ClimateTech's people problem
ClimateTech has become a major destination for venture investment, increasing 40x in the past decade. Indeed, ClimateTech was one of the few sectors that saw growing venture investment in 2022 amidst a wider slowdown. This is now translating into a track record for investors and founders, with 289 company exits since 2020.
However, talent is not moving into ClimateTech at the same pace and scale. This is true for both blue collar and white collar jobs in climate. The number of green contractors - such as electricians who can install heat pumps, car chargers, and induction stoves - is not growing enough to meet demand. Startups and larger corporations are also struggling with a shortage of white collar climate labor.
This creates a problem: While customer and investor demand for ClimateTech is booming, the sector’s ability to grow is constrained by staffing shortages. Momentum can only continue if the sector solves this conundrum. This will require us to find the next generation of climate leaders - many of whom will come from outside of the climate realm.
Much of the talent shortage will have to be filled with candidates from different industries. We believe this is to the benefit of ClimateTech. There is irreplaceable value that comes from different experiences. For example, a green finance founder with extensive experience in banking can benefit from a team member that has experience scaling a SaaS platform. This type of candidate will have seen different go-to-market strategies play out and have operated in highly-regulated environments before.
Lessons for founders and jobseekers
As we have hired across our companies, we have learnt some key lessons that improve the odds of success during the recruitment process:
- For companies: A major lever that ClimateTech companies can use to draw talent from other sectors is their mission. At Ezra, we regularly meet with candidates who have hit inflection points in their careers and want to pivot to mission-driven organizations. Many reflect that because start-ups are hard - hands-on, time-intensive, rollercoaster experiences - they at least want to know that they are putting their energy into something that will make a difference.
Companies can highlight the centrality of their mission during early conversations with potential candidates. This includes having a clear articulation of the organization’s vision and mission, how it links to climate impact, and how the candidate’s role will clearly support the organization’s work to make this a reality.
We have also found that a critical early-stage requirement for success is a clear hiring plan. This is particularly important as ClimateTech companies expand their hiring needs from technological expertise (e.g., solar, wind, and batteries) to new areas (e.g., fintech, AI/ML, SaaS, and marketplaces). It takes time to recruit key hires from non-climate backgrounds, and we have found that forward-looking recruitment strategies which factor in this complexity are essential to getting the right people on time.
While many start-ups recognize the important of hiring planning, they often fail to actually build one because of the day-to-day needs of the business. I cannot recommend enough the upfront time investment of putting together a hiring plan early - it saves founders time in the recruiting process, and can also be a key item to leverage in fundraising materials and other conversations.
- For climate-curious candidates: There are a number of climate-focused job websites that provide fantastic guidance for making the switch. Climate Draft, Climatebase, and My Climate Journey help talent branch into climate and highlight prospective employers.
Terra.do, another provider, offers courses to ramp up on the industry from exploring climate solutions, digging into the science, policy work, and more. The majority of candidates that I’ve spoken to who have used these courses appear to have a better understanding of where within climate they want to land, and have adjusted their job-seeking searches accordingly.
Candidates who are not yet actively looking for a full time role should also consider other ways to get involved with ClimateTech companies. This includes serving as an advisor (based on experience from other industries), an investor, or in a part-time capacity. I’ve seen a lot of candidates effectively use profiles on Climate Draft to create more visibility into what they’re open to and explore these alternatives.
Reflections from my own journey into the climate world
ClimateTech can be intimidating as an outsider - but I have learned to not be as bothered by this. I joined Ezra eight months ago with no previous experience in climate. It’s been an exhilarating journey so far and I’ve realized I have no shortage of curiosity when ramping up in a new space. I have learned to not be as intimidated by the scientific complexities of climate - no one expects you to know all the technologies or numbers. The climate umbrella is vast and there are many ways to make an impact. At the end of the day, everyone is working to make a difference and the climate community welcomes all types of questions and perspectives.
A new industry can be daunting, but I can say firsthand that the challenge is worth it! I’ve spent a significant amount of time speaking with candidates in the market who are also looking to make the pivot. It’s inspiring to hear people’s outlooks, opinions, and reasons for wanting to make the shift. It continues to be a driving force for myself and how we think about hiring at Ezra and our portfolio companies.