Investors keen to finance climate tech innovation

Jul 29, 2022

2

min read

Pollination is a specialist climate change investment and advisory firm, accelerating the transition to a net zero, nature positive future. They are a proud supporter of the 2022 Climate Tech Industry Report, and we chatted with Managing Director, Brer Adams, about the continued strong climate tech funding flow from 2021 and into 2022.

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"We might look back on 2021 as the time when climate tech venture capital arrived in Australia. Interest in climate technologies has exploded in recent years, with deal activity in early-stage venture companies reaching $US 400 million in 2021 in Australia according to Pitchbook data ten times the rate of the year earlier.

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While overall venture investing in all sectors has also increased dramatically, the share of investment in early-stage climate technology has more than doubled to 20% of all VC investment.

From Pollination’s global work and relationships across the climate solutions ecosystem, our view is that this is only the beginning. Geopolitical instability and an inflationary environment may be dampening venture markets, but we think climate tech’s share of global venture investing will continue to grow.

That’s because few other sectors are benefitting from decades-long demand drivers in all sectors, particularly industry, transport energy and food. The number of countries committed to Net Zero greenhouse gas emissions now stands at more than 70 covering about 76% of global emissions. The number of major corporations that have signed on to RE100 increased from 230 to 370. In just the last two years, the number of asset managers that pledged to meet Net Zero by 2050 has increased from 30 asset managers representing $US 9 trillion to 72 asset managers representing $US 43 trillion.

In the US, Federal Government incentives for green hydrogen will underpin a whole new industry. In Europe, mandates are being phased in that will underpin a circular economy in electronics, packaging, textiles, buildings, food and water.

Climate pledges have driven the demand for solutions - all these new industries require climate technologies to rapidly emerge. And now capital is flowing to the climate innovators.

Australia’s start up ecosystem will benefit from these tailwinds, as well as from exceptional ideas being promoted by networks like Climate Salad and founders backed by investors that can bring company building insights as well as capital. Since 2015, 47 climate tech unicorns have been created and more than half of these emerged in 2021. Australia already counts on this list and Pollination is thrilled to be working with others that are poised to become companies with global scale.

Pollination’s team includes experts in climate change, nature and economic transition, and our investment strategies span start up, venture, growth and private equity. Now three years old, the firm is connecting investors and customers to the most promising climate and nature solutions. We work with family office, institutional and corporate clients to back founders and start-ups with the ideas that can solve deep decarbonisation problems and unlock growth opportunities.

Technology is critical to solving climate change and the acceleration of capital flows into climate tech is good news for everyone committed to a net zero future.