This year may not have been the easiest year to get through—we find ourselves still reeling from the pandemic and on top of that, we are also dealing with extreme weather and the consequences of climate change.
The report states that this year climate tech startups have raised $32 billion so far—an amount that far surpasses any other year and is almost five times more than what was raised in 2016 directly after the Paris climate agreement was signed.
According to Stephen Feline, the North America director for London & Partners, there are three driving forces responsible for the increase in climate investments. “We know there’s growing consumer demand for more sustainable technologies in areas such as electric vehicles or renewable energy, leading to a significant increase in the number of startups and companies that are developing technologies in this area,” he explains. “Secondly, there’s a lot more funding available to these startups by venture capital investors [who] want to focus on backing impact-driven companies which they know will resonate with customers,” he adds. Thirdly, he believes the COP26 global climate conference plays a role in inspiring people into action.
It is wonderful news that people are beginning to put their money where their mouths are and that influential investors recognize that humanity is finally pushing together for a harmonious existence with the planet. Feline believes that this is just the start and that investment in this area is likely to grow rapidly, saying, “2021 has already seen record levels of investment into climate tech, with hubs like the Bay Area and London driving much of this growth. Next year, we can expect lots more opportunities for climate tech startups to attract funding and support from both policymakers and investors because they are increasingly recognizing the importance of technology and innovation in helping to tackle the global climate crisis.”
According to the report, most of the funding (80 percent of it) is being funneled into energy and transportation startups, followed by food companies. A smaller percentage of the investments are going to startups focused on circular economy and enterprise software.