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Minimizing Talent Risk Critical to Success of Cleantech 2.0

“Deploy, deploy, deploy” is a mantra coined by Jigar Shah that’s gaining momentum as the climate tech and energy industries seek to scale their operations to meet the 2030 net-zero goals. With this Decade of Action in full swing, the urgency to implement carbon reductions in corporate and government operations is (finally) palpable and intensifying.

Money flooding the industry signals this social shift, including $94 billion of new private climate assets under management in just under two years, as Climate Tech VC reports. Such levels of funding, and the new scrutiny attached to it, means managing runway and scaling to commercialization are not the only operational risks companies face today. Instead, a company’s ability to acquire high-value talent, specifically in leadership roles, is proving to be the linchpin to minimizing the risks companies face in their success.

Keen Eyes On Cleantech 2.0

Investors have always focused their attention on the teams they invest in. This resurgence of funding in the sector, known as Cleantech 2.0, is elevating the attention put on the people managing the ESG commitments in Fortune 500 companies and the teams that make up promising startups. Beyond who these companies currently employ, a deeper understanding of an organization’s talent risk and roadmap for future hiring is now a critical factor in the conversation.

In Cleantech 2.0, we now have effective technology, innovative capital stacks, strong political will, widespread policy and social support, and increasingly diverse teams. Yet, one risk ignored by Cleantech 1.0 that continues to be overlooked by leaders today is the danger of neglecting talent risk.

We often hear of how the skilled labor shortage is one of the biggest challenges facing the U.S. economy. Highly-trained tradespeople are critical to creating the “boots on the ground” workforce for electric vehicle and battery manufacturing as well as solar panel and efficiency installations that help cut emissions.

However, we need to address talent risk from the top down, with experienced leaders who can deploy the massive flow of funding and create plans to achieve green initiatives—and get it right the first time under pressured deadlines.

Avoiding Hiring Mistakes

In Cleantech 1.0, the pressure to mitigate risks related to managing financial runway and commercial adoption was significantly less, as was scrutiny around execution as VCs and startups learned by doing. In past years and during bull markets, VCs often left very early-stage companies mostly to their own devices, particularly at Series A. As early rounds become much larger and follow-on rounds accelerate, investors in Cleantech 2.0 are weighing more heavily on acquiring high-value talent.

Hiring mistakes are costly from both time and money perspectives. They can shorten a startup’s runway and slow down commercialization. Often the pressure to “scale” can outweigh the process of building a strategic hiring plan for tactical,  strategic and opportunistic hires. In any industry, a hiring mistake can have a domino effect: when your company focuses on solutions that address the climate crisis or the ecosystem surrounding those solutions, hiring the wrong person, the right person at the wrong time, or losing a candidate with an out of touch offer can set the company—and the entire sector—back and have real implications on the capital market’s appetite for this sector.

Hiring issues only became more apparent with the Great Resignation in 2020, which led to the need for remote hiring and a general reassessment of priorities for large pools of talent. This once-in-a-generation opportunity to transform our world requires a bold approach and not “more of the same” type of reactive recruiting. We need to use our collective knowledge and experience to de-risk talent decisions to minimize execution risk in order to drive success and keep investors coming back for more, even when the broader capital markets may be wavering.

Talent advisory services can help ease talent acquisition questions and mitigate execution risk. While such services have long been reserved for private equity or public market environments, some providers are becoming more attractive for early-stage companies with an increased focus on emerging verticals and market segments.

Companies that succeed in Cleantech 2.0 will be those that address their talent risk from the top down, with experienced teams who can deploy the massive flow of funding and get it right the first time under pressured deadlines. Done well, this will support our collective efforts to reach the 2030 net zero goals. Done poorly, our collective ability to mitigate the worst effects of climate change is at risk.

It’s time to fix the broken recruiting system and look at talent as a currency to answer this problem. With the right strategic advisors and a toolkit to strategize and develop a practical hiring playbook, companies can avoid the same costly hiring mistakes because people, not technology, will be the catalyst in the race against climate change.

Paige Carratturo is the Co-founder and CEO of Sea Change, a talent venture firm that provides advisory, business intelligence and retained search services to climate tech investors, their portfolio companies, and global corporations focused on transforming executive teams to achieve a more sustainable industry.