High-Octane Capitalism Meets Climate Change

(Bloomberg) -- In July 2020, Silicon Valley investor Chamath Palihapitiya tweeted a request. He wanted help identifying a framework he might use to spend a “few billion” dollars buying up companies, whose profits he could then invest in decarbonization, climate change and sustainability efforts. The chosen finalist could help implement it. 

What Palihapitiya was seeking was essentially a climate-oriented version of what Warren Buffett is most famous for: Berkshire Hathaway, a holding company of stable assets that acts as a platform for other investments. But while Palihapitiya received more than 1,500 submissions, his holding company never came to fruition.

“What I came to the conclusion of is, there is no anchor asset for me today,” Palihapitiya says on the latest episode of Bloomberg Green’s podcast. “The reason we haven't started the Berkshire for climate is we haven't found our Geico.”

Palihapitiya did, however, start to learn about clean tech by investing in it — and the learning curve was not cheap. “I jump in with my two feet, I make a bet. I learn,” he says. “Sometimes I jump in with $10 million, sometimes I jump in with 50, sometimes with 100. Trying to learn, trying to make sure that that was a good investment, trying to reinforce my body of knowledge.”

Palihapitiya is one of many venture capitalists increasingly interested in climate, but don’t mistake his interest for activism. As the stock market contracts and interest rates rise, funding from the US Inflation Reduction Act means climate tech that tackles hard problems may be “recession-proof.” In other words: Palihapitiya is focused on the bottom line. 

“People ask me: Are you motivated to solve the climate problem because of your love of the environment? I could give you the virtue-signaling answer … But that's not really where my motivation comes from. My motivation is economic,” he says. “The economic motivation that I have is that there is going to be trillions of dollars of value that will be redistributed over the next decade or two.”

You can listen to the full conversation with Palihapitiya below, and read a full transcript here.

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