Oct 28, 2020
Latest trends in Greentech and their fundraising
Focus on the evolution of ecology and their VC investments
Hello everyone !
To continue this series on the trendiest sectors of startups, we’ll analyse Greentech today ! 🌳
First of all, it should be noted that GreenTech do not really target a specific sector or field, but rather a set of innovations that promote the transition of the economy towards a more ecological model. Second, two trends can be identified :
1) Cleantech, which are based on industrial technologies and services that use natural resources, energy, water or raw materials and aims at improving productivity.
2) Climate tech, which focus on solutions to decarbonize the environment in the broadest sense : mobility, consumption, agriculture, etc.
Climate techs constitute a broader field than Cleantech since they focus on all the sectors of the economy and not only on the energy sector !
A strong interest of CVCs and VCs
In recent months, Amazon has committed to launch the Climate Pledge Fund, a $2 billion (nice) venture capital fund for Greentech. Even better : Jeff Bezos has pledged $10 billion to fight climate change with the creation of the Bezos Earth Fund. Thanks Jeff 👍
And it’s not the only one : Microsoft has announced a billion dollars for its Climate Innovation Fund. Thanks Bill 👍
(Mark, we’re waiting for your announcement for GreenBook Ventures 😎)
The world’s leading generalist VCs have also announced they are seeking opportunities related to Climate tech, including Sequoia Capital, Founders Fund, Khosla Ventures, Kleiner Perkins and Union Square Ventures.
In addition, according to an excellent PWC study, Climate tech attracted “only” $418 million in venture capital in 2013. In 2018, nearly fifty times as much capital was deployed, before the valves shrink to $16.3 billion in 2019. That’s 6% of global venture capital investment worldwide !
But then, what are the areas of development of the startups likely to interest our VC friends ?
That’s what we’ll see in a moment 🕵️
1) Reduction of carbon impact
Last year, no less than ten billion tons of ice were fractured. 6 km wide, 800 m deep and 1.6 km long, the iceberg that broke apart weights between 10 and 14 billion tons. This represents 3% of Greenland’s annual ice loss, estimated at 286 billion tons. This is caused by global warming, therefore CO2 (for the most part), methane and nitrous oxide.
Please be careful with the emission of these gases. ⚠️
Startups wanted to make their contribution in reducing these emissions, and their positioning can be analysed from two complementary angles 📐 :
1) service rendered to the greatest number of people because, basically, we are all part of the same ecosystem on a planetary scale ;
2) a golden opportunity because the size of the market is itself very large (between having to regulate developed countries and controlling emerging countries, each country is within the scope).
Let’s analyze below the solutions that protect/repair the environment by limiting the carbon impact of activities that are not very eco-friendly :
Prometheus (California) : Founded in 2018, the startup aims to recovering excess CO2 from the air and transform it into aircraft fuel. And the cherry on the cake is that this fuel does not add new carbon dioxide to the atmosphere when it is manufactured or consumed. It can be used in any car that uses gasoline because its molecular composition is identical to gasoline made from petroleum 🛢️. Prometheus gasoline will begin to be sold in California at the end of 2021, and then to the rest of the United States and abroad starting in 2022 !
→ The startup raised $150,000 in Seed through Y Combinator in 2019.
Holganix (Pennsylvania) : Established in 2010, Holganix sells environmentally friendly lawn care products that contain natural microorganisms. Their products reduce fertilizer use by up to 90%. The management team has successfully grown two multi-million dollar lawn care companies in the past and is now focused on creating another company with a more impactful and greener focus. Its products can be applied on many different surfaces : Farmyards, golf courses, residential lawns for gardening. 🏡
→ Holganix has raised $3 million in a 6th round of financing in 2017 by iSELECT FUND, Argonautic Ventures.
CelluComp. (Scotland) : Born in 2006, this Scottish company focuses on replacing cement with a sustainable material. This is a good idea because the cement industry accounts for nearly 7 to 8% of global carbon dioxide (CO2) emissions. This famous material is called Curran, which is produced by extracting cellulose nanofibers from vegetable roots.
→ The startup completed a 3.7 million pound Series A in 2016 with the participation of Sofinnova Partners.
2) New consumption patterns
Sometimes figures are better than long speeches :
- More than 8,000,000 tons of plastic waste is dumped into the sea every year ;
-100,000 marine mammals killed each year ;
- More than 1400 marine species already impacted ;
- 70% of floating waste ends up sinking ;
- 450 years for a plastic bottle to degrade ;
- 5 Southeast Asian countries are responsible for 60% of ocean plastic pollution.
That’s it. 🤓
Logically, this waste and quantity of plastic comes from somewhere, namely from our industrial, energy or food consumption patterns.
→ So certainly, there management of the destruction of this waste at a planetary scale is catastrophic. But we can do better. 👊
Doing better is the work that some startups have been doing in creating alternatives to reduce the excess use of resources :
Ÿnsect (Paris, Next 40) : Since 2011, Ÿnsect has been transforming insects into high quality, high value-added ingredients for pets, fish and plants, providing not only improved nutrition but also significant yields and health benefits. The startup is building high-tech industrial facilities in harmony with natural ecosystems, offering a long-term solution to the growing global demand for protein. Its unique know-how enables it to be a privileged partner for food professionals, laboratories, public institutions and farmers in the insect industry. The startup now employs 130 people !
→ Ÿnsect has just raised $139 million in debt and $65 million in Series C with the participation of several funds including Upfront Ventures, Supernova Invest, Astanor Ventures, Armat Group and Happiness Capital.
Lactips (Rhône-Alpes) : Founded in 2014, Lactips designs and markets biodegradable, edible and non-edible plastic products based on milk proteins. For example, Lactips offers a cold water soluble bioplastic that can be used for films, bags and 3D printers !
→ The startup has completed a 3.7 million euro Series A in 2018 with BNP Paribas Développement, Crédit Agricole Haute-Loire, BASF Venture Capital and Demeter Partners.
Agricool (Paris) : Born in 2015, the startup wants to grow pesticide-free fruits and vegetables such as strawberries, herbs or salad. Tomorrow, it will be a wide range of fruits and vegetables ! To reach their goal, recycled containers are used. And with only 35 m2, Agricool produces the same amount of food as 4000 m2 of traditional farmland. All without transport and with 100% renewable energy.
→ The startup has raised $25 million (Series B) in 2018 thanks to BPI, Kima Ventures, XAnge and Daphni, among others.
Glowee (Paris) : Born in 2014, Glowee is a bioluminescence system with no external energy consumption. It uses the natural ability of luminescent bacteria to produce light. The solution is comparable to that of a luminescent sticker and can therefore adopt any form. For example, it can be used on store windows to give visibility to brands at night. It is an excellent alternative to reduce the energy impact ! 💡
→ The startup has successfully completed a 1.3 million euro crowdfunding in 2019.
Winnow (London) : Founded in 2013, Winnow has created a solution called Winnow Vision which is an AI tool helping chefs to reduce food waste by 50%. Kitchens using Winnow have seen a 40–70% reduction in food waste in one year and savings of 2–8%. As a result, kitchens get more benefits while reducing their impact on the environment. 👨🍳
→ The start-up has completed a $12 million Series B debt financing of $8 million in 2019 with Circularity Capital, D-Ax corporate venture and European Investment Bank.
3) Circular Economy and Citizen Empowerment
Currently, we use far more resources than our planet can provide. This is problematic, given that the world’s population is expected to reach nearly 9 billion by 2035. In addition, there is a second problem (there is no end in sight) : global waste is expected to reach 3.40 billion tons by 2050.
When I look at these figures, I’m not feeling good. Neither are you, we’re not going to lie to each other ; environmental disaster is coming. 👑
Fortunately, there is (still) a way to overcome this : The circular economy. As its name suggests, it is a closed-loop business model that allows companies to recycle and reuse various products in new ways after their life cycle ends. In other words, moving from a “make-use-dispose” system to a “produce-use-reuse” system. ➰
The primary objective is to minimize the production of waste and keep it out of landfills and incinerators for as long as possible. The difficulty lies in knowing whether recycling a type of waste consumes more energy than disposing of it (the ERR = Energy Return Rate is used to verify this). The more difficult the components are to recycle, the more energy they require. If they require more energy to be recycled than to be disposed of, then it is better not to recycle. For example, if you were trying to recycle the asphalt left by tire tracks on the road, it would be an energy gulf without a name. ⚡
This being said, there are many resources that fall squarely within the scope of the circular economy and that can (well, must) be recycled. This technique offers a real impact on the preservation of the environment, and we will see this in more detail with the following startups :
HelloZack (Paris) : Created in 2016, HelloZack initially proposed to individuals to buy back their second-hand electronic products to resell them in a few clicks. Six months after its creation, the young company has pivoted to focus only on Apple products.
HelloZack thus developed a platform to facilitate the online resale of the Apple brand’s products. Once the price of the product is estimated (MacBook, iMac, iPhone, iPad, Apple Watch…), the company proceeds to its buyout before putting it back on the market. If the seller is in Paris, the start-up offers to deposit the product in a physical store or to book a courier to simplify the task. If the seller is located outside Paris, he must send his product by post.
Once the product is in the hands of the start-up, it is cleaned and repaired if necessary. As soon as the products are ready for a second life, they are offered for sale on several e-commerce sites, such as Amazon, eBay or Leboncoin.
→ The startup raised 1.2 million euros in 2018 thanks to Business Angels Aurelien de Meaux, Alexandre Huckert and Etienne Turion.
Heru (Abbots Morton, England) : Heru’s solution makes it possible to produce hot water for the home from everyday objects. Heru’s domestic energy resource unit is patented and therefore ensures that the usual waste never actually becomes waste. Imagine buying an item, taking it home, and using its packaging to power your home. Concretely, it looks like a washing machine, except that instead of putting clothes in it, you put your packaging in it. Smart.
→ The startup hasn’t raised any funds yet, but it might be worthwhile for VCs to take an interest because the concept is super innovative !
EcoTree (Paris) : Ecotree allows to buy trees on a platform and thus become forest owners. It is possible to follow them on a personal space or by going directly on site. These trees will eventually be exploited to produce a sustainable timber that will store carbon. 100% of the profits then go to the investor.
→ The startup completed a 1.2 million Euro Series A through West Web Valley in 2018.
Hesus (Ivry-sur-Seine) : Hesus is a company specializing in the management (disposal and recovery) of construction site waste (land and materials). Thanks to its Hesus Store digital platform, the company digitizes construction site waste management by optimizing the supply and demand for materials and inert earth, thus promoting the circular economy.
→ Hesus has successfully completed a EUR 10 million financing round in 2019 (Series B) with Demeter Partners as Lead Investor.
This article is finished ! Thank you for your reading, I hope you enjoyed it ! By the way, if you know about other Greentech, don’t hesitate to comment below 😎.
To continue the adventure, the 9th episode will focus on an exciting sector that has concerned us all : that of Edtech ! 🎓
