Rajat Khare on Why Clean Tech Is the New Frontier for U.S. Venture Capital
Charlie
Rajat Khare, an IIT Delhi alumnus, venture capitalist, and deep-tech investor, argues that clean tech has become the most compelling arena for U.S. venture capital. His assessment follows a shift in global capital flows: while Europe long led climate-sensitive investing, the United States now tops global clean-tech VC, aided by policy tailwinds and rapid commercialization across energy and industrial technologies.
What’s Driving the U.S. Upswing
Khare points to a decisive policy catalyst: the Inflation Reduction Act (IRA), which earmarks $370 billion for climate and clean-energy programs. The legislation has energized investment across electric vehicles, battery manufacturing, and green hydrogen infrastructure, drawing significant private capital into supporting technologies and enabling supply chains.
At the same time, Europe’s VC slowdown in 2023—shaped by political and economic uncertainty—has pushed global investors to reassess strategy, with many now viewing the U.S. as cleaner, clearer ground for scaling climate solutions. According to Khare, these dynamics have elevated the U.S. to the largest recipient of clean-tech venture capital globally, surpassing Europe and China.
A Clear Opportunity—With Real Constraints
Khare’s view is not merely celebratory. He underscores that clean tech still accounts for less than half of global deal count, which means competition for quality assets is intense and selectivity matters. Macroeconomic cross-winds—interest-rate pressure, trade frictions, and supply-chain disruptions—add execution risk for founders and funds alike. In addition, regulatory complexity in U.S. clean energy (permits, incentives, interconnections) can slow timelines and complicate diligence.
For founders, the scale-up gap is very real: many early-stage companies struggle to finance the move from proven pilots to bankable commercial projects, where capex requirements are heavier and risk underwriting is more demanding. Yet Rajat Khare maintains that the long-term growth trajectory remains intact.
Where Momentum Is Building
The article highlights market segments that have accelerated thanks to the IRA and subsequent private-sector activity:
EVs & Batteries: Advances in battery storage are lowering costs and improving range—key enablers for consumer adoption and grid-scale integration.
2. Green Hydrogen: Projects are gaining traction as a lower-carbon alternative in hard-to-abate sectors.
Clean-Energy Manufacturing: Incentives are catalyzing domestic production, which in turn strengthens supply-chain resilience around core clean-tech components.
Guidance for Investors
From Khare’s perspective as a rajat khare deep tech investor and rajat khare investor active in climate-aligned technologies, a few principles stand out:
Balance optimism with discipline. The policy super-cycle is powerful, but underwriting should stress-test sensitivity to rates, supply chains, and permitting timelines.
Prioritize commercialization pathways. Favor teams that can bridge the gap from pilot to scale using credible offtake, manufacturing plans, and project finance structures.
Track global dynamics. Even with U.S. leadership, clean tech is global—with advances in Europe and Asia shaping competition, cost curves, and markets.
Resilience Through Volatility
Notably, the U.S. clean-energy ecosystem expanded through the pandemic and recent geopolitical shocks, aided by IRA-linked tax incentives and grants that reward lower emissions and efficiency gains. This resilience, Khare indicates, is why many institutional LPs and strategics continue to increase exposure to the category despite cyclical noise.
Outlook
The rise of Rajat Khare Clean Tech theses within U.S. venture capital represents more than a thematic wave: it is a structural reset in how innovation, manufacturing, and infrastructure deployment are financed. For Rajat Khare Venture Capitalist priorities, that means measured conviction—backing platforms with durable policy alignment, defendable technology, and credible scale economics.
If investors stay disciplined on risk and rigorous on execution, the next decade of U.S. clean-tech could deliver both impact and returns—and, as Khare frames it, set a long-term foundation for competitive leadership in climate technologies.
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