward scaling their business instead?'"

The Climate Brick's advice for burgeoning climate techs

1. Identify your journey: Companies should determine which scaling and fundraising journeys best fit their profile.

2. Focus on critical unlocks: Each journey type has three 'critical unlocks' — something The Climate Bricks underscores as the most important factors for successful fundraising and scaling. For example, gigascaling companies should focus on developing a clear road map to cost competitiveness, demonstrating the ability to execute and scale rapidly, and securing committed offtakes.

3. Optimise the capital stack: This includes considering non-dilutive financing options, which can significantly impact a company's trajectory.

4. Hire specialised talent: Rokas Peciulaitis, fellow Creator of The Climate Brick Founding and Founder of Contrarian Ventures, says: "Due to the complexity of a climate tech company's capital stack, compared with that of a traditional software company, you need a highly experienced CFO with a strong understanding of financial structuring."

5. Adopt a collaborative approach: Climate tech requires a more collaborative mindset than traditional tech sectors. Rokas continues: "The climate tech space requires a more collaborative approach. It's not so much a question of 'move fast and break things' but rather 'move fast and fix things — together.'"

6. Use The Climate Brick as a guide: Founders can use the manual as a checklist for financing and operational milestones, helping them avoid common pitfalls and make informed decisions about building their capital stack and prioritising actions.

Ted Persson, another Partner at EQT Ventures and The Climate Brick Founding Creator, says: "Many founders have told us this is a badly needed initiative of immediate value to them. They use it as a checklist for financing and milestones of how to run the business operationally. Several late-stage founders have said they would have wanted something like this when they started off, to avoid many of the pitfalls along the way."

7. Engage with multiple stakeholders: The climate tech journey involves many stakeholders beyond just founders and investors. Companies should engage with universities, supply partners, regulators, grant providers, debt providers, project funders and offtakers.

8. Leverage grants and public funding: This is especially true for companies working on novel technologies, ensuring grants and public funding is a critical step in the early stages.

Building a sustainable future brick by brick

Sandra says that The Climate Brick, similar to the start-ups it assists, intends to consistently update and refine the manual to ensure it effectively serves its intended purpose.

"We don't see this as a project with a start and an end," she explains. "We want it to become a movement. We want the manual to be for the community and also by the community — an independent and entrepreneurial co-creation to deliver on our North Star, which is to bring as many climate technologies to scale as possible."

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