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Climate tech investment grows at five times the venture capital market rate over seven years

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VC and corporate investment in startups developing technology enabled solutions to climate change, and the transformation to net zero emissions, grew at a faster rate than VC investment as a whole between 2013 – 2019. In that time, US$60 billion of early stage capital was invested globally into startups contributing to tackling the net zero challenge. 

As Climate Week in New York focuses attention on transforming business and economies to net zero emissions, the new research by PwC examines the global startup ecosystem critical to commercialising the innovation needed to make a net zero future a reality. The first-of-its-kind analysis defines the climate tech investment landscape, and examines global early-stage climate tech deals, volumes, trends, sectors and investors. Climate tech is defined as a broad umbrella of solutions to reduce greenhouse gas (GHG) emissions across energy, transport, the built environment, industrial processes, and food and land use; in addition to shifts towards less resource-incentive business models, or carbon removal technologies. 

While climate tech is a nascent sector overall in the VC market (approx 6% of total capital invested in 2019), climate tech VC investment increased from US$418 million per annum in 2013 to US$16.3 billion in 2019. That is approximately three times the growth rate of VC investment into Artificial Intelligence (AI) over the same period. 

Key factors influencing investment include capital efficiency to prove and scale solutions; and the potential for the solutions to provide cost effective carbon reduction or removal. 

Nearly half of all venture dollars ($60bn) went to US and Canadian climate tech startups (US$29 billion); China is second at US$20 billion. The European market attracted US$7 billion. Mobility and Transport solutions dominate US and China investment. 

“The analysis shows the urgency of the opportunity, and gap to close, to support and scale  innovative technologies and business models to address the climate crisis,” comments Celine Herweijer, global leader, Innovation & Sustainability, PwC UK. “Climate tech is a new frontier in venture investing for the 2020s.”

“Some of the technologies and solutions critical to enabling this transformation are proven and need rapid commercialisation, which is why venture capital is key. It will not need trillions invested in startups to make a difference. But for the trickier technologies and markets it will need targeted support, including from governments, to make it through research and development, and the early stages beyond which capital increasingly is lining up.”

Drivers for growth

Climate tech related to mobility & transport, heavy industry, and GHG capture and storage are the fastest growing segments in the analysis, followed by food, agriculture, land use, built environment, energy, and climate and Earth data generation. 

Investment in micro-mobility such as e-scooter and bike platforms and wider transport innovation has grown dramatically, recording a compound annual growth rate (CAGR) of 151%, and representing 63% (US$37.4 billion) of all climate tech funding over the past seven years. The scale of transport innovation has also driven bigger deals.

“The climate tech market is maturing. As a society we are seeing more entrepreneurs launch startups, more investors back them, and an increasing number of larger funding rounds for later-stage high-potential deals.”, said Azeem Azhar, Senior Advisor to PwC UK, founder of Exponential View, and co-author of the report. “But PwC’s analysis shows the ecosystem is still nascent, with key gaps in the depth and nature of funding available to founders and tricky structural hurdles for them to navigate as they scale their businesses.”

Investors 

Climate tech venture funding is coming from every corner of the market.  Investors range from more traditional VC firms and venture funds specialising in sustainability, to corporate investors including energy majors, global consumer goods companies and big tech, government backed investment firms, and private equity players getting exposure to deals earlier.  

The strategic role of corporate venture capital (CVC) in particular, is key to many climate tech startups. Particularly those typified by high capital costs, targeted at disrupting asset-heavy incumbent industries with high barriers to entry, such as in energy, heavy industry and transport. For Mobility & Transport, 30% of the climate tech deals include a CVC firm, and in Energy, 32% of capital deployed came from CVCs. Overall, nearly a quarter of climate tech deals (24%) included a corporate investor.

“The involvement of corporates will be key to the continued success of climate tech – both in terms of their net zero commitments driving demand for new solutions, and their investments into commercialising innovation. It’s not just the financial means they bring, but the commercial know-how, and industry knowledge to help startups navigate how to rapidly deploy and scale new innovations into the market,” comments Celine Herweijer. 

Investment Hubs

Analysis of the top investment centres in Europe, Asia and the Americas shows climate tech startup investment in the San Francisco Bay area (US$11.7 billion) is 56% higher than its nearest rival, Shanghai (US$7.5 billion). Compared with the other regions, Europe is more invested in energy, particularly developing the core technologies for renewable energy generation (predominantly photovoltaics (PV) cells) and energy storage (batteries), demonstrating the potential for regional specialist capabilities to develop in a second wave of development of the climate tech sector, following mobility and transport.

Outside of mobility and the dominant US and China markets, Berlin, London, Labege (France) and Bengaluru, India were amongst the top ten cities for climate tech startup investment, attracting US$1.3 billion mainly across energy, agriculture and food and land use. 

The COVID-19 pandemic  reinforces climate tech need and opportunity 

In the short term, while COVID-19 is likely to have caused a lull in VC market activity during 2020, long term investment and potential in the market appears resilient. Over the past year, close to 300 global companies have commited to achieve net zero emissions before 2050. Many of these commitments include substantial pledges to fund innovation.

“Every commitment represents a demand signal—a new customer—in the market for a solution that helps them achieve net zero,” comments Celine Herweijer. “More broadly the increased profile of Environmental, Social, and Corporate Governance (ESG), increasing government commitments to a ‘green recovery’, and continued rising consumer pressure to respond to the climate crisis is cementing demand for climate tech.”

“Despite significant and promising levels of growth, with just ten years to reduce by half global greenhouse gas emissions to limit global warming to 1.5C, climate tech needs a rapid injection of capital, talent and public-private support to match its potential to build and accelerate faster, bolder innovation,” adds Celine Herweijer. 

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UN launches the first artificial intelligence tool for rapid natural capital accounting

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An innovative artificial intelligence (AI) tool that will make it easier for countries to measure the contributions of nature to their economic prosperity and well‑being was launched today by the United Nations and the Basque Centre for Climate Change (BC3).

Developed by the Statistics Division of the United Nations Department of Economic and Social Affairs (UN DESA), the UN Environment Programme (UNEP) and BC3, the new tool can vastly accelerate implementation of the new ground-breaking standard for valuing the contributions of nature that was adopted by the UN Statistical Commission last month.

The tool makes use of AI technology using the Artificial Intelligence for Environment and Sustainability (ARIES) platform to support countries as they apply the new international standard for natural capital accounting, the System of Environmental-Economic Accounting (SEEA) Ecosystem Accounting.

The new open-source and user-friendly digital tool, called the ARIES for SEEA Explorer, enables, for the first time, rapid and standardized yet customizable ecosystem accounting anywhere on Earth.

“The ARIES for SEEA Explorer is a game changer for governments that want to implement the recently adopted SEEA Ecosystem Accounting standard,” stressed Stefan Schweinfest, Director of the Statistics Division. “This application allows countries to jump-start accounts compilation from global data sources, which they can refine with national data or model parameters.”

The ecosystem accounts produced by countries will track the extent, condition and services provided by nature’s ecosystems – such as forests and wetlands – in the form of physical and monetary accounts and indicators. The adoption of the SEEA Ecosystem Accounting has been heralded as a historic step forward for the Sustainable Development Goals (SDGs) and to move beyond GDP in tracking global progress.

Bert Kroese, Deputy Director for Statistics Netherlands and Chair of the UN Committee of Environmental-Economic Accounting said, “The ARIES for SEEA Explorer will give countries a much-needed tool to make progress with the SDGs and the monitoring framework of the post-2020 Global Biodiversity Framework. Its low barrier to entry will ensure that no country is left behind when it comes to ecosystem accounting.”

Risenga Maluleke, Statistician-General of Statistics South Africa and Chair of the UN Committee of Experts on Big Data and Data Science for Official Statistics said, “The launch of the ARIES for SEEA Explorer on the UN Global Platform is an important step to mainstream the measurement of ecosystems and their contribution to the economy and wellbeing into global, regional and domestic statistics that will feed into policy and decision making. Better measures of nature will contribute to better policies to save our planet.”

Building economic systems that value nature as a central source of human wellbeing, environmental health and economic prosperity in the post-COVID-19 world is essential, according to Susan Gardner, Director of UNEP’s Ecosystems Division. “Having technology that incorporates and integrates the latest data, models and understanding of nature’s contributions through natural capital accounting will facilitate well-informed nature positive decision-making from businesses and governments – driving tangible action on biodiversity loss and climate change and a sustainable future for all,” she said.

The new platform could lead to greater collaboration. Ferdinando Villa, Ikerbasque Professor and Lead Investigator of ARIES at BC3, added, “There is a growing global demand for sustainable management of our natural resources, and to achieve this, scientists and decision-makers need to collaborate more and more. AI-based tools like the ARIES for SEEA Explorer hold the key to a future where open integration and reuse of knowledge, by both, is possible.”

The ARIES for SEEA Explorer is available on the UN Global Platform: a cloud-service environment supporting international collaboration among all countries in the world by sharing scientific knowledge, data, methods and technology.

A number of countries have already started using the ARIES for SEEA Explorer. The Explorer will continue to be expanded in the near future, by adding the functionality to derive indicators that allow to assess progress towards SDGs and the emerging post-2020 Global Biodiversity Framework.

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Huge plans for 2021 content year

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Cancel that Lead to Revival

This year was quite something for Division 2. And it’s not even Summer yet! Any fan of the game out there expects the devs to share plans for the new year at the end of the current one. But instead of sharing content plans for 2021, the devs suddenly announced that Update 12 would be the game’s last update. And even though everyone knows that the game doesn’t have a particularly large base of active players still, seeing official news like this put many fans in shock. By the time this announcement was released, Update 12 was already on the servers. Basically, it means that the devs weren’t going to release any additional content or even bug fixes for the game from that moment onward.

And this felt like passing on a huge opportunity. Sure, the game could have been made better, but the setting and the unique blend of genres of true-open world action and looter-shooter set in modern times post-apocalypse, this isn’t something that should be left to rot and get forgotten. There’s tons of possibilities and unrealized potential. This must have been what people at Ubisoft thought about too, because about a month later, the devs released another announcement, but this time with plans for content in 2021.

Of Ambitious Plans and New Player Assistance

Such a drastic change of heart must mean something, but this isn’t even the best of it. Ubisoft went from sending the game to purgatory to announcing huge plans for 2021, including an entirely new game mode that the series hasn’t seen before. What is it? Nobody knows.

But that’s not all. The devs want to add to the variety of builds which means new brands of gear and in great numbers. The new game mode will take them several months to develop. Therefore there’ll be plenty of time to get ready. Speaking of, have you ever heard of such a thing as Division 2 boost? This is a collection of services that can help you and your Agent with anything you two might need. It’s especially awesome and helpful for new players as there’s lots of content in the game, and it’s so easy to get lost. Services like the ones that you’ll find by clicking on that link will help your character steadily grow in levels and obtain actually valuable gear throughout the levelling process. So, come over and see what we have on the menu for you!

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Why Bankers use Data Rooms

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Investment banks and any other institution that deals with sensitive data have a responsibility to be GDPR compliant. When it comes to non-compliance and data breaches, financial institutions are starting to realize how costly this can be. In 2020, there were over $10 billion in fines handed out for compliance failures and breaches with Capital One taking the largest individual hit.

A US banking regulator hit Capital One with an $80 million fine for a cloud-based data breach. Any bank or financial institution that fails to perform due diligence and use secure data rooms risks being hit with a heavy financial penalty.

What are data rooms, and why, and how are they used by bankers?

What is a data room?

There are effectively two types of data rooms; a physical one and a virtual one. These days, the virtual data room is becoming very common and more popular.

A physical data room is an area set aside to store records and will have security in place so that only authorized personnel can access it. In the case of a merger or acquisition, this would normally mean the seller, the buyer, and their attorneys.

A virtual data room is a secure cloud-based storage area that has software put in place to stop access by anyone that is unauthorized. They are thought of as very secure and many top banks use them today. HSBC, Goldman Sachs, Barclays, Santander, and Bank of America are just a tiny portion of the financial institutions that put their sensitive information into data rooms.

A virtual data room is accessed through the internet but the actual servers will be stored in a secure facility far from the actual bank of finance house. Authorized personnel will have individual passwords and all activity is monitored and recorded.

What are the reasons for using a virtual data room?

Cybercrime is worldwide and affects individuals and businesses. Cybercrime is having an impact on the banking sector in many countries, compliance and security are paramount.

There will be different data protection laws around the world and the GDPR or General Data Protection Regulations covers all European Union countries. Banks must avoid data breaches and practice due diligence and this is why data rooms are important.

When companies are involved in mergers and acquisitions, records need to be made available to the interested and relevant parties, however, they must also be kept out of the hands of hackers or other unauthorized people. In the past, it was common for due diligence to be performed using hard copies and this makes the process much slower. Virtual data rooms allow a much faster process to take place.

Data rooms are also put in place to help share files between clients, third parties, and to store records. They are far more cost-effective than having a physical data room and so more companies than ever are now turning to these secure storage methods.

What happens if a bank fails to use a good virtual data room?

Failure to be compliant and be the victim of a data breach will lead to huge fines. In the European Union, those fines are a maximum of 18 million Euros or 4% of the total worldwide turnover.

But, it isn’t just financial penalties that can hit a business if they fail to keep their data secure. When Equifax admitted it had suffered a data breach affecting over 140 million Americans, or over 40% of the population, their company valuation plummeted. Around $3.5 billion was wiped off the stock market valuation of Equifax all because of a data breach.

Not using a secure data room can lead to loss of revenue, a drop in valuation, investors losing money, and also lead to a PR disaster. After all, people trust banks to keep their money safe and if there are data breaches then clients may leave.

How do banks use virtual data rooms?

VDRs are used in IPOs, M&A transactions, restructuring, raising capital, and for many more purposes.

Banks use them to have a smooth flow of information backward and forwards between stakeholders. They help to close deals quicker as fewer hard copies are being transferred around. Data is sent immediately anywhere in the world.

They of course store documents safely and away from prying eyes, but, at the same time allow for a higher level of transparency.

Choosing the right data room for a bank

Due diligence rooms may have been used traditionally for mergers & acquisitions but modern, virtual data rooms are used for much more, especially by bankers.

That means that a banker needs a data room that is capable of handling much more than just M&A transactions. The software that powers the data room has to provide enough functionality for buyers and sellers in M&As, loans, fundraising, debts, and many more purposes.

Some of the features you would look for when choosing a data room would be:

  • Security
  • Smart features
  • Access control
  • Customer service
  • Add-on features
  • Pricing

All of these are areas that need careful consideration when choosing the right data room.

Security of data room

If you use the internet and share sensitive data then you need to understand how to protect yourself from cybercrime. Banking requires serious levels of security and this should be the number concern when choosing a virtual data room.

A good VDR will have several certifications such as ISO 9001 and they should also have many security features set to international standards. Some things to look for are watermarks, the ability to recall documents from a user, and screen-only viewing.

Watermarks are used to identify who downloaded and printed a particular document. Screen-only viewing means that some documents cannot be printed or downloaded, reducing the risk of having several hard copies floating about.

One other important feature is being able to pull back documents from unauthorized hands. This means that if someone has previously downloaded some records and has now had their access revoked you can ‘pull’ those files back from their computer.

Other areas to look for in a data room

Smart features

These include the ability to search for keywords and phrases much like you would in Google. It helps when trying to find documents that fit together or when you have forgotten a particular heading.

Access control

You need to be able to access the documents remotely and to control who is allowed to view and download records.

Customer service

A good firm will offer 24/7 customer service all year round. This is vital as clients may be working in different time zones and need assistance at unusual times of the day. A company such as Firmex can offer this kind of customer service and may fit your virtual data room needs.

Add-on features

Many virtual data rooms allow for extra features so they can be used for more than just mergers & acquisitions. These can include project management and can help streamline many processes.

Pricing

Lastly, the other consideration is cost. Virtual data rooms offer a cost-effective alternative to a physical room but there is still a price to pay. There are free cloud-based storage systems but when it comes to security it is worth paying for so corners aren’t cut.

Summary

Banks have some different needs than other businesses when it comes to data rooms but VDRs can help with many areas. They use them for IPOs, M&As, raising capital, and many more banking processes.

Modern data rooms offer a high level of security and functionality that traditional, physical due diligence rooms cannot and are ideal for the banking world.

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