With climate change at the core, clean tech companies have raised record breaking $32 billion so far this year. This has been described as climate tech 2.0 investment boom. Analysts believe that investment in climate tech has more than quadrupled since 2016.
According to a research by MIT Energy Initiative, Venture Capitals (VCs), between 2006 and 2011, spent more than $25 billion funding clean tech and lost more than half their money. Funding for clean energy companies came to a grinding halt. However, since 2020, more than $40 billion of VC money has poured into climate tech companies from January 2020 to August 2021. And this has exceeded the total for the previous two years by37%.
Europe, as per CNBC, is the fastest-growing region globally for climate tech with the European VC investment into climate tech startups being seven times higher this year than in 2016 – from $1.1 billion to $8 billion. The Dealroom and London & Partners’ report, which has been released in the backdrop of the 2021 UN Climate Change Conference in Glasgow (COP26), highlights London as home to the biggest concentration of climate tech startups. 416 climate tech startups have been created since the Paris Climate Agreement. It says climate tech startups in London are collectively valued at $28 billion.
Laura Citron, CEO at London & Partners, in a statement said the tech industry plays a fundamentally important role in helping drive forward innovation in the fight against climate change. “Today’s findings demonstrate the creativity of climate tech firms in London tackling the climate crisis. Home to the largest cluster of climate tech companies in Europe and a thriving ecosystem of dedicated VC funds and accelerators alongside world-class researchers and talent, London’s tech sector is coming together to tackle the global climate crisis.”
The Financial Times points out that several important developments have occurred since the clean tech bust 10 years ago. “Renewable energy such as wind and solar is, for the first time, starting to compete with fossil fuel counterparts on price without relying on government subsidies. Electric cars and mopeds populate the world’s busiest cities after advances in lithium-ion batteries made them an attractive alternative to those powered by petrol and diesel.”
Peter Thiel, the outspoken Silicon Valley investor, highlighted that Silicon Valley has changed its investment strategy. “It is no longer opting for capital intensive renewable energy projects with high upfront costs. Instead, it is opting for smaller companies with niche products from new battery storage technologies to lab-grown meat, low-carbon concrete and sustainable aviation fuel.”