$17bn invested in ClimateTech in 2020
`ClimateTech’ is a term used to describe the introduction of technologies that tackle the climate change problem, with an emphasis on both prevention and adaptation. Venture capitalists say climate tech will be lucrative while still protecting the environment, based on lessons learnt from the clean-tech boom and bust. Last year, a whopping $17 billion was invested in climate-tech startups.
ClimateTech investment are categorized into six key technology themes: energy transition, transport and new mobility, agriculture and land-use, climate and forests, decarbonizing industry and buildings, and the circular economy and new materials.
In this article, the accent is on Total Carbon Neutrality Ventures, which has changed its investment thesis to focus solely on climate technology as its parent company Total SE shifts its focus to sustainability.
Artificial intelligence (AI) investments and ventures expanded in January, from Asia to the Middle East. South Korea's ICT ministry announced on January 12 that it would spend $114 million in AI chips this year, with a target of controlling 20% of the global AI chip market by 2030. Following that, Unilever and Alibaba revealed a collaboration called the ‘waste free world initiative,' which would use AI-based machine learning to identify and sort waste plastics. Saudi Arabia's Ministry of Energy announced on January 31 that a new artificial intelligence center would be established to study AI strategies in the energy sector.
In January, digital industry startups raised nearly $2 billion, the most in a single month since BNEF began keeping track. Investors awarded $700 million to 4Paradigm, $279 million to Enflame, and $400 million to Horizon Robotics, again rewarding AI startups and chip manufacturers.
With $17 billion invested globally, 2020 was the strongest year on record for climate-tech startup investment. The majority of this investment was in late-stage startups from a variety of new climate-tech funds, resident clean-tech funds and corporate venture capitalists (CVCs). There was a significant regional bias toward the United States and China, both of which have concentrated capital in the transportation/new mobility sector, which appears to be the most popular area of climate-tech investment among funds.
While climate tech is the fresh major topic in Silicon Valley, venture capitalists have been investing in clean energy and climate concepts for years. Climate tech could be defined as encompassing all major clean-tech topics as well as tackling climate change through mitigation and adaptation technologies. While both terms refer to clean energy (wind, solar, biofuels, etc.) and transportation, climate tech also refers to agricultural technology, carbon capture, and mapping carbon sinks/forests.
Climate tech is attracting mainstream VC/PE companies and celebrities, indicating that the movement is targeting non-climate or renewable energy-focused investors. In January, three of the biggest VC/PE companies made major announcements. TPG launched TPG Rise Climate, an entirely climate-related fund, in the first week of January, with a focus on solar, mobility, and agriculture. Although Union Square Ventures announced the closure of its $162 million environment fund, it had already made one investment in a satellite company focused on forest improvement. Elon Musk's $100 million tweet for carbon capture technology made headlines, and Robert Downey Jr. announced the unveiling of his own FootPrint Coalition Ventures project.
Total Carbon Neutrality Ventures (TCNV) was changed from Total Energy Ventures in 2019 to reflect the current emphasis on carbon-neutral and negative-emission technology. TCNV manages a $400 million evergreen fund that focuses on technologies that can be applied to Total SE's core market that have the potential to expand internationally. Transportation and new mobility, as well as energy transition technology, are among the fund's largest investments (such as smart energy and energy access software). The numerous collaborations and plans for a $2 billion clean hydrogen fund put it in a good position to participate in climate-tech in the future.