Last month, Chief Investment Officer Antoine Pradayrol addressed the audience at Alpha Wolves London Conference on ‘why you’re missing the boat if you are not in Climate Change investment’. The investment world as we know it is changing at an accelerating pace and one which will not slow any time soon given the United Nations sustainable development goal tracking (read our article about SDG’s GAS companies have been contributing to) and key goals to reach Net Zero by 2050.
The opportunity – is Climate Tech profitable?
In his talk at the conference (which brought together attendees from 36 countries including investors, executives and scale-ups), Antoine addressed the global implications of climate change and the opportunity this presents for investors to back high-growth companies that are not only financially sustainable but that will have a sustainable impact on our planet, hopefully for years to come.
“In 2050, the world must be net zero in terms of greenhouse gas emissions. And in that world, the winners will be the companies that are able to make products or deliver services in a way which is carbon efficient. So zero carbon is going to be a key source of competitive advantage for businesses in the next decades.”
Investment is all about making returns at scale. The biggest question is, ‘is this a profitable sector?’. Climate Tech is a sector on the rise, with the amount of investment into startups and scaleups in the sector being 24 times the amount it was 10 years ago. Additionally, there are now 45,000 companies in these different sectors globally, four times more than in 2010.
“Investment in climate tech is all about supporting the expected future winners, that is the technologies and solutions that directly cut emissions and enable us to adapt to the impacts of climate change.” – Antoine Pradayrol
Watch some key clips from Antoine’s talk about the climate tech investment space trends below…
The Climate Tech opportunity from Green Angel Syndicate on Vimeo.
Why act now?
So why should investors act now?
President Nick Lyth gave an inspiring keynote at the Emergence 2023 conference with the theme ‘Igniting growth and innovation for a better tomorrow.’. Calling for a change in the framework of investment to fall in line with the radical changes in our environment. Watch the full video.
“We (as a planet) have now become fragile. That is why in our work as investors, dealing with enormous pots of money, we have to recalibrate the relationship of what we’re doing with that money to the reality of the world we live in.”
Nick addressed professional investors, private investors and entrepreneurs alike with the proposition to change the investment framework and to not only invest for tomorrow but to invest for the 22nd century. This means focusing on investing in companies who are making a positive impact on the planet and have the potential to scale up and focussing on the key metric of carbon emissions when investing the impacts these companies are having on our atmosphere.
Read more in Nick’s recent open letter on Investing for the 22nd Century and his blog: A New World needs a New Investment Framework.
What venture capitalists are calling for
The evolution of Green Angel Ventures comes at a time where climate investment is imperative to our planet and where there is a demand from the investment community to put money into ‘sustainable’ funds. The proposition is to fill this need in the market for meaningful and clear impact measurement metrics, the growth of sustainable investment funds, with the view to grow a network of companies fighting climate change across each sector of the economy. Watch the video below, where CEO Cam Ross talks about these key needs from the investment community and how our approach will help to meet these.
Cam Ross – Investment Community Insights from Green Angel Syndicate on Vimeo.
1. Clarity on the key measurement focus
In the world of sustainable investments or ESG, there are so many confusing terms and a need for clarity on what the key measurement focus should be. We work with greenhouse gas focussed metrics that are clear and translate into direct, measurable impact.
“we offer a really clear greenhouse gas focused metric, which we analyse every six months with our portfolio companies. As a result of that we are seeing really strong traction and interest in things like our climate change fund, and our increasing venture fund from institutions that want to have that direct impact and are getting the signals from their stakeholders, that money and effort needs to be invested into this space” – Cam Ross, CEO
To learn more about our carbon impact measurement, read our recent impact report.
2. Demand to put investment into sustainable funds
One insight gathered from talking to members of the investment community at recent industry events is that there’s demand to put money into sustainable funds, and sustainable action, which is exactly what we offer. That is companies fighting climate change with their products and services, and having a direct impact on the concentration of greenhouse gas levels, the biggest problem we must solve.
There has been considerable conversation about the ongoing consultation from the FCA about its sustainability labels, i.e whether a fund or an investment opportunity can use the word sustainable or sustainability and its name. And the FCA has a consultation underway at the moment about what that’s going to mean.
“with ESG becoming increasingly popular among corporates, many want to transition their operations to net zero emissions. Hence, the size of the addressable market for climate tech startups is expanding and investments costs are decreasing.” – Antoine Pradayrol
3. Creating a climate tech industry nexus
One of the fantastic things that we’ve seen by building up the number of portfolio companies that we have, is that there are actually ongoing relationships now between some of those businesses, so they are buyers and sellers to each other in a marketplace. We can only achieve that diversity or that density of relationships through having a number of portfolio companies in our network. With green angel ventures, we look forward to having 50 to 100 companies in the portfolio, which will be a nexus for a number of relationships, commercial relationships between those businesses.
“Being able to unlock those and introduce people from one side of the of the marketplace to another is a really great way of some of our portfolio companies being able to grow, and also to deal with people that they know have a really similar mindset to them to helping to fight climate change in in the years to come.” – Cam Ross, CEO
These are exciting times for investors and for the growing companies which are fighting climate change with their products and services and with the market for climate tech startups expanding and investment costs decreasing, it’s a great time to invest.
Cam, Antoine, Nick and the team at Green Angel Ventures are looking forward to meeting and speaking with investors over the coming months to discuss this further. The team will be joining policymakers, innovators, funders and leaders from the public and private sector at Innovation Zero in London later this coming month, on 24th and 25th May.
Register and meet the team at Innovation Zero.
Visit Green Angel Ventures now or get in touch to explore opportunities for investing in climate tech that is changing our world for the better.