February 11, 2025

ZIRPed

Hi there, 

Has the ESG bubble popped? 

Mentions of ESG (environmental, social, and governance) on earnings calls hit a 4-year low last quarter:

Below, we break down: 

• How ESG skepticism is hammering tech companies
• Broader climate tech woes
• One bright spot: grid modernization

ESG skeptics

Skepticism around ESG initiatives is hitting the technology world in addition to the broader economy. 

For example, ESG-related tech markets collectively saw equity funding decline 54% year-over-year (YoY) in 2024.

Deals to carbon offset marketplaces and carbon management & accounting platforms slumped vs. their 2021 and 2022 peaks. 

See our previously published ESG market map for investing and banking here.

Factors including underperformance of ESG equity funds, unrealistic targets, and the changing political environment have chilled the movement. 

Some also more pointedly argue that ESG was a ZIRP phenomenon and/or that the days of corporate virtue signaling are over. 

Regulatory rollback under DJT in the US will likely accelerate this.

Climate tech's doldrums

ESG is a sub-theme in the broader climate tech sector, and the news ain’t prettier there.   

Climate tech saw a dramatic pullback across deals, funding, and exits in 2024. 

This coincided with high-profile bankruptcies of established climate tech startups like battery manufacturer Northvolt. 

Turbulence among public companies like Lilium and Arrival also highlighted the commercialization challenges facing the capital-intensive sector. 

Meanwhile, M&A activity dropped to its lowest level since 2020. 

What used to be a strategic imperative has dropped way down on the list of priorities.

Is the artist fka green tech and then climate tech in need of a rebrand?

Grid modernization momentum

One notable counter-trend: companies modernizing the power grid to meet AI’s energy needs have maintained momentum based on mega-round activity and Mosaic health scores. 

For example, Crusoe raised $600M at a $2.8B valuation in October to support its efforts to use waste natural gas to power large-scale data centers.

Nvidia invested in the deal, reflecting big tech’s interest in solutions targeting AI data center demands.

Get the full report on the evolving State of Climate Tech here. 

TLDR — Tech loves drama, right?

• Bidding war: Elon Musk and a group of investors made a $97.4B bid to acquire the nonprofit that controls OpenAI, escalating his legal and public battle with Sam Altman. The unsolicited offer complicates Altman’s efforts to convert OpenAI into a for-profit company. After Altman joked on X about buying Twitter for $9.74B, Musk fired back, calling him a “swindler.” We tend to agree with X user @wallstreetkarl that this should be solved via “an oil wrestling match."

Source: X

• Built different: Figure AI CEO Brett Adcock took to X to announce the company was ending its collaboration with OpenAI after a “major breakthrough” in humanoid robot intelligence. Adcock said Figure AI’s models are now built entirely in-house, making external partnerships “irrelevant.” This also occurred against the backdrop of OpenAI potentially jumping into the humanoid robot game on its own.
   
• In AI we trust?: Mistral AI CEO Arthur Mensch has dismissed the hype around artificial general intelligence (AGI), calling it a “very religious” obsession among tech leaders like Elon Musk and Sam Altman. Mensch, an atheist, argued that AI surpassing human intelligence is more myth than reality. While skeptical of AGI, Mensch does believe that AI-driven job disruption is coming “not in 10 years but more like in two."
   
• Bing-ing down the hammer: Microsoft is facing a French antitrust probe over whether it unfairly weakens search results for smaller rivals using Bing’s search technology. The investigation, which could lead to formal charges and fines, is part of France’s broader crackdown on big tech. While Microsoft has avoided major EU antitrust actions in recent years, regulators are already scrutinizing its bundling of Teams with Office products.

I love you.

Anand

@asanwal 

Co-Founder & Exec Chair

P.S. Applications are open for the 2025 AI 100. Submit here before March 13.

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