Investment in climate science and technology is changing, no longer focusing solely on hardware equipment, and the value of software is becoming increasingly prominent. Blue Bear Capital is representative of this shift. Its software-centric investment strategy is unique in the climate, industrial and energy investment fields and has attracted attention in the industry. They believe that software can significantly improve hardware efficiency and be applied in a wider range of fields to create greater value.
In the world of climate tech, hardware devices have always been considered fundamental. But Blue Bear Capital’s investment strategy is rewriting this traditional understanding: in this era of Internet of Everything, the value of software is also indispensable.
"Almost all hardware development is inseparable from software support," Vaughn Blake, a partner at Blue Bear Capital, said in an interview. The investment firm is taking a software-centric approach that stands out in the hardware-heavy world of climate, industrial and energy investing.
Ernst Sack, a partner at the company, explained this concept with a vivid example: Solar farms will inevitably encounter equipment failures that lead to reduced power generation, but by deploying monitoring services such as Raptor Maps, operators can minimize losses. "If calculated based on only a 10% performance improvement, with more than 100 GW of solar power installed capacity, it is equivalent to an increase of 10 GW of power generation, which is approximately equivalent to the production capacity of 3-5 coal power plants or nuclear power plants. "
Blue Bear Capital sees opportunities that extend far beyond traditional environmentally friendly technologies. Sack emphasized that AI has an extremely wide range of applications, ranging from wind energy, water treatment, and refrigeration to steel, cement, and chemical production, as well as shipping and aviation logistics, and it can play an important role. "Pure hardware companies tend to serve only a single vertical, whereas software solutions are almost universally applicable."
In order to implement this investment philosophy, Blue Bear recently completed the raising of a US$160 million third phase fund. Investors include the McKnight Foundation, Rockefeller Brothers Fund, UBS and other well-known institutions. The fund plans to invest in about 15 companies, making initial investments of about $5 million each, while reserving $10 million for follow-on investments to maintain ownership.
Blue Bear adopts a unique investment strategy, applying late-stage investment thinking to early-stage investment. As Blake says: "In the markets we invest in, IPOs are relatively less likely, while strategic M&A or private equity-backed M&A are more common." While a single exit may not be as large as a traditional VC fund's targets, through With portfolio investments, they expect to deliver similar returns to investors.
This change in investment thinking not only reflects the new trend of climate technology investment, but also demonstrates the huge potential of digital solutions in combating climate change. With the perfect combination of hardware and software, the future of climate technology will be brighter.
Blue Bear Capital’s innovative investment strategy heralds new development opportunities in the field of climate technology investment. Empower hardware through software, improve efficiency, reduce costs, and ultimately achieve a more sustainable future. This is not only an update of investment philosophy, but also a new way of thinking about addressing the challenges of climate change.