Rise of the specialist VCs
In the first half of 2022, the majority of the climate deals have been from VCs specialized in climate. Axios discovered, by data from Pitchbook, that 9 of the 10 most active investors were specialist climate firms. From January 1st to June 30th the multi-stage deep tech VC SOSV made the most deals (12), followed by the energy-focused VC Energy Impact Partners (8) and the generalist wealth fund Temasek Holdings (7), which holds sustainability as a core value. However, even though the rest of the top 10 is also a specialist firm, the importance of big generalist firms is not to be underestimated. They have the capital to make big investments and thus drive the development of the new technologies.
According to CTCV, there are currently over 180 climate tech VCs with a portfolio of 75% climate tech and that have participated in more than 1 climate deal within the past 6 months. Besides that, there are also over 40 climate-oriented corporate VCs (see here) and various foundations.
Regions: US reigns, Europe climbs
The Climate Tech Report Q1 2021 of Pitchbook sheds some light on the beginning of 2022 compared to the previous years. The industry is gaining traction: the data shows that between 2013 and 2019, the capital for climate tech grew 5x faster than the venture capital overall growth rate, even though climate tech accounted for only 6% of venture capital investments in 2019. For their top 10 VC investors, they looked at the global deal count from 2019 until March 31st, 2022. Number 1 is SOSV (66 deals), followed by the British alternative protein investor CPT Capital (42 deals) and Alumni Ventures (41 deals).
If we look at the larger geographies, the United States stands out. Of the top 50 VCs of Climate50, no less than 33 VCs are from the US, showing the country is still the focal point of climate tech investments. It's also the headquarters of the majority of the other investors and the country with the most billions raised since 2010, namely $232bn. Even though generalist firms have contributed to a lot of climate tech deals, most deals in the US climate tech environment to this day have been made by specialist climate VCs, according to data from Pitchbook. Breakthrough Energy Ventures and SOSV are at the top, impact investors Prelude Ventures, Climate Capital, Energy Impact Partners, and ImpactAssets appear further down in the top 10.
Climate tech is the biggest climber in European venture funding, with 13% of the capital going to these startups in 2021 compared to only 5.9% in 2017. 70% of the funding of the European start-ups comes from Europe-based VC's, so it's no surprise that the investors with the most European deals are mostly European themselves. The top 10 of 2021 from Sifted shows a varied image: generalist funds (Austrian SpeedInvest with 18 deals, French Eurazeo with 8 deals) and public investment banks (Bpifrance with 11 deals) stand next to specialist climate tech or impact VC's such as the Swedish Pale Blue Dot (10 deals) and Norrsken VC (8), the Swiss Übermorgen Ventures (9), and the Dutch Rockstart (8).
Early-stage, growth or corporate?
The Climate50 is the annual Climate VC ranking and lists the 50 most recognized Climate Tech investors globally. It takes the investments into account that fight climate change, by matching them to a selection of the Sustainable Development Goals of the UN (SDGs 6, 7, 9, 11, 12, 13, 14, 15). They not only look at direct performance metrics (companies invested in 2021 and over the past 10 years, portfolio companies, unicorns, exits in 2021 and over the last 10 years, and ratio of SDG-related investments to the total amount of investments in 2021), but also at indirect metrics such as brand awareness (number of followers on social media), the rating of founders, and popularity among the general public.
Of the top 50, 23 VCs are early-stage, 14 growth-stage and 13 corporate. The highest rated early stage VC is the generalist Plug & Play Ventures, which has an AUM size of over $1bn. Other high-scoring early-stage VCs in the list are Third Sphere, Elemental Excelerator and Prelude Ventures, all based in the US.
For the growth stage, the big winner is Energy Impact Partners, closely followed by Breakthrough Energy Ventures. Energy Impact was also number 1 of the total ranking. It's no coincidence that both these VCs are focused on energy: energy is more mature compared to other fields in climate tech, thanks to the earlier cleantech boom. The number 1 for corporate VCs, the French Engie New Ventures, aims at energy start-ups as well.
So which investor is a good fit for me?
Digging through all the articles, the usual issue appeared: although some things overlap, no one agrees on the names and numbers. Your choice will depend on what type of start-up you have: not only the stage matters, but also the field you're working in. A lot of VCs do impact investing or work with climate tech in general, but some of them focus on a specific field, such as energy or AgTech and Foodtech. The article contains a few links to pages that work with helpful filters (field, stage, geography). Certainly check them out if you start researching. If you're curious about future developments VCs are looking forward to, check out this article.
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