The $270 Trillion Opportunity That Awaits Climate Tech Founders

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The climate economy is entering a $270 trillion transition that could reshape industries from data centers to fashion. Capital is out there, but investors are cautious. Policymakers are sending mixed signals, and founders are caught between opportunity and uncertainty. At Climate Week NYC, investors and innovators agreed on one point. Climate technology is no longer judged only on the strength of an idea. Founders must now prove they have the leadership, financial discipline, and credibility to survive in an era of scrutiny and selective capital.

In no sector is this more visible than fashion. The industry sits at the heart of global supply chains and faces mounting pressure to cut emissions, shift to new materials, and prove it can scale sustainable solutions. For entrepreneurs, innovation is only the first step. What matters now is whether founders can demonstrate leadership in ways that attract and sustain investment. Federica Marchionni, chief executive of the Global Fashion Agenda, has been clear about what is at stake. “Now, I think that this is very crucial, so we have an updated ambition that builds on the Fashion CEO Agenda… it has a sharper sense of urgency. The cost of inaction now outweighs the investments required,” she said. Her words reflect the tenor of this year’s Climate Week. Progress is possible, but hesitation comes at a price.

The urgency is not limited to fashion. Todd Khozein, co-CEO of SecondMuse, reminded audiences that the climate economy is unlike anything humanity has faced. “McKinsey identified it as a $270 trillion economic transition between now and 2050. Almost certainly the largest economic transition humanity will have gone through by a country mile,” he said. That figure is staggering, but it is also a sign of opportunity. Founders who can show they are prepared for the transition are best positioned to secure their place in it.

What investors expect from climate tech founders

Investors are no longer satisfied with hopeful pitches. They want proof that companies can scale, manage risk, and deliver measurable impact. Large corporations are already modeling what that looks like. Equinix, a data center giant, now covers 96 percent of its operations with renewable energy and publishes detailed annual reports on its emissions and green bond allocations. That level of transparency has become the benchmark for governance and accountability. Startups cannot match Equinix’s scale, but they are expected to adopt the same discipline.

Fashion is also setting expectations through its trade groups. The Council of Fashion Designers of America (CFDA) has developed a Sustainability Resource Hub and a directory of vetted materials and suppliers. These tools are designed for brands, but they also serve as signals to innovators. To sell into the fashion supply chain, founders must align with these reference points.

For innovators, being investor-ready now requires more than technical breakthroughs. It means having a financial strategy, clear commercial pathways, credible reporting, resilient supply chains, and fluency in both industry standards and policymaking.

Financial realities versus the opportunity

Raising money for climate innovation has never been easy. Investors are careful about capital allocation, and many funds have slowed the pace of new deals since the peak of 2021. There is money available for the right opportunities, especially in Europe and North America. Early-stage ventures that combine grants, venture investment, and offtake agreements are still closing rounds.

The challenge is that innovation is expensive. Marchionni noted the reality bluntly: “Most innovators have a hard time at the beginning. The cost of creating new fabrics, new recyclable techniques, or the infrastructure itself is really not easy… that’s why policymakers need to incentivize innovation, because without early investment, many will fail.”

In other words, founders need to match their financial strategy to their stage of development. That means seeking non-dilutive funding where possible, building pilot projects that demonstrate commercial traction, and proving to investors that economies of scale will be effective.

For fashion startups, one of the strongest signals to investors is an offtake agreement. When a brand commits to buying a material over several years, it tells investors that there is a market ready to absorb production. Recent deals, such as Ganni’s multi-year contract for recycled polyester, illustrate how offtakes can de-risk innovation. Certifications and life-cycle assessments add further credibility. They help investors and brands evaluate whether the environmental benefits are real and whether the product can scale responsibly. For founders, securing these validations before seeking major investment is increasingly seen as a prerequisite.

A new economy requires a new level of data transparency

Another expectation is impact reporting that is specific, verifiable, and aligned with recognized standards. Investors want to know not just that a product is sustainable but how the company is measuring progress. Equinix, for example, publishes detailed greenhouse gas emissions data, water use metrics, and energy efficiency improvements across its portfolio. That level of transparency has become a model. Startups need not match the scale, but they must adopt the same principle: credible reporting builds investor confidence.

Investors are also scrutinizing the supply side. They want to know if a company can access feedstocks, manage yields, and deliver at cost. Materials companies have faced a rocky two years, with investment slowing in 2023 before rebounding in 2025. Founders who can demonstrate that they have reliable suppliers, realistic cost curves, and clear plans for scaling production are the ones most likely to secure funding.

Success also depends on understanding how to navigate the broader ecosystem. CFDA’s resources outline what brands look for in potential vendors. Founders who align their documentation and testing with these standards shorten the path to adoption. Khozein added that inclusivity itself can be a competitive advantage. He argued that “there’s nothing inherent about economic growth that says it needs to come at the expense of human dignity or the health of the planet. That was a choice we made. The economic argument is that inclusive economies create more creative, smarter products and services.”

Navigating Policy headwinds

Even with strong business models, founders face policy environments that can either accelerate or stall innovation. Rachel Kibbe, founder of American Circular Textiles, described how statutory language and regulatory practice often diverge. “There is a definition of recycling in statute that theoretically would allow for both chemical and mechanical recycling. But in regulatory implementation, agencies can be more specific. That back-and-forth over definitions has already slowed programs, precluding new technologies from meeting the goals set in legislation,” she said.

She also warned about the cost of fragmentation. “If we can keep the bones of things basically similar so that we’re all operating from essentially a level playing field, that’s the goal. Otherwise, every state creating a different program just makes all your lives more expensive and miserable.”

The motivations behind policymaking also complicate matters. “Policymakers in the U.S. aren’t necessarily looking at extended producer responsibility as something that addresses climate change. They’re hearing from local waste management companies that landfills are full and getting more expensive, and they want solutions that save them money,” Kibbe explained.

In contrast, Khozein pointed to state-level programs that demonstrate how policy can drive investment. He cited New York’s energy authority, which leverages every public dollar into fifteen dollars of outcomes, and Massachusetts’ $1.3 billion climate bill, which is projected to yield a sixteen-fold return within a decade. These models show that well-designed programs can create both environmental and economic value.

Founders and Investors May need to Rethink what success means

Leadership in climate tech also requires reframing how success is measured. For decades, growth has been defined by revenue and volume. Marchionni suggested a different benchmark: “My dream is that companies will be judged not only on how they grow their business in volumes, but on how much they invest into innovations and R&D. If we measured success that way, we’d have a much better system.”

Her vision reflects a broader trend. Investors are beginning to reward long-term innovation and impact alongside financial returns. For founders, that means making the case that R&D and measurable sustainability outcomes are integral parts of their growth story.

The path to investment is not easy, but founders can prepare by asking the right questions. Do they have a pilot project and at least one commercial pathway, such as an offtake with a brand? Are their unit economics and emissions data transparent and consistent with industry frameworks? Is their supply chain ready for third-party review? Do they know which funding instrument they need next and what milestone it will unlock?

Khozein’s advice to entrepreneurs is simple but pointed. “Focus on three things: focus on the economics, focus on the economics, focus on the economics. Prove how much money you are saving your customer,” he said. He added that emissions reductions themselves translate into savings. More efficient cars save drivers money. Air conditioning systems that run at higher efficiency save households money. The link between sustainability and cost reduction is often direct.

A moment of choice

Climate Week NYC made one thing clear. Good ideas are not enough. Investors want leaders who can combine vision with financial discipline, transparent data, resilient supply chains, and policy fluency. Fashion, with its complex networks and urgent sustainability challenges, is an early test case for what that looks like.

For founders, the opportunity is real. The cost of inaction is high, but the rewards of building companies that can scale responsibly are higher. Marchionni’s warning, Kibbe’s regulatory cautions, and Khozein’s economic framing all point in the same direction. Leadership is the differentiator. The climate tech founders and other entrepreneurs who embrace it will not only secure funding but also help shape the largest economic transition in human history.