Climate ventures face a scale-up gap, foundation chief says
Shell Foundation CEO Jonathan Berman says distribution, cost and finance now limit climate technology more than invention.
By Sofia Marchetti · World Affairs Correspondent
4 min read
Climate technology is reaching fewer customers than its backers hoped, even after years of investment in products that can cut emissions and raise incomes. Jonathan Berman, chief executive of the Shell Foundation, said the harder task now is building the channels, prices and financing that can move working products into mass use.
Berman, who leads the UK-registered charity, made the case in a Fortune commentary tied to London Climate Action Week. He said the event opened with a stronger demand for evidence of deployment and less patience for climate pledges that do not lead to products in the field.
According to Berman, the past decade produced useful climate tools, including solar-powered cold storage for smallholder farmers and electric two- and three-wheelers that cost less to operate than petrol vehicles. The problem, he wrote, is that too few of those technologies have moved from pilot projects to broad markets.
Startup funding data show the size of the scale-up problem, Berman said. Stripe has reported that about one-third of U.S. startups that raise seed or pre-seed funding go on to raise a Series A round, while analysis cited by Berman found that fewer than one in 20 seed-funded companies in Africa reach Series A; in one 2022 cohort, 5 of 105 companies had done so within three years.
Berman said Shell Foundation has backed climate ventures for more than 20 years, but the number that have reached 1 million customers can be counted on one hand. He argued that a functional prototype and a company serving large numbers of customers require different kinds of work.
Distribution, pricing and credit
Berman identified three barriers: reaching customers, lowering entry costs and financing growth. He said distribution must be designed around last-mile sales channels, service networks and supply chains, especially for customers in lower-income or harder-to-reach markets.
As an example, he pointed to Shell Foundation’s work with Indian delivery platforms Zomato and Swiggy, which he said have 500,000 riders each, to deploy electricity-free cooling vests for riders in 14 cities. He also cited ClimaFii, an alliance between Shell Foundation and Accion, as a way to work through microfinance institutions that already serve vendors and small farmers.
On cost, Berman said some proven climate products remain out of reach because customers cannot afford upfront prices. In India’s electric mobility market, he said battery-swapping models from companies such as Kinetic Green and Sun Mobility can separate the battery from the vehicle purchase price, allowing drivers to pay for energy as they earn and cutting the entry cost of an electric three-wheeler by as much as half.
He also cited S4S Technologies, an Earthshot Prize winner, which uses collective ownership by women micro-entrepreneurs to operate solar drying units that preserve farm produce and turn waste into revenue.
Financing remains another constraint, Berman said, because customers may need credit to buy products and companies need capital to expand. He said many ventures are beyond the grant stage but still too risky for mainstream investors.
Berman said catalytic capital can take early losses and attract larger private commitments. He pointed to the Mirova Gigaton Fund and a green-credit facility with India’s SIDBI as examples, saying the goal is to make private investment possible rather than replace it.
Philanthropy’s role
Berman said philanthropy should not try to fund the climate transition through grants alone. Its role, he argued, is to take early risks that commercial capital will not take and accept that successful companies and investors may make money from those bets.
Shell Foundation says it has helped mobilize more than £10 billion in capital and improved the lives of more than 288 million people. The foundation’s 2024 annual report said its portfolio mobilized more than $300 million that year, with more than 80% coming from private sources.
Berman said markets tend to reach easier customers first, leaving smallholder farmers, informal workers and women among the groups served later. He urged funders to keep backing new technology while also investing in business models, distribution systems and finance structures that can get existing products to more people.
This story draws on original reporting from Fortune.