Playbook

Adaptation and Resilience Innovation Playbook

The Tailwind Adaptation & Resilience Innovation Playbook is a first-of-a-kind report that overviews current supply, demand, and capital trends in the climate adaptation innovation space. In this Playbook, we map the innovations, capital flows, and customer needs shaping this growing investment category. Our analysis of the startup and investor ecosystem, developed in partnership with Vibrant Data Labs, provides the first-of-its-kind detailed analysis of startup activity and funding trends for adaptation startups.

Download the Executive Summary and full Playbook, watch the webinar.

Demand 

Our findings demonstrate the demand for adaptation and resilience solutions exceeds $1.4 Trillion annually. 

• $737 B from global governments 
• $647 B from consumers (both households and smallholder farmers)
• $58 B from US corporations 

Supply 

• Between 2019 – 2023 pure play adaptation startups made up 12% of all funded climate tech startups, but only received 3% of total funding ($4.5 B). 
• Dual adaptation + mitigation startups constituted 30% of all climate tech startups, but received only 18% of total funding ($26.7 B), bringing the total number of dual adaptation + mitigation startups (in its broadest interpretation) to 42% of all funded climate tech startups. 
• Within the pure play adaptation startups, we found investments overwhelmingly went towards Digital Solutions & AI (44%) and Earth Observation & Sensors (27%).

Capital Gap 

Our research indicates adaptation companies are facing two major capital gaps: 

• Capital Gap 1: Like the initial capital gap in climate tech 1.0, we see a dire need for more funds at the pre-seed and seed stages. This represents the most serious capital gap for A&R companies.
• Capital Gap 2: While the early venture and late venture funds available trend upward from the pre-seed + seed funding gap, venture capital volumes pale in comparison to the VC dollars available to pure play mitigation companies. More venture funding is needed to scale adaptation companies.

Recommendations

The Playbook outlines a set of recommendations for funders, entrepreneurs, corporations and policymakers interested in growing climate adaptation innovation to meet humanity’s growing demands. Here are a few highlights:

For Entrepreneurs 

We know many solutions are needed to make society and the economy resilient to climate change. Investors will do good business with Bright Spots and Hidden Gems. Our advice for entrepreneurs? focus on Hidden Gems and Blind Spots. 

Bright spots = Places to improve on existing tech (medium innovation need)​	Hidden gems = Places to create and scale new businesses (medium innovation need) ​	Blind spots = Places to advance research and create and scale new businesses (high innovation need)​
Ex.Grid resilience, crop editing, Improving upon existing indoor cooling technologies ​	Ex. Creating solutions that make ground transport resilient, flood-resistant materials​	Ex. Creating new solutions for post-disaster recovery​, climate health solutions

For Funders

• Philanthropic and Public Funders – Focus on filling capital gap #1 and making sure grants and catalytic capital exist for adaptation solution providers at the pre-seed and seed stages. 
• Private Investors – Focus on developing an investment thesis that includes climate adaptation and directing more capital into early and late venture rounds for adaptation companies. 

For Policymakers 

• Pass Resilience Focused Policies – Make sure whether it’s at the national, state, provincial, or city level(s) that we have robust legislation that ties adaptation and resilience goals to regulation and public investment. 
• Fund Innovation Programs – Fund research, incubators, accelerators, and direct funding programs for climate adaptation startups and innovators. 
• Guide Standards Development – Drive the development of definitions, metrics, and standards that can be used to ensure the performance and impact of adaptation and resilience solutions. 

For Corporations

• Protect your business – Make sure your company has robust climate risk monitoring and invest in physical risk solutions to protect your business and the communities where you operate from the impacts of climate change. 
• Remain competitive – Engage in external and internal innovation to build and acquire new adaptation solutions that can help your business meet the growing demands of governments, consumers and the private sector.

Credits

The Taxonomy for Adaptation and Resilience Investments was developed by Tailwind with funding and support from Autodesk Foundation, Breakthrough Energy Fellows, Battelle, Lyda Hill Philanthropies, Shockwave Foundation, Vibrant Data Labs, C2ES and Fors Marsh.

Downloads

The following documents can be downloaded.

• Full Playbook (112 pp)
• Executive Summary (12 pp)
• Webinar deck (30 pp)
• Webinar recording (video)

Contact

Feedback and questions are welcome: info@tailwindclimate.com or via our Contact Form.

Citations

This work should be cited as: Tailwind (2024). The Adaptation and Resilience Innovation Playbook.