Investing in Sustainability for a Brighter Tomorrow.
Sustainable Business: Good for the Planet, Good for Business.
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Business Strategy | pgf500, how it does work
The State of Climate Tech Q1’23
The State of Climate Tech Q1’23
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Net Zero Insights’ quarterly analysis on funding data in the private market venture space in Europe and North America.
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New Q1 Climate Tech Investment Data from Net Zero Insights and Alder & Co. Shows VC Funding Down but Other Sources Keep Sector Liquid.
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U.S. funding remains stable thanks to grant funding; Europe sees a significant decrease
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Net Zero Insights, the leading market intelligence platform for climate tech in Europe and North America together with Alder & Co., a purpose-driven climate tech marketing agency, today announced Q1 climate tech investment results demonstrating an overall slowdown. However, nearly 20% of funding in venture tech overall went specifically to climate, showcasing the industry’s resiliency. Total European investment was $4.4B (down 58% from Q4 2022), and total U.S. investment came in at $9.0B (down 7% from Q4 2022).
Non-equity sources provided 42% of the total $14.5B in funding this quarter with major deals including Redwood Materials ($2B), Zenobe Energy (£235M), Raylo (£110M), Blocpower ($130M) and Onto (£100M). Grant funding also rose 20% over the previous quarter in part due to the momentum from the passage of the U.S. Inflation Reduction Act and progress on the European green deal.
“While the EU continues to work through the details of its own Green new deal, we are seeing more European companies eyeing opportunities in the U.S. to take advantage of the momentum derived from the IRA,” said Melanie Adamson, chief marketing strategist, Alder & Co.
While the share of debt increased in relation to the total funding, the absolute volume of debt funding actually decreased quarter over quarter. Nevertheless, the amount of debt raised in Q1’23 is still significantly above the 2021 quarterly average of $3.1B. Equity investment, currently $8.5B, has consistently decreased since it hit $23.3B in Q1’22.
“Investors are increasingly focused on funding startups and organizations that demonstrate a clear path to profitability,” said Federico Cristoforoni, co-founder, Net Zero Insights. “This underscores the need for climate tech companies to develop sustainable business models that balance growth with financial stability.”
Of the ten challenge areas analyzed, only the circular economy vertical raised more quarter-over-quarter funding. More than 40% of total funding went to the energy sector, maintaining momentum in the global transition to electric vehicles, solar and other renewable sources.
While Silicon Valley Bank’s collapse rattled climate tech startups and sent shockwaves through U.S. investment communities, it may have had a net positive effect: diversification.
“What we learned from the SVB fallout is that the banking system and the ways in which finance is directed into sustainable investment has to change,” said Jon Shieber, chief editor and venture partner at Footprint Coalition. “Luckily, more regional and community banks are waiting in the wings.
Net Zero’s reporting uses data from the Net0 platform to analyze funding for climate tech startups, scaleups and SMEs, mainly in Europe and North America. The analysis covers funding activity from January 2021, excluding certain round types such as acquisition, IPO, and SPAC.
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New Video Tutorial | Build a Sustainable Business Model
Business Strategy | pgf500, how it does work
The State of Venture in 5 charts | Startups in Q1’23
The State of Venture in 5 charts | Startups in Q1’23
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New Video Tutorial | Sustainable Business Model
pgf500 platform | How it does work > Video
The Best Green Business Strategy
There are many different strategies that a business can implement to become more environmentally friendly, and the best strategy will depend on the specific business and industry.
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However, some key elements of a successful green business strategy might include:
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Conducting a sustainability audit: A sustainability audit can help a business identify areas where it can reduce waste, conserve resources, and improve its environmental impact. This can include everything from energy and water usage to waste reduction and recycling programs.
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Implementing sustainable practices: Once a sustainability audit has been completed, a business can start implementing sustainable practices, such as using renewable energy sources, reducing energy and water usage, and using sustainable materials in production.
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Developing a green marketing plan: A green marketing plan can help a business communicate its sustainability efforts to customers and stakeholders, which can improve its reputation and attract environmentally conscious consumers.
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Engaging employees: Engaging employees in sustainability efforts can help create a culture of environmental responsibility within the company, and can also lead to new ideas and innovations for reducing the company’s environmental impact.
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Measuring and reporting on progress: To ensure that sustainability efforts are effective and to demonstrate the company’s commitment to sustainability, it’s important to measure and report on progress regularly.
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Overall, the key to a successful green business strategy is to approach sustainability as an ongoing process of improvement, rather than a one-time initiative. By continually seeking new ways to reduce its environmental impact, a business can improve its bottom line while also benefiting the planet.
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pgf500 Team
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