In the last year there has been a transformation in venture capital, with new funding mechanisms resulting in a high investment flow into private markets.
The investment market for climate-based technology echoes this trend.
This combination of an increasing focus on ESG in private markets with new ESG legislation is fuelling strong growth and causing a strategy shift in organisation to focus on these areas.
Climate based investing has grown dramatically in 2020-2021 with $87.5bn in 12 months which is a 210% increase on the year prior making climate tech account for 14cents of each VC dollar spent.
The expenditure on VC tech is not just growing overall because of new companies entering the space and receiving similar investment amounts, the average deal size is nearly 4x the year previous growing from $27m to $97m with ‘megadeals’ becoming increasingly common in the space.
When looking at the subsets of investment within Climate Tech, mobility and transport represent the highest proportion of investment with $58bn of investment form H2 2020 to H1 2021. The primary focus of funds in this sector were focussed on electric vehicles and low emissions vehicles with a number of mega deals in the space e.g., Lucid Motors raising $6.9bn.
The US received the most investment with the San Francisco Bay Area remaining the hub for innovation although London Berlin and New York were the next most active.
The PwC report highlights that of the 15 technology areas they analysed, the top 5 that represent the ability to cut 80% of future carbon emissions receive only 25% of total investment highlighting a missed investment opportunity as well as an opportunity to deploy capital with a high potential positive impact.
The real takeaway for procurement is that there is a lot of growth and innovation within the ESG markets with a wide breadth of solutions for different markets and industries focussed on improving the global climate through a focus on individual companies’ activities.