From LCAs to Forward-Looking Impact: A Guide for VCs

As an independent sustainability consultant, I’ve noticed a growing trend in venture capital: Startups are increasingly being asked for Lifecycle Assessments (LCAs). However, while LCAs can provide valuable insights, they can also be costly and produce vastly different results, even when aiming for the same objective.

It’s crucial to understand that LCAs are not a scientific method but rather an accounting methodology based on science. They often emphasize production impacts (where materials like plastic score well due to their lightweight and low-carbon production) while overlooking the usage phase and disposal impacts.

Given the inherent uncertainties and assumptions in LCAs, it’s vital for funders to allocate budgets for peer reviews and avoid making claims beyond the study’s scope. If you want to understand more about the lifecycle of plastic and its environmental impacts, you can explore our detailed overview on Lifecycle Assessment steps, software, and databases.

For investors and early-stage companies, exploring more effective methods to evaluate the future emissions impact of innovative climate solutions is paramount. Project Frame is pioneering a promising alternative that hones in on greenhouse gas (GHG) impact assessment. While a Lifecycle Assessment (LCA) delves into a multitude of environmental impact categories (15!), the depth may be excessive for pre-seed and seed startups. However, considering a comprehensive LCA post Series A can refine processes and input decisions.

Table of Contents

• The Importance of Narrative
• Project Frame's innovative approach
• Steps for Forward-Looking Impact Analysis
• Additionality - a deciding question
• Potential GHG impact - modeling emissions on an S-curve
• Embracing Sustainability in Venture Capital
• Conclusion

The Importance of Narrative

It all begins with a narrative. Describing the potential or intended impact of a proposed climate solution in relatable terms is key. Oftentimes, this impact stems from a combination of interconnected factors that ultimately lead to a reduction in GHG emissions.

To guide this storytelling process, there are a couple of key questions that should be addressed:

• How do you characterize the proposed climate solution?
• What is the appropriate system boundary?
• Are you measuring a broad climate solution or a specific company?
• What market trends and sizing should be applied?
• How can unit impact be combined with market or commercial forecasts?

Project Frame's innovative approach

Project Frame introduces an innovative approach to evaluating the GHG impact of climate solutions, focusing on a forward-looking perspective.

Their methodology commences with a standardized unit impact calculation, where the projected impact of a climate solution is derived by multiplying the emissions difference of a single unit compared to the incumbent by the total number of units deployed. This unit serves as a benchmark for quantifying the environmental benefits of the solution, showcasing the reduction in emissions between one unit of the existing technology and one unit of the proposed solution.

Steps for Forward-Looking Impact Analysis

1. Unit Impact: This is the foundation and prerequisite for further impact analysis. It measures the emissions difference between a single unit of the proposed solution and the incumbent.

2. Potential GHG Impact: Ideal for newer technologies or solutions. This approach is more hypothetical, projecting broader market impacts and easier to carry out.

3. Planned GHG Impact: Best for specific companies, projects, or portfolios with concrete business plans and sales forecasts. It offers a more realistic projection of emissions impact, but is more difficult to calculate based on the moving target of commercial projections.

4. Other Considerations: This includes attribution and additionality. While not common practice for all climate investors, these concepts are crucial for thorough pre-investment screening.

Additionality - a deciding question

While the concept of determining additionality may seem straightforward, its practical application can be quite intricate. How can we ascertain that a solution offers unique benefits for the future that set it apart from other solutions - particularly in a landscape where greenhouse gas reductions are constantly evolving? The interplay of new regulations, shifting market dynamics, and the availability of alternative solutions all play a critical role in shaping emissions outcomes.

Determining additionality can be a nuanced process, influenced by various factors like comparing existing solutions with proposed climate innovations. It requires careful consideration of baseline scenarios, future market dynamics, alternative technologies, grid sustainability, regulatory landscapes, and other key variables.

One example could be Hydrogen. Will any solution based on Hydrogen make a real difference or is Hydrogen just hype and will be outcompeted by renewables? Also taking into account the differences between green, blue or pink Hydrogen. These are some really difficult assumptions to make, but if you get these right, you win big in venture capital. To better understand these complexities, read more about CO2 compensation and reduction strategies for companies.

Potential GHG impact - modeling emissions on an S-curve

Understanding the success of a solution hinges on the pivotal question of when and how a new climate solution will be embraced by the market, a challenge both significant and intricate to gauge. Delving into the realm of technological diffusion and innovation adoption, decades of study have unraveled common approaches that delve into sociological and behavioral change paradigms. These frameworks illuminate the journey of new technologies as they permeate societies, navigating from inception to widespread acceptance, following the trajectory of an S-curve.

This gives an S-curve as shown above. But rather than obsessing over different ways to calculate S-curves, the advice is to simply work with standardized scenarios with low, average, and high adoption of a given technology as part of a sensitivity analysis.

Embracing Sustainability in Venture Capital

Navigating the complexities of sustainability assessments is crucial for venture capitalists and startups. Embracing Project Frame’s method can streamline the process and ensure a more accurate and responsible evaluation of climate solutions. By focusing on potential and planned impacts, VCs can better direct their investments towards high-potential, sustainable solutions.

Currently, however, the average VC does not consider emissions reduction potential and in many cases not even carbon footprints. Looking at Project A's Serias A portfolio, a mere 11% of startups are measuring their GHG footprint and the initiatives they pursue to reduce carbon are superficial at best:

Even if Project A does not consider itself a Climate VC, emission reduction potentials could provide a meaningful data point to develop future company strategies.

Conclusion

In conclusion, while LCAs offer valuable insights, they come with limitations and high costs. Alternatives like Project Frame's forward-looking impact assessments provide a more practical and future-oriented approach. This method not only enhances the accuracy of sustainability evaluations but also promotes responsible investing in climate solutions. By leveraging these innovative tools through climate scenario analysis and forward-looking risk assessment, VCs and startups can drive meaningful progress towards a sustainable future.

For more detailed guidance and resources, you can visit Project Frame's pre-investment GHG assessment page.

How Fiegenbaum Solutions Can Help

Fiegenbaum Solutions offers specialized consulting services to help venture capitalists and startups navigate the complexities of sustainability assessments. My comprehensive support includes:

• Strategic Guidance: I provide tailored advice on the most effective assessment methods, including the use of Project Frame’s forward-looking impact assessments and traditional LCAs.
• Data Collection and Analysis: I assist in collecting and analyzing relevant data to ensure accurate and reliable sustainability evaluations.
• Peer Reviews: I facilitate peer reviews to validate the assumptions and methodologies used in sustainability assessments, enhancing credibility and accuracy.
• Stakeholder Engagement: I help communicate the results and benefits of sustainability assessments to investors, customers, and other stakeholders, building trust and transparency.
• Regulatory Compliance: I ensure that all assessments meet current regulatory standards and guidelines, reducing risk and enhancing investor confidence.

By leveraging my expertise, venture capitalists and startups can make informed investment decisions, drive sustainable innovation, and achieve significant progress towards their sustainability goals.

Related Articles

• How to Position Your Climate Tech Startup for Article 9 VC Funds
• What Climate VCs Are Actually Looking for beyond 2026
• 4 Types of Climate Startups That Will Struggle to Raise
• Unlocking ESG Value for Startups and Venture Capital

Want to know how your impact measurement stacks up?
Use our ESG Investment Quick-Check to evaluate your startup's ESG readiness for VC investors.

Frequently Asked Questions

What is the difference between LCAs and forward-looking impact assessments for climate startups?

Life Cycle Assessments (LCAs) measure the historical environmental impact of a product across its entire lifecycle, while forward-looking impact assessments project the potential climate benefits a technology could deliver at scale. For venture capital purposes, forward-looking assessments are often more relevant because they evaluate a startup's future impact potential rather than its current, pre-commercial performance. This distinction is critical for early-stage climate companies where scaled impact differs dramatically from pilot-phase results.

Why do LCAs often produce vastly different results even for the same product or technology?

LCA results vary significantly due to differences in system boundaries, functional units, data sources, allocation methods, and geographic assumptions. Two LCA practitioners may define the product system differently—including or excluding different lifecycle stages—or use different datasets for energy grids and material sourcing, leading to results that can differ by orders of magnitude. This variability underscores why LCAs alone are insufficient for investment decisions without explicit transparency about methodological choices.

How can venture capital firms determine if a climate solution is truly additional?

Additionality assessment requires VCs to evaluate whether the solution would exist and scale without their investment, and whether it creates impact beyond what would occur under business-as-usual conditions. Key questions include: Would competing technologies have addressed this problem anyway? Are there regulatory or market tailwinds that would drive adoption regardless? Does the startup's technology deliver materially better outcomes than existing alternatives? Rigorous additionality assessment prevents capital from flowing to solutions that would have happened anyway.

What is an S-curve projection and why does it matter for climate tech investment?

An S-curve projection models how a technology's adoption and impact accelerates over time, typically following a sigmoid pattern of slow initial growth, rapid scaling, and eventual market saturation. For climate tech investors, S-curve analysis is critical because it illustrates the difference between early-stage performance and mature-market impact—a solar panel's efficiency today is not its efficiency when manufactured at billion-unit scale with refined processes. Understanding where a startup sits on its S-curve helps VCs evaluate realistic long-term impact potential rather than extrapolating from current capabilities.

Should early-stage startups conduct full lifecycle assessments before Series A funding?

Full LCAs are typically not necessary before Series A, as they are resource-intensive and may lock in assumptions about a technology not yet mature enough for such precision. Early-stage startups should instead focus on directional impact hypotheses, key assumptions, and commitments to more rigorous assessment as the technology matures. Series B and beyond, when product specifications are more stable, represents a more appropriate time for comprehensive LCA work that will inform scaled production and market positioning.

How does Project Frame's methodology differ from traditional LCA approaches for VCs?

Project Frame combines forward-looking impact modeling with venture-relevant assessment frameworks that account for uncertainty, market dynamics, and scaling trajectories rather than treating products as static entities. Traditional LCAs focus on historical or current-state environmental performance, while Project Frame explicitly models how impact evolves as a company scales, manufacturing improves, and deployment patterns mature. This approach better captures the dynamic nature of early-stage climate tech and provides more actionable guidance for portfolio decision-making.

What key questions should be addressed when defining the impact narrative of a climate solution?

An effective impact narrative should address: What specific greenhouse gas reductions or environmental benefits does the solution deliver, and compared to what baseline? Over what geographic areas and timeframes will impact occur? What assumptions about adoption, manufacturing scale, and market behavior drive the impact projections? Are there secondary or rebound effects that could reduce net impact? Clear answers to these questions prevent overstated claims and provide investors with realistic, defensible impact models.

How does startup lifecycle stage impact impact assessment requirements?

Assessment rigor should scale with company maturity and the proximity to commercialization. Pre-seed and seed-stage companies need directional impact hypotheses and transparent assumption-setting, while Series A requires more detailed technical validation and competitive benchmarking. By Series B and C, companies should have empirical data from deployed systems and concrete plans for impact verification at scale. Matching assessment depth to venture fund lifecycle stages ensures due diligence is appropriately calibrated without creating barriers to early-stage innovation.

What do impact VCs need to know about climate solution assessment?

Impact VCs should understand that climate credibility requires both financial returns and measurable, additional greenhouse gas reductions or environmental benefits. Assessment must separate hype from hard science by examining underlying assumptions, comparing solutions against relevant baselines, and distinguishing between pilot-phase performance and projected scaled impact. Impact VCs should demand transparency about methodological choices, additionality reasoning, and forward-curve assessments rather than relying solely on third-party certifications or single-metric claims.