Latest news with #NicoleLeBlanc
Forbes
01-07-2025
- Business
- Forbes
Global Arbitrage: Why Green Investing Needs An Ecosystem Approach
Nicole LeBlanc is a partner at Toyota's growth fund, Woven Capital, focusing on mobility, sustainability and smart city investments. When it comes to the climate tech investment landscape, we're no longer in the era of point solutions; we're in the ecosystem era. Across the globe, companies have deployed isolated technologies, such as EV charging stations, but the reality is that these end-point solutions often fall short because they lack coherent integration. So, what we're seeing now is the emergence of software companies, like WeaveGrid (one of our portfolio companies) and Monta, that are trying to smooth over these transitions and integrate disparate technologies. We're at an inflection point in clean energy, with multiple standards and technologies competing for dominance. I believe the most successful climate tech investors will be those who understand the unique contributions of different regions to the global ecosystem and how true success depends on geographic diversification. In short: There's an investment arbitrage opportunity in looking across markets and understanding which are artificially accelerating adoption through regulation, which are driven by economics and where gaps in funding create undervalued assets. In this arbitrage game, corporate venture capital (CVC) players may hold an advantage over traditional venture capital (VC) investors. The U.S. Market: Policy Uncertainty And Capital Reallocation In the United States, the climate tech investment landscape has been profoundly shaped by policy shifts. The Inflation Reduction Act created a surge of early-stage investment in sustainability-focused startups. New entrants, particularly circularity and recycling startups, used this capital influx to validate technologies through proof of concepts with various partners, while covering expenditures that traditional VC-backed startups couldn't. However, many now face a critical gap as U.S. policies shift while startups attempt to transition to the execution phase. This gap has widened as venture capital has dramatically shifted toward AI, leaving many promising climate tech companies struggling to secure growth-stage funding. Despite this reallocation of capital, though, certain climate tech segments remain fundamentally relevant regardless of policy changes. As one clean energy startup founder explained to me, the utilities sector continues to invest in innovative solutions because they face ongoing operational challenges that require technology solutions, regardless of whether government incentives are available. For these utilities, climate tech isn't about subsidies but solving real business problems. One of the most promising opportunities in the U.S. market lies in engaging traditional energy players, like oil and gas companies, in the clean energy transition. They have the capital, scale and infrastructure to make meaningful investments, particularly in technologies like blue hydrogen, which is derived from fossil fuels, allowing them to participate in the transition while leveraging their existing capabilities. While purists might prefer an immediate jump to green hydrogen, the reality is that transitional technologies may be necessary for the next five to 10 years to build the ecosystem for full decarbonization. The European Market: Regulation-Driven Innovation Europe presents a dramatically different investment landscape, driven primarily by stringent regulations that create real costs for noncompliance. Companies operating in Europe face substantial fines—potentially $100 million or more annually for some companies that can't meet emissions standards. These regulations effectively create an artificial market for clean energy. Many corporations will pay premiums for clean solutions because the alternative is expensive regulatory penalties. For CVCs, the European market offers a unique value proposition traditional VC's can't capitalize on: Investments in sustainability startups can directly help parent companies reduce regulatory fines and compliance costs. This isn't just about generating returns; it's about mitigating real business risks. Corporate investors can be kingmakers by not only providing capital but also connecting startups with business units that need their solutions to avoid costly penalties. Last year, approximately 50% of all funding for physical climate tech solutions came in the form of debt financing. I see VC becoming more concentrated in larger mega-rounds at the growth stage, with many boom or bust outcomes. In Europe, numerous Series A companies that raised funding in the last 12 months are now facing a softening VC landscape. Our analysis identified many companies like this in that region. With valuations remarkably low, this can allow CVCs to step in with favorable terms. The Japanese Market: Limited Early-Stage Ecosystem Japan presents yet another distinct market in the clean tech investment landscape. The country has relatively few early-stage investors focused on sustainability and clean energy, resulting in a limited pipeline of growth-stage companies. However, again, I think this scarcity creates an opportunity for corporate leadership in spaces where traditional VCs aren't active. Japanese corporations tend to take a longer-term view of sustainability initiatives, in my experience. Some timelines extend decades into the future, which requires laying groundwork far in advance, given the three- to four-year product design cycles in industries like automotive. This long-term orientation enables Japanese corporate investors to make patient capital investments that may not align with the typical five- to seven-year return horizons of traditional venture capitalists. As a prime example, within the automotive industry, development cycles can take years—by design rather than inefficiency—and as a result extending the time required to integrate into the system and become part of the production process. The challenge in Japan is not necessarily a lack of technology innovation, but what I see as insufficient support for startups to scale these innovations globally, which also creates an uphill battle for talent acquisition. CVC can play a crucial role in bridging this gap by providing funding as well as access to global markets and manufacturing expertise. A Global Investment Strategy The most successful investors in climate tech recognize that different regions complement each other in the ecosystem. Europe's regulatory environment creates demand for solutions that can then be refined and scaled in markets like the U.S., while Japanese manufacturing expertise can help reduce costs once technologies are proven. The traditional venture capital model is being tested by climate tech investments, which often require patient capital. This, as well as the current volatility in markets and technology preferences, makes flexibility crucial. This should extend to investment strategies as well. Geographic diversification can help create resilience in an uncertain technology landscape and provide multiple paths to exits and returns. The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation. 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Forbes
30-04-2025
- Business
- Forbes
What Startups Should Consider When Exploring Corporate VCs
Nicole LeBlanc is a partner at Toyota's growth fund, Woven Capital, focusing on mobility, sustainability and smart city investments. In today's economic climate, corporate venture capital (CVC) is gaining traction among founders as a critical investment partner. The numbers tell a compelling story: Although CVCs invest in less than a quarter of funding rounds, CVC-backed startups are twice as likely to raise follow-on funding and experience half the failure rate compared to companies backed solely by traditional venture capital (VC) firms. Given this, founders are increasingly faced with the decision of whether to turn to traditional VC or go with CVC investments. From my time as a partner at a CVC, I've found there are three key considerations startups looking at CVC backing should take into account. When evaluating CVCs, founders should first consider what I like to call the "phone-a-friend" advantage: access to the entire corporation's brain trust. Ask whether the CVC's parent corporation would provide access to its network of subject matter experts. This can help you gain invaluable insights that might otherwise take years to develop independently. This expertise can translate into real-world product feedback and validation for startups. The journey from innovative startup to market leader is fraught with challenges, particularly around scaling production and sales. As such, founders should ensure they're prioritizing CVCs that will provide access to mass production expertise, guidance and, yes, a bit of hand-holding. The firm you choose should be willing to educate and support you on the longer sales cycles that enterprises require. Founders who look for this form of strategic partnership can find valuable insight that helps them strengthen relationships with key decision-makers and accelerate market access. While many CVCs operate with similar return expectations as traditional VCs, CVCs typically have a parallel goal of seeking strategic value and insights from innovators while pursuing returns. This can translate into greater patience as CVCs seek to better understand new, fast-changing technologies and markets, which in turn can deliver greater payoffs across the parent company. Founders considering a CVC should ensure they're committed to long-term value creation over short-term gains. When navigating market turbulence and election cycles, sustained support can allow companies to extend their planning horizon, map out their road maps 18 months or more in advance and enable greater flexibility. The CVC landscape is undergoing a profound transformation. Historically viewed as slow-moving corporate extensions deploying small checks to buy strategic insights on the cheap, I'm finding that today's CVCs are becoming increasingly sophisticated operations that feature dedicated investment teams who combine startup speed with corporate muscle. This evolution is reflected in the numbers: In 2023, 12% of U.S. rounds were backed by corporate investors. This is a clear signal to me that CVCs are no longer just corporate innovation theater; they're becoming serious, committed partners in the startup ecosystem. For founders navigating today's fundraising environment, understanding the strategic value of CVC partnerships is more crucial than ever. Startups should ask themselves: Does the CVC's broader ecosystem offer potential benefits to my business, and has the corporate investor shown proven success with startups in similar industries? Not every CVC will be a fit for every startup. It's essential that startups look for CVCs that align with their target audience or market while ensuring there's no conflict of interest. Concerns around limited exit options—as CVC involvement can sometimes constrain future acquisitions or IPOs—and hesitation to share sensitive information with a potential competitor affiliated with a CVC are key points to consider. The best CVC-startup relationships are those where everyone shares the same strategic goal. Those startups that won't benefit from strategic insights or influential market connections may find more value in traditional investors. But in an era when capital efficiency and strategic growth matter more than ever, CVC partnerships may offer a compelling path forward. For startups that decide a CVC is the right choice for them, they can gain a partner who delivers value far beyond the check. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
