Climate startups resist

Posted on December 16, 2022 at 8:31 am

In Silicon Valley, as elsewhere, not a week goes by without announcements of layoff plans. Spooked by falling valuations, many start-ups are giving up raising funds, while investment funds are thinking twice before investing, for lack of attractive exit prospects.

In this gloomy landscape, some sectors float. This is the case, in particular, of start-ups dedicated to combating climate change, or adapting to an increasingly warmer world.

“With the exception of the third quarter of 2023, which was marked by a spike in investments driven by SPACs [des coquilles vides qui rachètent des entreprises non cotées pour leur permettre de se lancer en Bourse, NDLR]What now appears to be an anomaly, the decline in cleantech investment is far from drastic,” PwC said in a report released last month.

15 to 20 billion dollars

“In 2022, this investment is between 15 and 20 billion dollars per quarter, which corresponds to the investments made during the first half of 2021, says the report. In total, since the start of 2018, $260 billion has been raised for low-carbon technologies, including over $50 billion in 2022.”

Climate investments represented, in the last twelve months, more than a quarter (26%) of the values ​​raised by startups, all sectors together. That’s just above the average seen since 2018, according to PwC.

transport in mind

But these funds are not always used optimally. Last year, the transport sector – mainly micromobility and electric vehicles – alone accounted for 61% of investments, although it emits only 16% of greenhouse gas emissions. That imbalance has corrected somewhat this year, but mobility startups still attracted nearly half (48%) of the funds.

Other sectors that show promise in terms of reducing emissions, including combating food waste and carbon capture and storage, attract relatively little investment. To remedy this situation, technology giants, including Stripe, Google, Meta and Shopify, launched a market guarantee mechanism endowed with 925 million dollars, in order to remunerate the tons of CO2 captured. This could unlock more funding for start-ups in the sector.

How to feed?

Food and agriculture, two sectors with high methane emissions, are doing little better. This month, San Francisco-based startup Black Sheep Foods, for example, raised $12.3 million to increase production of its plant-based lamb-flavored meat, which can already be found in California restaurants. . In France, start-up Naïo Technologies raised 33 million to develop its agricultural robots.

In kitchens, the best way to reduce emissions is all-electric. But most induction hobs use a lot of electricity to operate—sometimes too much for older homes with inadequate electrical systems. Impulse, another San Francisco start-up, is developing battery-powered induction cooktops that use less current when cooking. She raised $20 million in Serie A last month.

reserve of 37 billion

In the coming months, climate investments could take off. According to the specialized media Climate Tech VC, 132 funds specializing in climate investments have raised $94 billion since January 2021 to invest in startups that develop clean technologies.

The media estimates that VC and “growth” funds have already invested 6 billion in recent months, but still have 37 billion dollars, which they are expected to inject into startups in the coming months.

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