Mitiga Solutions — Redefining climate risk management through AI
Deep tech companies have been at the core of what we do at Kibo Ventures for the past 10 years. Since we invested in Jetlore in 2013, we have constantly met and invested in companies built by technologists such as Pedro from Devo, Esther from Acurable, Elisenda from Vilynx, Daniela from Defined AI, or Germán from Gestoos.
A few weeks ago we announced that we led Mitiga Solutions’ €13m Series A together with Microsoft Climate Innovation Fund, Nationwide Ventures, Creas Impact Fund, and Faber Ventures. Mitiga is one of those examples of technology-first companies: a research lab spin-off, mostly driven by developers & technical profiles and built by two PhDs who have spent most of their careers dealing with climate research.
Usually, when we analyze companies with this profile, the problem we find lies around product market fit and distribution: despite having impressive technology and talented teams, they may be targeting niche markets or struggling to identify the right go-to-market strategy. Mitiga is amongst the few companies that managed to cross the chasm, found a target market, and is providing a compelling USP for which customers are willing to pay recurrently.
Keep reading if you want to know what has made Mitiga stand out, our thesis around climate risk, and how Mitiga will play a key role in dealing with it.
Climate change and natural catastrophes
The number of extreme weather disasters has tripled in the last 30 years, affecting more than 189Bn people historically and contributing to more than $560Bn in losses in Europe alone — what’s more worrying is that 10% of these damages were produced in 2021 only — and over $280Bn in the US. The outlook for the coming years is even worse: by 2030, the number of disaster events is projected to increase by 40%.
Yet risk managers (insurers, re-insures, banks, real estate owners, and humanitarian volunteers) lack resources to accurately manage and understand the impact of these natural hazards and prevent them from becoming disasters. Insurers, for instance, have historically trusted probabilistic models that use historical data to tackle this issue but find themselves with huge losses due to the different nature of these events today versus the last 15 or 20 years when data was gathered.
In this context, pressure from regulators is also on the rise:
- The new EU Taxonomy now requires regulated market-listed companies and EU-based entities with at least 500 employees to report physical risk impact with regard to climate change adaptation and mitigation
- The Task Force on Climate-related Financial Disclosures (TCFD) has developed guidelines to effectively evaluate and report climate-related financial disclosures
Beyond compliance and regulation, many industries face significant challenges due to climate change. For example, homes in Florida that are exposed to changing climate risks have experienced value depreciation of approximately $5Bn; there has been an 8% decrease in housing prices in flood-prone areas of New York; and a 61% increase in non-renewals of insurance policies due to denied coverage in moderate-to-very-high fire risk in California (source).
Meet Mitiga: a physics-based, multi-hazard, and high-performance computing platform
Mitiga is a Barcelona-based company born in 2018 and founded by Alejandro Martí, Ph.D. in applied mathematics and physical sciences, and Mauricio Hanzich, Ph.D. in informatics.
They have built a platform that provides an all-in-one solution to manage and protect against extreme climate and natural disaster risks. The platform provides information about the potential or actual occurrence of natural hazards and the impact it might have, delivered through APIs or presented to its customers through (i) specific dashboards, (ii) hazard maps, (iii) climate risk indexes/scores or (iv) risk transfer products.
We believe Mitiga has the ingredients to become a global category leader and the go-to company for any enterprise looking to mitigate the impact of climate change in its day-to-day activities. Our investment thesis for Mitiga winning this huge opportunity is built around the following fundamental blocks:
- A unique team: Alex and Mauricio are leading a 32 people company that includes 14 PhDs, 10 developers, and 4 climate experts. Alex and Mauricio have been more than 20 years doing research in the climate space and have been collaborating with the Barcelona Supercomputing Center (BSC) for more than a decade. Also, the team has built a unique culture that embraces growth, leadership, forward-thinking, and innovation
- Born from tech but raised towards business: Mitiga was born in BSC and has been developing a state-of-the-art platform that runs proprietary AI models for each hazard (wildfires, volcanoes, extreme weather, sandstorms, …), uses physics-based data and can cover natural catastrophes worldwide. Besides being born as a technology-first company, Mitiga has grown with a commercial purpose and has found product market fit amongst the insurance, real estate, and banking industries. They have built 3 different business lines from their platform: Risk Modeling, Climate Risk Score, and Cat Bond structuring
- Scalable go-to-market strategy with a clear customer profile and USP. Mitiga has closed contracts through direct sales with insurers like AXA Climate, Howden Group, Willis Tower Watson, asset managers and operators like Group Suez, INDRA, Safran, and governmental organizations like EUROCONTROL, UNDP, and non-profits like the Danish Red Cross and others. In addition, Mitiga has a very relevant distribution partnership with Microsoft
- Efficient growth: reached ca. €1.3m ARR having raised less than €800k dedicating a ton of resources to building their platform and product, learning through some project-based deals while building a solid base of recurrent customers with >120% net dollar retention rate and above benchmark margins
Mitiga now enters the next phase of its journey: scaling up sales, team, and product while preventing natural hazards from becoming disasters, pushing the boundaries of how risks are mitigated through cutting-edge technology, and making the world a more resilient and safer place to be under a changing climate.
We are very excited to be part of this journey and looking forward to the coming years of Mitiga. If you are looking for your next challenge and feel passionate about climate and technology, Alex and Mauricio are building the team out of Barcelona and currently hiring a bunch of people, reach them out! Go Mitiga 🌋!!!!!
-Written by Jordi and Javier. With the help of all the Kibo Ventures & Mitiga’s teams
