It's difficult to build high-growth clean tech companies using venture capital: Despoiling the planet has a much higher return on investment than saving it.

Twenty years ago, there were high hopes for companies aiming to mitigate environmental impacts, but an extended recession, China's dominance over solar power manufacturing and low natural gas prices were just a few factors factors that undercut investor expectations and left the industry hobbled for years. Many vaunted products and technology never made it to market.

A 2016 MIT Energy Initiative working paper found that VC is "the wrong model for clean energy innovation." It takes years to create economies of scale, and not every investor is willing to foot the bill for a decade of R&D.

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"If a new and more diverse set of actors avoids the mistakes of the clean tech VC boom and bust, then they may be able to support a new generation of clean tech companies," the paper concluded.

That hypothetical cohort is now a reality: A McKinsey report found that climate tech "could attract $1.5 trillion to $2 trillion of annual capital investment" by 2025.

Senior Climate Writer Tim De Chant spoke to five investors to get their take on the state of the industry in Q3 2022. Their answers shed light on how VCs are reacting to the downturn, which tech may have the greatest potential for impact and what they're looking for at the moment:

• Pae Wu, general partner, SOSV; CTO, IndieBio

• Christian Garcia, partner, Breakthrough Energy Ventures

• Rajesh Swaminathan, venture partner, Khosla Ventures

• Andrew Beebe, managing director, Obvious Ventures

• Amy Burr, president, JetBlue Technology Ventures

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Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist