Climate tech funding held up despite market volatility

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Hello readers,

Despite the doom and gloom in global capital markets, there appears to have been a steady flow of investments into climate solutions in the first half of the year. Hot areas, including carbon capture and foodtech, continued to attract investor interest.

This week’s issue looks at venture capital investments in technology startups aiming to help solve the climate crisis.

Enjoy reading!

– Nicole

THE BIG STORY

Image credit: Timmy Loen

Adam Neumann’s Flowcarbon: Another WeWork in the making?
After WeWork’s fall from grace in 2019, founder Adam Neumann started a new crypto company, Flowcarbon, which claims to sell tokenized carbon credits to companies looking to reduce their carbon footprint. In this story, we look at Neumann’s new venture and the mounting skepticism it’s already facing.

DEEP READS

Climate tech funding shows some signs of defying market turmoil

In the first half of the year, funding for companies working on climate technology that aim to decarbonize our economies has been somewhat resilient to the shocks in the capital markets, according to data from Bloomberg.

In H1 2022, investors continued pouring money into climate technology despite the overall venture capital market seeing both the dollar amount of funding and the number of deals fall.

There appeared to be a shift in the climate tech investment space, a BloombergNEF analyst said. The total number of deals fell 30% in the second quarter, but a lot of capital is ready to be deployed.

Venture capital and private equity investment into climate-related sectors stayed flat at about US$12 billion in the second quarter compared to a year ago, according to BloombergNEF. However, the US$27.9 billion of new funds that flowed into these sectors in the first half of the year was 47% more than the same period a year ago.

Carbon capture and removal technology was one of the climate tech categories that garnered investor interest in Q2. Ventures under the category received US$1.4 billion in funding in the last quarter. Zurich-based company Climeworks alone pulled in US$650 million in April.

Energy-related companies, meanwhile, received more than US$5.3 billion, beating out electric vehicles and other transportation solutions, which have been a popular category for climate investors in the past two years.

This may be due to a lack of private electric vehicle companies to invest in after a slew of such firms went public last year.

Other than carbon capture technology, food systems startups also attracted rising interest from investors, according to data from financial database company PitchBook. Food insecurity has become a threat in many places around the world, exacerbated by the effects of global warming, so this isn’t much of a surprise.

However, it is too early to say that a steady flow of funds will continue pouring into climate solutions amid a market downturn.

Historian and author of the best-selling book Sapiens, Yuval Noah Harari recently discussed the actual cost of averting the climate catastrophe. He argues that putting an equivalent of just 2% of global gross domestic product into climate solutions is all we must do, but we need to shift our priorities and invest more wisely in practical and effective solutions.

TRENDING NEWS

You can also check out Tech in Asia’s coverage of Asia’s greentech scene here.

1️⃣ Japan and South Korea hit solar records in May
Solar power generation in Japan and South Korea reached record levels in May, according to a new report by energy think tank Ember.

In May in Japan, power produced from sunlight exceeded 10 terawatt hours or about 15% of the country’s total power generation. Similarly, 7% of South Korea’s electricity use came from solar power sources, reaching an all-time high

Why it matters:

Asian countries are expanding their renewable energy production amid major disruptions in coal and natural gas supply due to Russia’s invasion of Ukraine. Both Japan and South Korea are heavily reliant on fossil fuels.

Image credit: Unsplash

2️⃣ Heat waves in the US, Europe, and Asia are connected, scientists say
Scientists found that human-caused climate change affects the jet streams—narrow bands of strong winds that develop in the upper layers of the atmosphere—in ways that have led to more frequent heat waves.

Why it matters:

The perturbations in jet streams play a crucial part in enabling the formation of heat domes, like those that have set up across parts of the US, Asia, and Europe over the past few months that have spiked temperatures to record-high levels.

3️⃣ Japan set to expand energy transition support to India
Japan plans to support India’s transition to clean energy through expanding its Asia Energy Transition Initiative, a program initially launched last year for Southeast Asian nations.

Why it matters:

The push for energy diversification comes amid a looming energy crisis in Asia due to the loss of Russian energy supplies.

4️⃣ Ex-Bank of England advisor joins MetaVerse Green Exchange
Former Bank of England senior advisor Michael Sheren has joined Singapore-based green fintech startup MetaVerse Green Exchange (MVGX) as its president and chief strategy officer. Sheren previously led the bank’s sustainable finance and environmental risk management work and co-founded the bank’s fintech accelerator program.

Why it matters:

MVGX operates a digital carbon exchange that is licensed and regulated by the Monetary Authority of Singapore. It is developing green financing solutions like tokenized carbon credits.

STARTUP WATCH

1️⃣ Fifth Wall closes $500m climate fund to decarbonize real estate
Real estate technology-focused venture capital firm Fifth Wall has closed its US$500 million inaugural Climate Fund, which aims to decarbonize the real estate industry.

The new fund’s limited partners include some of the largest real estate owners and developers, including American Homes 4 Rent, BBVA, British Land, Camden Property Trust, CBRE, Cosan, The Durst Organization, and Equity Residential, Hilton, Host Hotels & Resorts, and more.

2️⃣ US nuclear fusion company TAE raises $250m in latest round
California-based TAE Technologies, a company focusing on developing aneutronic fusion power, has raised US$250 million in its latest funding from investors, including Chevron and Google. The new funding will go toward the construction of its next research reactor, Copernicus.

3️⃣ IQM raises $128m to build quantum computers aimed at fixing the climate crisis
Finland-based IQM Quantum Computers, a leading manufacturer of quantum computers in Europe, has raised US$128 million in a series A2 funding round led by World Fund, with participation from Bayern Kapital, EIC Fund, OurCrowd, QCI SPV, Tofino, and Varma, as well as some existing investors. The firm is tackling the climate crisis by using quantum computing to model possible solutions.

4️⃣ Persistent Energy raises $10m to grow its clean-tech venture building business in Africa
Persistent Energy, an investment firm focusing on Africa’s renewable energy sector, has raised US$10 million in a series C funding round led by Kyuden International Corporation and FSD Africa Investments. The round also saw participation from former Japanese politician Kotaro Tamura, as well as existing investors such as BK Ventures BV and DPI Energy Ventures. The new injection will go toward growing the firm’s climate venture-building business in Africa.

That’s it for this edition – we hope you liked it! Do subscribe to continue receiving The Offset.

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