What is Climate Tech? 
By design, the term “climate tech” covers a lot of ground, including both digital and physical technologies. It consists of technologies that lessen greenhouse gas emissions, eliminate emissions from the atmosphere, and allow for climate change adaptation. A device might theoretically be categorised as climate tech if it has anything to do with addressing any component of the intricate and multifaceted challenge of climate change. This all-encompassing perspective recognises the complexity of the climate crisis and the variety of solutions required, but it also permits some flexibility when startups, investors, and other stakeholders attempt to evaluate their impact.
Where did the term Climate Tech come from?
The phrase itself is relatively new, not becoming widely used until around 2020. However, some companies, investors, and technologies themselves have been around for much longer than others. Many players in the climate technology industry have existed at least since the “cleantech” interest spike from 2008 to 2011.
What distinguishes climate technology from cleantech? Theoretically, cleantech is technology that lessens adverse environmental effects with a strong emphasis on the energy sector, whereas climate tech is technology that addresses the effects of climate change. There is significant overlap between the two terms in practice. The important thing to keep in mind is that these industry labels are not scientific categories. Clean Energy Ventures has a nice explanation of this. A particular umbrella only fits some technology, whereas others don’t. Strong scepticism surrounds the phrase “cleantech,” as many investments in that space have failed to pay off for investors. It makes sense then that many investors would gravitate towards a new moniker.
Why is now the time for climate tech?
Youth-led climate movements all around the world are proof of the growing public desire for climate action. This has been a significant underlying reason driving the spike in climate tech interest.
Naturally, Silicon Valley and other tech hubs have responded to that mood by proposing new technologies and business models to address the issue…
Even though it may appear a bit simplistic, there is some utility in that strategy. For the businesses and technology that can help with the transition, the worldwide change from an emissions-heavy economy to one that is conscious of its effects and seeking to remedy its previous mistakes represents a huge financial opportunity.
It’s difficult to resist the intensity of that simultaneous moral and financial obligation.
Instead of depending on new technology, why not continue with existing approaches?
To put it simply, you should do both. The Intergovernmental Panel on Climate Change (IPCC), the top global climate authority, released a historic report in 2018 that emphasised the importance of keeping global warming to 1.5 degrees Celsius. The report presents four possible routes for achieving that objective. Although the paths are very varied, new technologies play a significant part in each of them. Relying on technology to reduce emissions is not the same as having a techno-optimistic attitude. New technologies must be deployed together with current solutions. But the IPCC routes make it clear that innovation is the key to mitigation.
Investment in Climate Tech
Climate technology has increased 10x in four years, making it the industry with the fastest growth in all of Europe. In 2021, $11 billion will be invested in the sector, up from $1.1 billion invested in 2017.
Only finance, which had an increase of 5.6x, attracted more investment during this time period than climate tech. Climate tech businesses received 13% of all venture capital funding in Europe throughout the past year, up from 5.9% in 2017. Additionally, entrepreneurs in the environment sector raised an unprecedented $11B in 2021, a 2.2x increase from 2020. The ecosystem for European climate technology is anticipated to be worth $104 billion by the end of 2021, more than tripling in value since 2020.
With European investors providing the majority of the capital for climate tech, there is lots of potential for international investment opportunities. In terms of total funding, venture capital funds provide 41% of all funding in the sector, followed by corporate investment (29%) and private equity (18%).
Dedicated European climate tech funds raised $2.6 billion in 2021, more than twice what they had raised in 2020. This increase in money shows the venture capital community’s growing sense of urgency and responsibility.
Climate Tech Startups that are Currently Flourishing
1. Rad Power Bikes
Founded in 2007, Rad Power Bikes sells and makes electric bikes and associated equipment. This business aims to transform the future of mobility with its e-bikes. The sales revenue of Rad Power Bike nearly tripled between 2019 and 2020.
Funding: $329.3M (Series D)
Location: Seattle, WA
2. Pachama
Pachama is a cleantech startup founded in 2018 that provides a marketplace where businesses can buy carbon credits. To find and validate forest projects for carbon offsetting, they use artificial intelligence and machine learning. Currently, more than a thousand businesses buy carbon credits through Pachama’s market.
Funding: $79.3M (Series B)
Location: San Francisco, CA
3. Form EnergY
Form Energy developed and manufactures a low-cost system for storing renewable energy. Founded in 2017, they have batteries that can store solar and wind energy for extended periods and their yearly income is estimated at $25M. Form Energy’s battery technology will allow the entire world’s electricity infrastructure to function entirely on renewable energy, according to their website.
Funding: $368.8M (Series D)
Location: Somerville, MA
4. Freewire Technologies
Freewire Technologies, founded in 2014, produces a variety of EV charging options. More specifically, they provide clean power generators (or “Mobi Gen”), portable charging units (or “Mobi EV”), and stationary charging stations. The company says that compared to existing charging devices, its solutions can deliver 10–20 times more power outputs.
Funding: $230.2M (Series D)
Location: Newark, CA
5. AMP Robotics
AMP Robotics is a climate tech startup that was founded in 2014 and has developed an AI-powered robotic system for waste recycling. Recyclable materials are said to be identified with 99% accuracy with the technology they’re implementing. AMP Robotics was also included on the CNBC Disruptor 50 list this year.
Funding: $76.1M (Series B)
Location: Louisville, CO
6. ZeroAvia
ZeroAvia, founded in 2017, has developed an aircraft hydrogen powertrain with zero emissions. Their objective is to reduce expenses and CO2 emissions in order to make aviation more environmentally friendly. Their website states that during the next 10 years, a demand for their powertrain of 100,000+ units is anticipated
Funding: $140M (Series B)Location: Hollister, CA
7. Universal Hydrogen
Universal Hydrogen is a cleantech company founded in 2020. This startup wants to increase access to carbon-free aviation so they’ve been developing a hydrogen-powered flight infrastructure. Airbus Ventures and JetBlue Technologies Ventures have both invested in Universal Hydrogen thus far.
Funding: $82.5M (Series B)
Location: Venice, CA
8. Aclima
Founded in 2007, Aclima provides a software solution to assist organisations and governments in monitoring greenhouse gas emissions and air quality. The tool is made to visualise important data about air quality and offer insights that could assist safeguard the public’s health. Currently, more than 100 local governments use Aclima to gauge and assess air quality.
Funding: $64M (Series B)
Location: San Francisco, CA
9. Aurora Solar 
Aurora Solar is a B2B SaaS startup that provides remote shade analysis for solar designs. Founded in 2016, they assist solar energy enterprises in calculating the economic benefits of their designs and developing sales offers through the use of aerial images. Over 40,000 solar projects are created each week utilising Aurora Solar’s platform, their website states.
Funding: $2.1B (Post-IPO Equity)
Location: Mountain View, CA
10. Northvolt
Northvolt is a producer of environmentally friendly lithium-ion batteries. This startup recovers and recycles used batteries to create its products. Additionally, they have added more than 1,400 personnel since its founding.
Funding: $7.1B (Convertible Note)
Location: Stockholm, Sweden
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Amit Khanna, 7startup Founder
Amit has 18 years of experience in the industry and an MBA. He supports entrepreneurs with every aspect of their business including concept and product development, investor presentations, and fundraising. Amit & 7startup assist startups in the pre due-diligence process and help connect them to our vast network of investors. Reach out to us today and see if we’re a fit!
