The Acceleration Problem Nobody Is Pricing

The road out of the death spiral begins at Pre-seed

A big part of my career has been about deployment, from trying to figure out how a chemical manufacturer with output in the range of hundreds of thousands of tons per year can pivot to being a “Vitamin C Company” to trying to scale a gas turbine MRO company within the constraints of a supply chain that was at least 20 years behind armed with nothing but my paltry bank account and a lot of raw ambition. It’s not a surprise that many of my best investor friends in the sector aren’t “techno-optimists” in the traditional sense but more deployment-centric. Why do I still choose to invest in Pre-seed rather than in Seed, Series A, or beyond? Because I believe there are still fundamental structural issues with the capital funnel.

In a world where even traditional SaaS funds have long acknowledged that they have turned from 10-year funds to 10+2 or even 3, somehow most climate capital pathways, and their associated early-stage financing structures, are still constructed around a 7 to 10-year exit horizon. Founders and funders look at headline-grabbing average funding round sizes and valuations as a base template rather than a thoughtful process based on their own current needs and validation points.

A Climatetech startup and a pure B2B SaaS or now an AI startup can both be venture-backed, but ultimately they’re completely different assets. Treating them as if they’re the same class of investible assets creates, first, broken handoffs between early-stage capital and later-stage financing, and, second, a push to commercialization points before a sound technological foundation is built.

Even if you manage to raise successive funding rounds despite these challenges, the core scalable competencies you’re supposed to be building have been eroded by a death spiral of higher-cost acquisition of lower-margin customers in indefensible market segments. This will be particularly problematic as AI adoption accelerates.

Speaking of AI, the rapid build-out of AI infrastructure over the past few years and its gravitational pull on the Climate and Energy sectors are undeniable. It also casts a glaring spotlight on the assumption embedded in any categorical argument that “we have everything we need right now, so we should be directing all of our capital towards deployment, not innovation.” That assumption is that the world will stay relatively the same, with any changes incremental.

What has actually proven true is that the boom-and-bust cycles that dotcom and crypto went through are no longer confined to just “numbers go up, numbers go down” on digital ledgers, but now persistently influence physical supply chains and infrastructure across the world. Ignoring this accelerating influence (before you accuse me of being an AI maximalist, remember, acceleration goes both ways) and hoping that all future issues appearing at an accelerated pace can be solved by adopting existing solutions in new ways, like repurposing bitcoin miners or supersonic jet engines, is just too reactive an approach.

These are not problems that can be fixed from the top down. They have to be set right from the foundation, before the fundraising cycle becomes an all-consuming vortex in the middle of something that can genuinely transform an entire industry. That’s why I invest Pre-seed.