Welcome to “10 Ways to Win in Climate Software,” an Energize series defining the playbook for sustainability SaaS entrepreneurs. In case you missed it, catch up on the series opener and the first four Ways to Win in our countdown:
At Energize, we believe climate software startups can create invaluable market footholds by adhering to the mantra: “Own the problem, not just the solution.” Many tech startups focus their outreach efforts solely on their product or software and fail to adequately engage with their industry, missing out on the opportunity to unlock the next level of customer engagement and growth.
This mantra joined the Energize lexicon courtesy of Bilal Zuberi, General Partner at Lux Capital and an Energize co-investor. In a recent blog, Bilal argues that a common theme uniting high-performing startups is tackling an important problem from multiple angles, rather than selling a single solution. “Users rarely care about implementation, but almost always care about results,” he writes. “In deep tech, the difference between a science project and a science product is whether or not it solves a major problem, and if someone would be willing to pay for it.” He notes that startups that own the problem instead of a singular solution also tend to engage foundational customers who they build solutions with rather than for, meaning those solutions are vetted by potential large customer archetypes before they even hit the market.
While owning the problem may be considered a nice-to-have for entrepreneurs in some industries, we believe it’s a must-have for climate software founders. Why?
1. Categories like “solar software” and “climate risk analytics” didn’t exist five years ago. That means buyers are being educated in real time. The climate SaaS startups they turn to for answers have the best opportunity to corner the market, define their value and prescribe the value formula, giving them influence over future pricing discussions with customers.
2. A rising tide lifts all boats. Ecosystem acceleration can create surprising positive feedback loops, even when your competition is elevated as well. The pie can always be bigger, and growing the pie usually works better than trying to carve out a small piece for yourself. With emerging categories, total addressable markets (TAMs) that are initially perceived as small can have exponential market growth.
3. Climate software buyers might be procuring software of that type for the first time. It’s important to become so interconnected with a problem that your company becomes the de facto first call. This can also help promote the “customer champion,” who can help find the budget for your software within their company.
4. Winners are rewarded more than second and third place. So far, climate software categories have frequently been “winner-takes-most,” which is consistent with how we’ve seen other vertical software categories develop historically. Becoming the name associated with an emerging category is all-important.
Owning the problem in climate software requires highly strategic thinking about how your product roadmap intersects with your go-to-market strategy – including your sales team structure, brand awareness, industry-specific sales and marketing channels, buyer-specific product marketing, and more. Search engine optimization (SEO), Instagram ads and tired sales development representative (SDR) techniques simply aren’t going to cut it. So, what can you do to own your problem? At Energize, we have seen four clear-cut ways to win a problem space in climate software:
Verticalize Messaging: Customize product marketing to reach target markets
It’s essential to customize your sales approach and marketing materials to the industry your company is targeting. That includes speaking the industry language and framing the value proposition to align with your target customer’s underlying business model. If your company sells software to infrastructure developers, don’t send telecom marketing materials to a wind power developer! In fact, it’s common for climate software companies to set up vertical-specific sales teams that only target one industry.
Our portfolio company DroneDeploy began verticalizing product marketing as they moved beyond their initial construction and agriculture verticals to include renewable energy. Simple tactics like creating a landing page specific to renewable energy, with relevant product examples and tailored language, can make all the difference in pipeline conversion. Since verticalizing their product marketing, DroneDeploy’s revenue has increased by more than three-fold.
Create Awareness: Publish thought capital to elevate your customers
Market education is paramount in climate software categories that are being actively created — and what better way to educate than with crisp, analytical climate software content? Too often we see climate software companies begrudgingly or ineffectively leverage thought capital. Content that isn’t sharp, specific and data-driven – or critically, doesn’t elevate customers and partners – is almost certain to be washed away in the flotsam and jetsam of unoriginal marketing content.
Utilitarian content like guides and training programs can help position you as the undisputed expert of your field. Let’s say you are a battery software company and you’ve heard from customers that the safety of workers servicing batteries is of major concern. By publishing a white paper that uses proprietary data to illustrate how to avoid battery safety incidents, you can strengthen your credibility while providing real value to your customers.
Energize’s portfolio company Patch does an excellent job of elevating the carbon ecosystem with thought capital. They’ve shared carbon removal explainers, engaged climate action experts to prognosticate about the year ahead and even created a partner directory of carbon accounting software platforms to help mutual customers navigate their own sustainability journey.
Engage Authentically: Build community through user conferences and trade shows
Climate and industrial software startups often have customers that work in the field and care much less about buzzy tech trends than they do about getting their work done safely and effectively. Meeting industry veterans at trade shows and industry events can help you demonstrate how your climate and industrial software can help achieve those outcomes, while creating personal connections and building your credibility. And one strong customer champion at the beginning of a startup’s life can catalyze a powerful “fast-follower” dynamic. Lean heavily on your early adopters – a credible reference from an industry brand name might be the singular unlock for customers #2, 3, 4, 5 and beyond.
Our portfolio company Urbint, which provides AI-driven risk management software to critical infrastructure industries, doesn’t spend time at buzzy tech events like SXSW, Collision or TechCrunch Disrupt, because their customers aren’t there. Instead, you’ll find the Urbint team with their customers at Distributech, CERAWeek, and the EEI and AGA Executive forums. Raise your hand if any of these critical infrastructure events are on your bingo card!
"It’s imperative to be a trusted partner versus a vendor to the industry,” Corey Capasso, Founder & CEO of Urbint, explains. "This includes being present in more intimate and exclusive events, being referenced by influential trade publications for having a quantifiable impact, and incorporating industry adopted science with best-in-class technology.”
With that said, many climate software startups wear themselves out by feverishly attending every relevant event. Instead, companies can gather a group of passionate users or early adopters (often engineers, developers or product managers) and host a conference addressing their problem themselves. Providing the opportunity for customers to learn industry standards and best practices can make your climate software conference the glue for professional development in your category. For example, Aurora Solar holds an annual Empower summit for solar professionals to share insights at the forefront of solar software and digital workflow, and TWAICE launched TWAICE Vision to bring together battery aficionados from all over the world.
Build an Ecosystem: Find partners that can help you serve customers more efficiently
Truly owning the problem on an end-to-end basis may or may not be achievable for any single company. Your clients may have needs that exceed your software’s ability to address the full scope of the problem in a timely or cost-effective manner. That’s why Energize believes partnerships can be game changers. As our portfolio companies mature, we encourage them to build out an ecosystem of partners that support and deliver additional value to their customer base. Our previous blog explores how our portfolio companies are using partnerships to create customer trust and go-to-market leverage in climate software, including how battery analytics software startup TWAICE uses partnerships to generate over 30 percent of their revenue.
Effective partnerships can take numerous forms: deep product integrations and value-added services to more traditional reseller relationships are just a few examples. Regardless of the approach, the goal is to understand your customer’s real needs and track down the resources necessary to meet them. Remember, your climate SaaS startup doesn’t need to address client needs directly in order to address them effectively.
Many strategies to own the problem might seem like simple, obvious actions that every climate software company is already pursuing. But in our experience, only the best climate software companies put in the time, care and resources to effectively own their problem, elevate their entire ecosystem and become synonymous with sustainability SaaS category creation.
Next up? Ways to Win #5 The Power of Climate Product-Led Growth
This article represents the views of the author and is provided for informational purposes only. It is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Readers should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Information is subject to change based on market or other conditions.
