President-elect Donald Trump's stance on climate change has been a subject of concern for many, particularly in the climate tech sector. During his campaign, Trump led chants of "drill, baby, drill" and frequently criticized wind turbines and electric vehicles. However, some climate tech investors believe that Trump's policies might not be universally detrimental to the sector.

Leonardo Banchik, investment director at Voyager Ventures, notes that deregulation and increased oil and gas production could also lead to the development of geothermal energy and geologic hydrogen. "If you deregulate and you 'drill, baby, drill,' you can get more natural gas and oil. You can also get heat like geothermal. You can potentially get geologic hydrogen," Banchik said.

Sophie Bakalar, a partner at Collab Fund, agrees that some climate tech startups might benefit from Trump's policies. She also expects that the new administration could inspire more entrepreneurs to start building in the sector. "Climate does not operate on a four-year cycle, these are very long-term trends and problems," Bakalar added.

Investors' optimism stems from lessons learned from the clean tech cycle that went bust over a decade ago. Many companies grew too quickly, relying on government subsidies and building massive factories and supply chains before demand had fully materialized. This time around, investors are taking a more cautious approach, focusing on companies that provide concrete value to their customers, independent of climate considerations.

Joshua Posamentier, managing partner at Congruent Ventures, echoes this sentiment. "We don't invest in anything that we think will require subsidies forever in order to have any unit economics." This approach could help climate tech startups weather any potential storms, even if federal support dwindles.

However, not all climate tech startups will be immune to the impact of Trump's policies. Companies reliant on tax credits for consumers, such as wind power and related industries, might take a hit. The Environmental Protection Agency could also see budget cuts, which could affect some companies.

Shaun Abrahamson, managing partner at Third Sphere, notes that the lack of federal support might push some companies that were already struggling to the brink. "It's going to be a distillation, a thinning out of the herd," Posamentier said. "I think they were probably already on death's door."

On the other hand, some sectors could get a boost from Trump's policies. Geothermal and geologic hydrogen companies, for example, might benefit from policies favorable to oil and gas extraction. Grid-related startups could also gain from proposed permitting overhauls.

Nuclear startups building small modular reactors (SMR) and geothermal companies are likely to be among the beneficiaries, Banchik said. SMR startups like Kairos and X-Energy have already signed deals with Google and Amazon, respectively. Geothermal startups like Fervo Energy are partnering with Google to power their datacenters.

Chris Wright, Trump's pick for energy secretary, could be a potential ally for these companies. Wright is on the board at Oklo, an SMR startup, and his company, Liberty Energy, has invested in Fervo. Despite being perceived as anti-climate, Wright has shown a willingness to adopt better technologies, such as electrifying his company's fracking equipment.

As the new administration takes shape, investors and their portfolio companies will have to wait and see which predictions play out and which ones don't. "The only constant is change and instability in the next four years," Posamentier said.

Despite the uncertainty, some climate tech investors remain cautiously optimistic, citing the sector's long-term trends and the potential benefits from deregulation and policy changes. As the industry navigates this new landscape, one thing is clear: the next four years will be a critical period for climate tech startups.