Mumbai: Venture capital investment into climate tech companies globally has skyrocketed since the Paris Agreement, according to a new report today by London & Partners and Dealroom.co. Released to coincide with the upcoming 2021 UN Climate Change Conference, the research shows India ranks ninth in the list of top 10 countries for climate tech investment since 2016, with Indian climate tech firms receiving $1bn in VC funding from 2016 to 2021 YTD.
Global climate tech VC investment soared from $6.6bn in 2016 to $32.3bn in 2021 (YTD), an increase in funding by almost five times. 2021 investment levels have already exceeded the whole of 2020 for global climate tech investment, demonstrating the importance of the global tech industry in the fight against climate change.
According to the new report, which analyses technology companies working to reduce Green House Gas emissions or addressing the impacts of climate change, the top 10 countries for climate tech VC investment between 2016 and 2021 YTD are: US ($48bn), China ($18.6bn), Sweden ($5.8bn), UK ($4.3bn), France ($3.7bn), Germany ($2.7bn), Canada ($1.4bn), Netherlands ($1.3bn), India ($1bn) and Singapore ($700m).
Europe is the fastest-growing region globally for climate tech, with European VC investment into climate tech firms seven times higher this year than in 2016 (up from $1.1bn to $8bn). In Europe, London is one of the world’s most advanced ecosystems for climate tech, with its startups raising $3.3bn since 2016, accounting for 16% of Europe’s total. London is also home 416 climate tech companies, the biggest cluster in Europe.
Hemin Bharucha, Country Director India, London & Partners said: “Countries around the world need to work together so that we can collectively change business practices and commit to net zero emissions. The global tech industry plays a pivotal role in accelerating this global transformation and this is demonstrated in the rapid growth of VC investment into global climate tech companies. It is fantastic to see the UK and India among the top 10 countries for climate tech investment globally, with London leading the way in Europe for the number of climate tech companies and dedicated VC funds.”
Remus Brett, Partner at LocalGlobe said: “The UK is well on its way to becoming a climate tech powerhouse thanks to its combination of world-leading research, thriving ecosystem and creative entrepreneurs that are using technology to solve the most pressing issue in our lifetime. It’s no wonder then that investors across Europe and the world are taking note of the startups and scaleups being created in London and the rest of the country. With sustained investment and the right support, these companies will have the tools they need to successfully reduce greenhouse gas emissions and fight the climate crisis.”
Future growth looks strong for London’s climate tech sector, with the UK capital ranking second globally behind the Bay Area for number of funding rounds raised by climate tech startups, demonstrating an active early-stage ecosystem. Some of the largest deals involving London climate tech companies in 2021 include a $800m Growth Equity round for unicorn clean energy company Octopus Energy; a $118m deal for Newcleo and a $120m round for Carbon Clean Solutions.
Climate tech startups in London also have access to deep pools of dedicated climate tech capital, with the city home to 18 dedicated climate tech VC firms, more than anywhere else in Europe. London-based VC funds have raised over half of all European dedicated climate tech funds in the last two years, further evidence of the huge potential for future growth of London’s climate tech sector. The largest climate tech funds raised in 2021 include a $900m fund by London-based Lightrock, a $312m fund by London-based 2150 and a $200m fund by Munich-based Blue Horizon.
Growth in climate tech is being driven by significant investment into transportation and energy solutions, accounting for a combined total of 78% of global climate tech investment in 2021. A similar trend is reflected in London, with 60% of VC investment into climate tech going into energy companies, while enterprise software, circular economy and food startups are also attracting an increasing share of investment. The number of innovative companies in these climate tech subsectors in London is growing and firms such as urban farm Crate to Plate, the climate risk platform Cervest and circular economy platform Circulor are all addressing key challenges.
