Many green tech companies sell the mission: buy this because it is good for the planet. That works with customers who already care about the climate. They will pay a bit more, or put up with a product that works a bit worse. But let’s be real: most customers do not buy that way. They buy something if it costs less or works better.
I have sold environmental technology for ten years, and I ask one question about any green product. Would a customer who does not care about the climate still buy it? That’s the ultimate utility test. If it lowers their energy bill, breaks down less, or does the job better, the answer is yes, and the lower emissions come with a purchase they wanted anyway.
Some investors ask it more bluntly. Tim Schumacher is a general partner at World Fund, a climate tech fund in Europe, and he asks founders how they would sell their product to a climate denier. On Hugo Rauch’s podcast he explained why. The people who care about the climate are already on board, and the climate argument won’t win over anyone else. If the founder can still sell it, the product probably costs less or works better than what the customer has now.
Many green products cost more than the option they replace, and the customer pays that extra because the product is green. World Fund looks for the opposite: products where the green option is also the cheaper one. Rauch calls these startups that just happen to be green.