Deploying Climate Tech for Impact: Inside Stepchange’s Mission with Anay Shah
In this interview, Anay Shah, co-founder of Stepchange, shares his journey from working in emerging markets to investing in climate tech and supporting startups with software-enabled solutions.
FOUNDED
2023
NUMBER OF PORTCOS
6 and growing
FOCUS GEOGRAPHIES
US focused but we will invest globally. To date all of our investments are in the US and Canada but we see a lot of opportunity in the EU and plan to look for investments operating in key emerging markets.
FOCUS AREAS
Software-enabled climate tech. We invest across all verticals of climate and expect to touch many areas of the economy impacted by the changing environment. The solution must be enabled by software and ready to serve customers as we are focused on speed and scale of impact.
STAGES
We are pre-seed and seed stage investors.
To date, ⅔ of our founders come from underrepresented backgrounds and ⅔ of our companies have a direct impact on lower income communities.
Anay, what motivated you personally to get started as an investor?
My motivation for co-founding Stepchange and becoming an early-stage climate tech investor began with a question: What is the best way for me to have an impact on the climate crisis? I spent much of 2023 seeking the answer.
My path to this moment began nearly 20 years ago at the US State Department, where I had the incredible opportunity to work across Africa, Asia, and Latin America, tackling poverty in emerging markets. This sparked my passion to understand complex problems facing humanity, with climate change being one of the most urgent. Much to the chagrin of my parents, I left my government role and moved to New Delhi, India to join d.light, a solar startup bringing clean energy to off-grid villages.
After a few years selling solar lanterns in rural villages, I returned to the U.S., to pursue an MBA at Stanford – a dream come true. While my goal was a dual master’s in environment and natural resources, my path turned back towards startups and I unexpectedly began a decade of building fintech companies. I joined Remitly as the 10th employee, launching our first 12 new markets and helping scale to over 400 employees. This was a textbook 0 to 1 journey of hyper growth that gave me some battle scars of building businesses in regulated industries.
I spent the next five years as an exec at Tala, a startup transforming digital banking in emerging markets. There I had the good fortune to lead a 250-person team and help navigate the company through later stage growth, including a $150 million Series E raise.
While my love for financial inclusion continues, I kept feeling the pull back to climate as the existential challenge of our generation. In 2023 I left Tala to dig deeper into the science underpinning this crisis and the tech trends that will drive meaningful solutions. As I began angel investing and LP’ing in climate funds I saw that my experience as an operator was directly applicable to supporting early stage climate tech founders.
The universe conspired in my favor, and I met my co-founder Ben, a 2x entrepreneur who had exited to Google & Stripe before finding his path to climate and developing a thesis around software-enabled climate solutions. After months of collaborating and refining our vision, we launched Stepchange—combining our operating experiences to accelerate climate-focused startups and drive solutions at scale.
How do you believe investing in private markets can help you achieve both your personal and investment objectives?
I’ve always been mindful of how brief our time is on Earth and having kids heightened that urgency. With the climate crisis, we need a speed and scale of solutions that, ultimately, only the private markets can deliver.
I got switched on to the idea of ‘using the engine of capitalism for good’ at the State Department. I saw firsthand how market mechanisms are the only way to scale the solutions we need, both locally and globally. Complex problems, like the climate crisis, require multi-actor solutions. But the challenge lies in how private markets are incentivized—often prioritizing short-term profits over long-term change. To attract the trillions of dollars of private capital needed to build a new energy economy, we need to develop solutions with billion dollar returns and gigaton scale impact. For me, the investment outcomes are directly tied to my personal outcomes of maximum climate impact, which also means achieving massive fund returns.
The next 7 to 10 years are critical for reducing greenhouse gas emissions and ensuring a livable planet for the next generation, including my own children. Transitioning from operator to investor—and from fintech to climate—wasn’t obvious, but this crisis demands diverse perspectives and an all-hands-on-deck mentality. If I can play even a small role in bending the curve toward climate stability, it will be time well spent.
We would love to learn more about how Stepchange integrates climate impact into its investment philosophy. Given the extensive range of similar funds and groups, how does Stepchange’s vision differentiate itself from the competition?
Our investment strategy centers on technologies addressing climate impact at scale—it drives how we build networks, engage founders, and shape our portfolio. Like many thesis-driven investors, we assess each opportunity through a dual lens: climate impact and business scalability. This isn’t ESG or concessionary capital; there will be a new generation of billion-dollar companies that emerge to directly reduce GHG emissions and help society adapt to climate change.
We don’t see a conflict between climate impact and profits. On the contrary, with the right business models, companies that drive massive climate impact will create billions of dollars of enterprise value. Additionally, the opportunity to build a new energy economy is so large that it often fosters more collaboration than competition—we are often in deep collaboration with other climate investors.
Our differentiation comes from two pillars: thesis and approach. We focus on software-enabled climate solutions and aim to deploy scalable technologies now. While we are thrilled that large funds are investing in solutions that will commercialize in 10-20 years, we’re looking for solutions with market opportunity today. As operators we bring hands-on experience to founders, often as the first institutional check, helping find product-market fit, develop go-to-market strategies, refine pricing, growth strategies and more. We’ve built a product-shipping ecosystem around our fund-from our partnership to our advisers and limited partners-we’re surrounded by talent that can help the next generation of builders.
We invest early, at pre-seed and seed stages, and take a high-conviction, hands-on approach that founders appreciate for its practical value and collaborative spirit.
How does Stepchange’s investment philosophy translate into your product-oriented focus?
Ben & I have built and scaled products used by billions of people and used to move billions of dollars. It is natural for us to dive into the product and distribution strategy with founders to build rapport. During our diligence we dive deep into product demos, tech, and customer journeys, problem solving around product roadmaps and prioritization. Even if we don’t invest, we offer feedback to set founders up for success.
The reality is that finding product-market fit (PMF) isn’t a one-time exercise; it´s an evergreen question that requires constant iteration as companies scale into new customer verticals, product lines and markets. The exploration of PMF leverages our product and growth experience and helps founders scale.
Based on our operating experience, we’ve developed a sense of where founders can focus for maximum impact—whether it’s tech, product features, or team building. This approach means we examine 50-60 companies for every one investment.
Our values drive us to build relationships based on respect and shared success, not just for returns but to solve critical challenges like the climate crisis.
Climate-focused venture funds often face unique challenges. What do you see as the main barriers to successful investment in this sector, and how does your fund address them?
Climate tech investing is unique because it’s about anticipating a future across multiple dimensions. It involves shifting consumer behavior, evolving enterprise demands, and highly unpredictable macro environments. We’re in the early innings of creating a new energy economy and rethinking how entire industries should be built for the next 50 years.
Breakthrough innovations are necessary to address the ‘hard to abate’ sectors as well as unleashing world changing technology, such as nuclear fusion. Large funds with deep engineering or chemistry expertise should focus on capex heavy deep tech. Fortunately, at least 60% of the progress on reducing greenhouse gases can be achieved with existing technologies. The challenge now is deploying and adopting these solutions. That’s where we come in—backing amazing founders with clear hypotheses, a strong go-to-market strategy, the right team, and the ability to iterate quickly based on customer feedback. All of our investments address real market needs today, using software as the critical layer to accelerate adoption.
Considering the rapid changes in the private investing ecosystem and the current global macroeconomic landscape, which specific industry trends have most influenced your recent private investment decisions?
We’re seeing a shift back to business fundamentals in the private markets, and our investment approach aligns deeply with this trend. As operators who’ve built unit-economically positive businesses, we prioritize sustainability, scalability, and real revenue generation from the start. Founders today are focused on generating real revenue, cutting through the hand-waving of the recent past. Many opportunities might struggle to get funded in this environment and, as a result, we believe this vintage of companies and funds will outperform.
This is a unique time to launch a first fund given the macro environment; but the higher bar for belief means everyone is more intentional, and we can avoid investments driven by hype. We go deep to gain conviction on the founder, market, and product discovery, which leads to greater long-term returns.
From an industry perspective, we look for technologies at the tipping point of major adoption and identify bottlenecks we can help remove. For example, we see huge potential in areas like transportation and building decarbonization, where incumbents can’t meet market demand. We also see great opportunity in unlocking power generation and enhancing grid services, where incumbents and large players need solutions to move smarter and faster–especially as energy demand rapidly grows with data centers, EVs, and further electrification. Or where markets are broken due to old models, like property insurance. We believe these sectors will drive massive impact and returns this decade.
What is the most valuable investment lesson you’ve learned during your career?
Early-stage investing is a people business, and while it’s easy for analytical minds like ours to dive deep into business models, product-market fit, distribution strategies, and competition, those factors are only part of the picture. From my experience scaling a company from Seed to Series D, I know the journey is anything but linear. Plans have to be designed to change because markets change, and you’re constantly iterating based on new customer insights.
One constant in this journey is the quality of the founding team. That’s why our biggest investment right now is in ourselves, building a culture at Stepchange that allows us to excel. We’ve created a platform where we can challenge each other, aim for outsized wins, leverage our tribe of experts, and maintain the values of trust and collaboration. Ben & I believe this is the foundation for success, both for our fund and for the teams we invest in.
Another lesson I keep running into is that “the math has to math”—venture economics have to work. Venture capital is not a panacea, especially for the climate crisis. But for the right founding teams that want to truly build venture-scale businesses it can be a major accelerant to their business. It’s important for everyone to be honest when venture is not the right form of capital for a particular organization.
What’s your favorite non-business interest or hobby? We’d love to know a bit more about your personal side.
What’s been most interesting about my return to climate work is the convergence of personal and professional. I’ve always been a nature lover and casual athlete. Over the past 5 years, I’ve regularly turned to running to clear my head, regulate my nervous system, explore new places, and push myself beyond my comfort zone. It’s a way to reconnect with nature, community, and the larger purpose of why we do this work.
As a parent, my kids have become my main hobby! They’re also a constant reminder of the stakes—why we must navigate this existential crisis and harness human ingenuity to create a more livable world for future generations.
Please leave us a book recommendation
I’m currently reading Kamala Harris’ autobiography, Power Law on VC, and Cheaper, Faster, Better by Tom Steyer.
I just finished Coal: A Human History by Barbara Freese, and An Immense World by Ed Yong. Speed & Scale is excellent for anyone looking to ramp on climate solutions.
My non-work suggestion would be You are Here by Tich Naht Hahn.
On a scale of 0 to 10, how optimistic are you about the current market conditions?
From an entrepreneurial and startup investor perspective, it’s a great time to be a climate founder—I’d rate it a 9.5. The macro environment and technological advancements are perfectly aligned, creating a huge window of opportunity for innovation. If a founder asked whether now is the right time, I’d say go for it, as there’s unlikely to be a better moment than now.
As a pre-election U.S. citizen, I’m more cautious, around a 7. The polarization and uncertainty in the country are concerning, especially with such high stakes globally. But I remain hopeful that we can eventually move beyond the divisions. At Stepchange, we’re proud signatories of the “Climate VCs for Harris” Pledge, which underscores our commitment to increase opportunities for everyone.
As a citizen of the world, though, I’m at a 3. I believe we will confront unimaginable challenges over the next 30 years, including unprecedented climate refugee crises and severe water scarcity, particularly in emerging markets. Unfortunately, I think things will get worse before they get better. But even so, I remain a techno-optimist and a believer in humanity, because we don’t have any choice but to keep fighting for a better future on this pale blue dot.
