What the numbers say: Venture capitalists are moving beyond the initial focus areas within the climate tech industry, such as solar, wind, and lithium-ion battery startups, to decarbonized food, carbon-removal, advanced sustainable materials, and next-generation fuel startups. Within the climate tech sector, VCs invested $18.4B in storage tech, $11.4B in mobility, and $9.5B in food and agriculture startups in 2022. What happened: The reason for the move is that solar, wind, and lithium-ion battery technology has advanced and are gradually replacing fossil fuels. As the technology matures ever further, the market forces will help bring down the costs of the technology even more. As a result, VCs are now focusing on other domains within the climate tech industry that are tackling other challenges. Relevance: Last year, VCs invested $70.1B into the climate tech sector, up 89% from 2021, per HolonIQ Global Impact Intelligence. The sector defied the venture funding pullback trend from last year. However, VC and PE funding for the industry declined 12.8% in Q1 2023, showing that the sector is not entirely immune to overall macroeconomic conditions. Nevertheless, investors are confident about the sector's potential due to the recent introduction of the Inflation Reduction Act, which has nearly $374B of incentives for carbon-free industrial development. Per Bloomberg, the introduction of the climate bill is poised to capitalize 4.5 times more investment from the private sector than the public funds earmarked for the initiative.
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23 generalist and climate-focused venture firms joined the Venture Capital Alliance (VCA), an initiative aimed at reducing emissions at VC firms and their respective portfolio companies. VC firms will need to achieve net-zero emissions by 2030, while their portfolio startups will need to have net-zero emissions by 2050. More: - Founding members of the VCA include Tiger Global, DCVC, Prelude Ventures, Energy Impact Partners, Capricorn Investment Group, S2G Ventures, Union Square Ventures, World Fund, and 2150.
- Per Crunchbase, the VC firms in the alliance collectively have $62.3B in assets under management.
- Generalist VC firms must ensure their portfolio startups reach net-zero emission targets by 2050 by decarbonizing their operations.
- VCs will need to ensure that climate-tech investments have the potential to save at least 100 megatons of carbon dioxide emissions.
- The alliance is placed under the Glasgow Financial Alliance for Net Zero (GFANZ) — a group formed during the COP26 climate conference — and is a part of the U.N.-approved Race to Zero campaign.
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Malaysian drone services startup Aerodyne Group has tapped Citigroup for a potential $150M to $200M fundraiser. The financing, expected to be a Series C round, is reportedly being sought at a unicorn valuation. Aerodyne's fundraising efforts come ahead of the firm's targeted IPO listing, which could happen in 2024 or 2025. More: - Aerodyne is a drone-based solutions provider that leverages AI and drone data to resolve complex industrial challenges and enable large-scale data operations, analytics, and process optimization.
- The firm has a presence in 35 countries and manages nearly 560,000 infrastructure assets on behalf of clients.
- The firm has raised $60M in total funding to date, which includes a $30M Series B round led by Intervest and Kejora Ventures in 2019.
- The current round may be completed in stages, with the first close expected by mid-year, per sources close to the matter.
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Global fintech startups secured $14.9B in VC funding in Q1 2023, up 52% QoQ from Q4 2022's tally of $9.8B. The funding surge was largely due to Stripe's $6.5B funding round, which closed in mid-March. Despite the increase, the sector is expected to face a funding shortfall that could last for the next four to eight quarters, per Crunchbase. More: - In Q4 2022, quarterly funding fell below the $10B mark for the first time since Q1 2019.
- Before the VC funding pullback that started in 2022, fintech was one of the highly funded sectors raking in nearly 20% of the $681B deployed in global startups in 2021.
- Several seed to Series C startups that raised funding in 2021 and 2022 will be looking to raise funding over the next few months, which may be tough considering the difficult fundraising environment for fintech startups.
- Bessemer Venture Partners advises such startups to raise capital before the company needs it rather than waiting for the "perfect" time.
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The Canadian federal government selected six funds that will receive a collective $50M capital allocated for the life science stream under the Venture Capital Catalyst Initiative (VCCI). AllosteRx Advanced Therapies, Amplitude Ventures, CTI Life Sciences Fund, Genesys Capital, Pender Ventures, and Sectoral Asset Management are the fund managers set to receive the funding. More: - The federal government renewed the VCCI program with a $450M commitment under three streams.
- Out of the committed capital, $350M was earmarked for funds of funds and $50M each for life sciences and inclusive growth streams.
- The exact distribution of the $50M capital was not disclosed. However, per The Logic, CTI will receive $5M from the VCCI program.
- CTI intends to divert the proceeds towards its third fund, which has secured $132M in commitments so far.
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British fintech-focused VC firm Anthemis Group laid off 16 employees, or 28% of its workforce, earlier this year. The move is part of its larger restructuring efforts "to set up the business for future growth." The firm is focused on deploying capital toward "financial system improvement and reinvention." More: - Farhan Lalji, a former managing director at Anthemis, was reportedly laid off during the restructuring efforts.
- After the layoffs, the firm hired a new investment principal and head of intellectual capital.
- Anthemis currently has a 44-member team across its European and North American offices.
- The firm has $1.5B in assets under management (AUM).
- It last received $700M in capital commitments in 2021 for its funds.
- So far this year, the company has invested in Flyby, Elevate, Greenspark, and Agreena.
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- Yahoo acquired sports betting startup Wagr for an undisclosed sum. The Nashville, Tennessee-based startup had raised $16M in total funding to date from investors, including Greycroft, Seven Seven Six, and Kraft Group.
- Advanced metals recycling startup Cyclic Materials secured $27M in Series A funding led by Energy Impact Partners and BMW i Ventures.
- VMG Technology led a $20M Series B round into car wash CRM technology developer Rinsed.
- Amazon Industrial Innovation Fund, Safar Partners, and Yamaha Motor Ventures provided $14M in funding to Veo Robotics.
- South Korea's Ministry of SMEs and Startups will invest $748M (KRW 1T) into fund-of-funds this year in a bid to boost the VC sector in the nation.
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 |  | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords. | |
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