- ClimateHack Weekly
- 20 European Climate VCs: What they’ll fund next in 2024
20 European Climate VCs: What they’ll fund next in 2024
The four largest deals in European tech last year all went to ClimateTech.
Momentum is building and urgency to solve the climate crisis is picking up pace in 2024.
As undeterred builders dream big, pioneer the unthinkable and create moonshots; funding has a vital role to play in their mission to succeed and scale.
So we spoke to 20 European impact investors to hear which technologies are top of mind. And now you can too.
TL;DR: They’ll be backing technologies that can move the needle in:
🌾 Regenerative agriculture
🛠️ Green metals and mining
🚌 Electrifying public transport
🌿 NatureTech and biodiversity
⚡ Long duration energy storage
🔄 Upcycling waste side streams
🔋 Battery recycling and charging
🌬️ Carbon capture, storage and MRV
Before we jump in:
Here’s what 20 European investors had to say:
Xavier Lorphelin @ Serena
NatureTech: There is no net zero without nature. However there is still a challenge on how to accurately and efficiently measure human and business impacts on nature. Watch out innovative technologies (eDNA, bioacoustics, hyperspectral imaging...) to measure, verify and report (MRV) positive and negative impacts on biodiversity and enable the development of biodiversity credits.
Regenerative Agriculture: A recent report from the FAO reveals that the hidden costs of our current agrifood system amount to at least $10 trillion annually while its GDP contribution accounts for $4.2 trillion. We need a more systemic approach to transition towards sustainable and regenerative agriculture thanks to precision farming, nutrient management, biofertilizers, soil health monitoring or plant biotechnology.
High-performance Energy Storage Solutions: Battery tech is evolving rapidly. In 2024, expect to see solid-state batteries start coming into their own. They’re safer, have higher energy densities, and charge faster than lithium-ion batteries. This could be a game-changer for electric vehicles and grid storage, boosting adoption rates.
Iris ten Have @ Extantia
Cement and Concrete Alternatives: The cement industry emits ±2.8 Gt CO2e per year and innovations in this sector could significantly reduce these emissions. Startups should be addressing clinker production, which causes about 90% of all the emissions related to cement. The focus should be on materials that either absorb CO2 during the production process or require less energy to produce. Additionally, recycling concrete waste could be an interesting area to explore.
CO2 Mineralisation, Enhanced Weathering and MRV: This trend encapsulates a set of technologies that can directly remove CO2 from the atmosphere by enhancing natural processes. Startups should aim to improve the efficiency and scalability of these processes. For example, working on cost-effective mineralisation methods as well as developing reliable and quantitative MRV methods to ensure accurate tracking of carbon removal.
Long Duration Energy Storage (LDES): LDES is crucial for balancing renewable energy supply with demand, especially in periods when solar or wind power is unavailable. Exploring solutions beyond conventional Li-ion batteries opens the door to potentially more efficient storage methods. Startups should concentrate on developing scalable and low cost storage technologies. This could include (electro)chemical storage, thermal storage, or mechanical storage solutions. The focus should be on reducing costs, increasing energy density, improving round trip efficiencies, and ensuring the longevity of these storage solutions.
Myke Näf @ Übermorgen Ventures
Adaptation and Resilience: The world is lagging behind climate targets. Therefore, climate disasters such as droughts and floods will not only persist but are likely to increase in frequency, underscoring the growing need for effective adaptation and resilience solutions.
Sustainable agriculture and horticulture: Possibly considerable opportunities remain in these fields with regard to all climate-relevant aspects: prevention, adaptation, and resilience.
High-quality, Scalable CDR: Both nature-based and engineered solutions, underpinned by robust MRV methodologies, will be essential in all scenarios. Their urgency intensifies as we continue to fall behind our climate targets.
Mobility: Even in the age of EVs, we need to shift towards more sustainable mobility solutions like public transport and cycling infrastructure, moving away from a car-centered world.
Sustainable Unit Economics: Government incentives such as the IRA are great and essential to get certain approaches off the ground. However, given the variable election outcomes in some countries and upcoming elections in the US, the long-term viability of these incentives is uncertain, highlighting the need for sustainable and sound business models.
Christian Gonzalez @ Planet A Ventures
Transforming the unit economics of precision fermentation: Animal-free dairy, egg, heme protein and many more products produced by precision fermentation are set to transform the food industry. The problem? The costs of production are just too high. It will be exciting to see in 2024 startups developing new technologies upstream, downstream, and at the reactor level.
Green ammonia: Green ammonia has the potential to be a key zero-carbon fuel, hydrogen carrier, fertiliser, and used for energy storage, playing a very important role in the transition to net-zero carbon dioxide emissions. For many reasons, biocatalysis could be regarded as one of the most exciting approaches for green ammonia synthesis, and I'd keep my eyes out for further developments in this space.
The promise of plant cell culture: Imagine producing wheat, cacao butter, avocado, aloe vera and plant flavours and fragrances in bioreactors - this is all possible with plant cell culture. The problem? Similarly to precision fermentation products, the cost of production is just too high. In 2024 it will be exciting to watch as startups make strides in this space and launch cost-competitive bio identical ingredients.
Rune Theill @ Rockstart
Carbon Capture: The utilisation of technologies in carbon removal projects, capturing carbon and reselling credits across industries. This encourages greater corporate involvement in the energy transition.
Energy Storage: The development of long-duration energy storage solutions to realize the full benefits of renewable energy and advance towards an electrified future economy.
Waste Side Streams: The transformation of waste streams into sustainable products, catering to the evolving demands of consumers, while avoiding waste.
Marieke Gehres @ Earlybird VC
Closing the Green Skills Gap: While several jobs are vulnerable to the changing climate and the necessary transformation of industries, there are also jobs created that are crucial to respond to climate change. But demand for green jobs is outpacing the production of green talent. Jobs that require green skills—building blocks such as waste prevention, environmental remediation, and other abilities that promote environmental sustainability of economic abilities—are crucial to this green transformation and we urgently need to find solutions to bridge these skill gaps.
Climate Data becomes More and More Valuable: Climate data is becoming increasingly valuable, with the climate crisis more palpable than ever. We must learn to deal with its consequences. Businesses capable of predicting climate disasters and assessing risks through the analysis of primary and secondary data are becoming crucial across various sectors—public service, financial services, real estate, industry, and for consumers.
The Carbon Removal Market Needs Faster Support for Delivery: In total around 4 mio credits of engineered carbon removal have been purchased so far but only 1.9% of them have been delivered. Carbon credits alone are ineffective; real action is necessary. Therefore, we need support along the entire value chain to accelerate the delivery of carbon removal technologies and projects. This support requires sufficient upfront capital and commitments under insurance for adequate assurance.
Jonas von den Driesch @ Shift Invest
Food and Agriculture: Next to the topics we defined as strategic (food waste & regenerative agriculture), we see water scarcity increasing. Consequently, we look for founders working on innovations for more efficient water management, e.g. as part of precision agriculture.
Energy: We look for founders working on smart hardware/software solutions for power grid management.
Mobility and Logistics: Founders working on sustainable aviation and founders with solutions that drive the shift to more sustainable transport modes, both in mobility and logistics.
Industries: Technologies that can make our industry more sustainable or circular, especially companies active in digitization, automation and optimisation of (chemical) manufacturing and construction processes.
Anna Ottosson @ Mudcake
Adapting to a changing climate: More and more founders and investors are realizing the severity of the effects that climate change, biodiversity loss and water scarcity will have on our food system; we expect to see more solutions centered on adaptation to this new reality across the agricultural sector and food supply chain.
Ocean as the New Frontier: Our oceans and how we use the planet’s water resources in relation to our food system has gained attention in recent years. We believe there’s still plenty of unexplored subtopics here and are keen to get to know the startups focused on this new frontier of the food system.
Biomedical Innovations: Humanity needs to transform what we eat into a therapeutic asset, merging dietary science with medicine (e.g. RNA and microbiome research) to enhance health and prevent disease. We want to redefine food's role in well-being, integrating advanced biomedical insights for more effective nutritional strategies.
Jaime Betech @ Good Seed Ventures
Whole cut meats: Consumers in the alt protein space have waited a long time for this. Companies are replicating the texture and taste of traditional meat in a whole cut manner, mostly through fermentation processes. The products are mostly clean label and healthier than their animal counterparts, making it appealing to not only vegans but meat consumers.
Enhanced Rock Weathering: This technique, involving the spreading of pulverized rocks on farmland, accelerates carbon dioxide absorption from the atmosphere. It not only combats climate change but also improves soil health, benefiting agriculture productivity. Startups focusing on this can expect to see growing interest from sectors focused on sustainable practices, offering a dual benefit of environmental impact and financial returns.
Ocean Carbon Drawdown Solutions: According to research, the ocean absorbs around 20-25% of the earth's CO2. Ocean CDR focuses on reducing atmospheric CO2 by enhancing the ocean’s natural carbon sequestration processes. This approach is critical in mitigating global warming. The technology’s scalability and potential for significant environmental impact is an attractive venture for startups and investors alike which, if proven, will be poised for growth in a world increasingly focused on climate change solutions.
Melina Sanchez @ AENU
Climate FinTech: As SMEs take additional steps to keep their energy bills low, they will start procuring green hardware (solar, batteries, EV infrastructure and more). These SMEs will need lending players who can underwrite green hardware easily and at scale.
Energy: In 2024, commercial and industrial players will prioritize renewable energy procurement at predictable prices. To facilitate this transition, PPA (power purchase agreements) and REC (renewable energy certificates) companies will pick up steam in the market.
Circularity: In the short-to-medium term, lithium and other scarce minerals & metals that are critical to the energy transition (from EVs to grid-scale battery storage) will continue to be on top of the geopolitical agenda and experience volatile prices. To mitigate these externalities, battery recycling technologies will play a more prominent role.
Will Anderson @ Possible Ventures
Long-duration Energy Storage: As we increasingly feed our grids with energy from less predictable renewable energy sources, we need novel energy storage solutions to handle the variability and intermittency associated with these sources.
Waste to Energy Production: Our societies generate enormous quantities of biomass which today is typically treated as waste streams and largely underutilised. Novel technologies which efficiently extract the energy (and biochar) from these waste streams have the potential to turn burdensome cost centres into profit centres for organisations.
Electrifying Transportation: Around a quarter of global emissions come from our transportation footprint. Finding novel solutions to moving people and things not only reduces our footprint, but simultaneously makes our built environments more liveable.
Will Wells @ FirstMinute Capital
Computational platforms for alternative, decarbonised materials: As gen AI matures in 2024, we should see the first glimpse of an inevitably huge chemistry unlock. AI/ML platforms that can speed up and optimise the materials discovery process should proliferate.
Battery breakthroughs: With EV adoption climbing to 20% and solar fundamentals stronger than ever - $500bn of new investment in 2023 - the pressure is on for better battery design, optimisation and recycling. Northvolt’s year end novel sodium ion announcement may well set the tone for 2024.
Prolonged flight to quality in carbon: Low quality VCM is (rightly) out, high quality CDRs are in, and with nowhere near enough supply. This will see breakneck CDR growth from a low base and a new raft of tech - accelerated by cap stack / FOAK style enhancements - together with an expanding definition of CDR.
Namratha Kothpalli @ Speedinvest
Unlocking renewables as baseload via software: As renewables contribute a larger share of the electricity supply, we need to find ways to overcome the intermittency of renewable energy sources, making them more dependable and capable of providing a continuous, baseload-like power supply. This is where software can play a key role in energy transition via solutions to manage and optimize energy storage systems, smart grids, demand response, virtual power plants, etc.
Energy security: Supply chains that can enable energy security and energy transition continue to be crucial for economies/countries around the world, especially in light of ongoing geo political conflicts. We are actively exploring new technologies and approaches that can incorporate local and regional production, distribution, and management of low-carbon energy infrastructure and supply chain.
Climate adaptation and resilience: While reducing the severity of climate change is a worthy investment and avoiding the increase in every fraction of a degree matters, we also need to be prepared to adapt to the most severe consequences of elevated levels of greenhouse gases.
Yoann Berno @ Climate Insiders
Carbon Removal: We've reached an inflection point. Biochar is mature and can already deliver volumes. But the whole space is boiling with innovation that will show real results in 2024.
Ocean Acidification: It's the twin brother of Climate Change and not enough spoken about. The ocean is our planet's #1 carbon sink. But the ocean carbon cycle is about to derail, both killing all marine life but also stopping it from pursuing further carbon absorption. There are a number of startups bringing scalable solutions to combat acidification. 2024 might also be a point of inflection.
Green Chemistry: There's a lot of innovation to decarbonize 2 of the most polluting chemical reactions on Earth: Ethylene and Propylene production. Innovations range from Photocatalysis to using electrochemical processes converting CO2 into basic chemicals.
Hayden Young @ SET Ventures
Flexibility in electricity markets: Renewable energy production, which can be volatile, will be paired more frequently with flexible assets on the demand side, from industrial facilities, smart homes to electric vehicles. Therefore, data-driven business models that can monetise flexibility and shift energy loads will be increasingly in demand.
Industrial Microgrids: In the face of increasing energy volatility and shifts in procurement strategies, Commercial & Industrial (C&I) companies are increasing on-site electricity generation and demand to bolster their energy reliability. From 2019 - 2022, a majority of the 167 GW of distributed PV added to the energy mix came from C&I installations creating microgrids on a large scale. Solutions to manage and optimise these microgrids will be vital in shaping the future of energy management.
Democratised Energy Trading: The energy trading market will become more democratised so that even SMEs can trade, not just the large players. Smart, affordable platforms that link the energy-using assets and microgrids mentioned above directly with energy trading markets will allow participants to exploit the flexibility inherent in the new energy system, further incentivising the transition to clean energy.
Louis Millon @ Systemiq Capital
Climate adaptation and resilience solutions: As climate-related disasters become more common, it’s becoming increasingly clear that we need to adapt to a changing climate while we’re decarbonizing as fast as possible. I’m excited to see more impressive founders find scalable and profitable business models in this space.
Water decarbonisation: As a sub-niche of industrial decarbonization, WaterTech has been relatively under-loved by VCs in the past few years, because of the reputation of the water industry as a slow and conservative market where it’s hard to grow fast. I’m seeing the tide turning here, and think there’s great businesses to build there.
The first applications of generative AI to climate: A year after Chat GPT took the world by storm, we’re starting to see the first truly viable applications of that general-purpose paradigm to climate. I think it is going in 2024 to turbo-charge growth for a wide range of existing startups, and provide a platform for entirely new business models that were unimaginable two years ago.
Łukasz Skarka @ InnoEnergy Central Europe
Carbon Technologies: The broad concept of carbon tech includes all the technologies related to CCU, CCS, power-to-x, SAF, DAC - everything that takes carbon out and either stores, uses or upgrades - are vital. We need to take action not only to reduce emissions but also to decrease them - regardless of if it's at the point of emissions or somewhere else - innovation is needed. This niche sector not only aligns with global sustainability goals but also holds the promise of generating substantial returns as it contributes to the transition to a more carbon-neutral future.
Circular Economy and Bioeconomy: Innovative technologies and companies that focus on product redesign, recycling infrastructure, and closed-loop systems can include waste & byproducts valorization to fuels and feedstocks, bio-based feedstocks for large scale chemical production and specialty chemicals, biomass to energy, biomethane, end-of-life solutions, waste heat valorization. Most promising market segments would include wastewater, batteries, packaging, construction materials, textiles and apparel, agriculture and food, automotive - but also transversally - business model innovation in all of these industries.
Critical Raw Materials Value Chains: The exploration, extraction, processing, production efficiency, reshoring, supply chain concerns and circularity of essential raw materials crucial for various industries such as renewable energy, electric vehicles, technology, and healthcare. Technological advancements, environmental concerns, and geopolitical shifts drive the increasing global demand which makes the niche an interesting one to work in and to invest in. The operational efficiency, electrification, digitalization and cradle to cradle, drive the focus of VCs and corporates towards this value chain, making it very attractive.
Hampus Jakobsson @ Pale blue dot
"Not Dumb": There are so many sectors where becoming more climate friendly is just doing good business - like recycling, EV transport, monitoring manufacturing, etc. We'd love to see more startups tackling big and old industries with modern methods.
Smart Grids: The grid today is not only antiquated but dumb - we have a similar level of understanding and measurement of water in pipes as we do of electricity in the grid. We expect the same revolution the internet did for the telco-world but within the electrical grid.
Shorter, Sustainable and More Predictable Supply Chains: So many industries are dependent on materials or parts from regions of the world with questionable practices, or the supply chain is complex, fragile, and opaque. We expect to see more supply chain companies, valorization, circularity, and recycling done well.
Clara Camesasca @ Volta Circle
Sorting and Recycling Technologies: To decrease our usage of new resources and reach circularity we still need a lot of innovation to be scaled, from sorting of textile & waste to advanced recycling of plastics and mixed fibers.
Green Fertilisers: Given how problematic conventional agrichemical products are, a recent report has identified green fertilisers as one of the “super-leverage points” that could bring us closer to zero emissions.
Water Treatment: Water is an increasingly scarce resource, and we need to save and reuse as much as possible, from monitoring and recovering urban and industrial wastewaters to tackling micro pollutants.
Anna Trendewicz @ Future Energy Ventures
Power Grids Digitization: Rapid growth of intermittent renewables being intergrated in the power system and changes in demand patterns driven by electrification cause more frequent and severe power grid congestion events. Demand side flexibility can help to solve this issue and to enable integration of higher shares of renewables at existing grid capacity, presenting a $1.8trillion savings opportunity in grid reinforcement through 2050. Digital platforms play a crucial enabling role by providing visibility on supply, demand and grid load data.
Solar Acceleration: The deployment of C&I solar enjoys strong regulatory tailwinds in the EU and in the US driven by the European Green Deal and the IRA. The permitting, procurement and installation of solar PV systems are a bottleneck limiting the growth rate, therefore solution providers that can accelerate solar PV deployment will be in high demand.
Green Heat: The rise of heat pumps and other renewable energy solutions will accelerate in 2024 fueled by regulatory tailwinds (government subsidies, tax credits and CO2 emission limits). Similarly to the solar sector, rapidly growing demand faces a supply side bottleneck driven by local and manual procurement and installation processes. Digital platforms that accelerate system sizing, collecting bids and finding installers have a massive opportunity in 2024.
Smart EV Charging: The exponential EVs adoption curve goes hand in hand with the need to roll out the EV charging infrastructure at speed. The additional electricity demand needs to be supplied with renewable energy and without putting too much strain on the power grids. Digital platforms are crucial to manage the highly complex and decentralized system of public, semi-public and private charging points and provide a seamless driver experience, while also optimizing for the lowest total cost of ownership by utilizing dynamic energy prices or generating revenue from grid flexibility services.
Carbon Markets: Carbon emissions management, including accounting, reduction and removals, is crucial to reaching the decarbonization goals and achieving net zero. Carbon accounting software platforms must grow rapidly to properly evaluate scope 1, 2, and 3 emissions, which can then be offset (and inset) with high-quality credits. Platforms that connect providers of high-quality, verified carbon credits and emitting entities are the key element for balancing the carbon system and are set for rapid growth in 2024.
Agree, disagree or want to have your say? We’d love to hear from you.
Next, we’ll be speaking to leading VCs across LatAm, Africa and the US to hear their predictions and priorities for the new year.
Want to be the first to hear what they have to say? Subscribe to ClimateHack.