2023 was the hottest year on record, and 2024 continues to set new records (Delhi, India with a population of 34 million, hit a record high of 52.9C / 127.2F last month). Despite 28 years of annual COP gatherings, greenhouse gas emissions continue to rise globally. However, if we scrutinize the trend data below the top line, we can see promising progress with scalable climate solutions that are disrupting the status quo. Most of the necessary technologies for a net zero scenario exist today – now we must transition faster.
Pursuing Peter Drucker’s mantra “What gets measured gets managed,” the Valo team is keen to publish our 2023 Impact Report.
As we work with entrepreneurs and investors, this annual report will also be a work in process. As early-stage technology investors, we understand that our startups can only create enduring impact if they successfully “cross the chasm.” Our goal is to invest in climate solutions that have the right business model and necessary unit economics to achieve scale.
Valo’s mission is “investing for a brighter future,” and we do this by supporting entrepreneurs who are building critical solutions that will deliver both cash flow and a positive impact for humanity.
We are optimistic about human ingenuity, the abundant resources within our reach, and our species’ capacity for social cooperation and adaptation. Nevertheless, there is great urgency to the crisis we’re facing. Therefore, we are focused on climate solutions that can be commercialized today or in the near term.
Valo’s Impact Measurement Framework
Climate solutions encompass a broad and evolving investment landscape that is highly technical and requires collaboration across multiple stakeholders. We try to take a holistic, “systems thinking” approach to analyze technology benefits in relation to existing economic value chains and the potential catalysts for technology adoption.
To set our portfolio in the context of the broader climate tech ecosystem, we categorize our investments across three dimensions of impact that are aligned with the Impact Management Project’s “5 Dimensions of Impact.”
One end of each axis is neither better nor worse than the other, as we believe valuable and effective climate solutions are needed in each of these categories. For example, within Proximity of Impact, enabling solutions are typically digital and can therefore reach scale faster.
Within Degree of Impact, “evolutionary” solutions can benefit by leveraging existing assets, while “revolutionary” solutions can change the game entirely. Within Stage of Impact, we highlight how the business is delivering measurable impact as it increases in scale, reflecting our investment strategy to align purpose and profit.
Throughout this report, we have included data drawn from multiple sources including LCAs, customer case studies, and testimonials—all provided by our portfolio companies.
Necessity is the mother of invention
Capitalism as an economic model works. It can work even more efficiently as markets internalize the cost of negative externalities. We see Schumpeter’s force of “creative destruction” already driving the energy transition as global demand for electricity accelerates and the costs of renewables and batteries decline.
Investing in climate solutions is hard, but it offers multiplier impacts for future generations as well as exceptional wealth creation for the entrepreneurs and market participants who are prepared to lead or adapt.
As we put forward our impact framework and the progress our individual companies have made to date, we welcome your thoughts on this important and often qualitative task of impact measurement, especially for early-stage startups.
Optimistically yours,
-The Valo Team
