The 1990s dotcom era left an unforgettable mark on economic history: a frenzy of innovation, eye-watering valuations, and a spectacular crash that wiped out most of the startups in the early 2000s.

Today, Climate tech is a promising sector to decarbonise industries, reimagine energy systems, and rescue the planet. Venture capital inflows hit $70 billion in 2023, and startups like Bend and Satgana are becoming household names in sustainability circles.

The Echoes of the Dotcom Era

The dotcom boom was fueled by two forces: 

Technological disruption & Irrational exuberance

Investors invested big in the internet’s potential and often ignored its shaky business models.

Climate tech today mirrors this dynamic. Startups are having more breakthroughs in AI, renewable energy, and carbon accounting to tackle emissions, but not all solutions created are equal.

Take Bend, a fintech startup that automatically offsets corporate carbon emissions by linking spending to verified climate projects. Its seamless integration with financial systems and real-time dashboards exemplifies the sector’s potential to embed sustainability into everyday operations.

Similarly, Satgana, a €30 million climate tech VC fund, is backing startups that blend radical innovation with social equity, such as African-led clean energy ventures. 

These companies solve tangible problems, unlike many dotcom-era ventures that prioritised growth over viability.

However, red flags persist. The Exploding Topics report notes that the ClimateTech market could reach $182.5 billion by 2033, but valuations are already stretching logic.

The Case for Cautious Optimism

Climate tech’s strongest argument lies in its existential urgency. Unlike the speculative internet startups of the ’90s, Climate tech addresses a non-negotiable crisis.

With governments mandating net-zero targets, accountability being demanded by consumers, and corporations facing mounting pressure to decarbonise.

This triad creates a resilient demand floor.

Policy tailwinds are also accelerating adoption. The EU’s Carbon Border Adjustment Mechanism and the U.S. Inflation Reduction Act are funneling billions into clean tech.

In India, startups like Terrablu Climate Technologies and Climacrew are utilising federal subsidies to scale carbon credit platforms and seaweed farming, a natural carbon sink.

The Perils of Overpromising

For all its promise, Climate tech risks repeating dotcom-era mistakes. 

  • Valuation inflation is rampant: early-stage climate startups now command premiums of 20-50% over SaaS peers, despite longer paths to profitability.
    The GSMA ClimateTech programme warns that digital solutions in low-income countries often struggle with fragmented markets and funding gaps. Even well-funded ventures face technical hurdles.
  • Consider carbon removal technologies. While startups like Proclime tout AI-optimised reforestation, scientists caution that natural solutions alone can’t offset current emission rates. Similarly, hydrogen energy startups face stiff competition from cheaper renewables.
    The sector’s complexity - spanning hardware, software, and policy - means many solutions will fail to scale.
  • Another risk is greenwashing. As corporations rush to meet net-zero pledges, some may prioritise PR-friendly offsets over systemic change.
    Bend’s model, while innovative, could inadvertently let companies "buy" sustainability without reducing actual emissions. 

Without rigorous standards, Climate tech risks becoming a fig leaf for polluters.

So, how can Climate tech avoid the dotcom bust’s fate?

Three lessons stand out:

  1. Focus on Unit Economics: Startups must prove their solutions are not just eco-friendly but also economically viable. Dhartie Net Zero, which monetises energy efficiency projects for Indian SMEs, exemplifies this balance.
  2. Collaborate, Don’t Silo: The GSMA’s ClimateTech initiative highlights the need for partnerships between tech firms, governments, and NGOs to address systemic barriers like energy poverty.
  3. Embrace Transparency: Platforms like Bend’s emissions dashboard and Viviid Emissions Reductions’ carbon credit traceability tools build trust through data visibility.

A Boom With Boundaries

ClimateTech is neither a guaranteed goldmine nor a doomed bubble. It’s a sector where stakes are incomparably higher than in the dotcom era. Failure here is financial and planetary.

The startups that survive will be those connected to innovation with pragmatism, and equity with profitability.

Many ClimateTech startups are moving beyond hype and starting to deliver real results, though the landscape is still mixed. Companies like Antora Energy and Fervo are deploying commercial-scale solutions: thermal batteries and advanced geothermal drilling, which demonstrate genuine technological progress.

The sector is growing fast, with a projected market value of $79.45 billion by 2029, but funding is becoming more selective as investors demand clear paths to profitability and scalability.

While some startups still overpromise, the days of easy money for vague green ideas are fading. The focus is shifting toward solutions that can prove both environmental and commercial impact. Challenges remain, especially in mainstream adoption and scaling, but the sector is maturing.

As Romain Diaz of Satgana aptly states,

“This isn’t just about returns; it’s about rewriting capitalism’s rules”

The road ahead is fraught with challenges, but the alternative inaction is unthinkable. For investors and innovators alike, the mantra should be clear: optimism, yes, but tempered with relentless scrutiny.

Edited by Annette George