NET ZERO REPORT
MAPPING GLOBAL SUSTAINABLE TECH PIONEERS
In partnership with BNP Paribas
'Scientific evidence for warming of the climate system is unequivocal.'UN Intergovernmental Panel on Climate Change
Global organisations have rallied. The United Nations has developed Sustainable Development Goals (SDGs), with one of its aims being the reduction of carbon emissions, and the UN has brought national governments together to address climate change causes through the IPCC.
For change to be achieved, though, talk is not enough. The World Economic Forum states that digital technology can reduce global emissions by 15% in 2030.
At Tech Nation, we believe that UK tech has a fundamental part to play in combating climate change, but support is needed to help pioneering sustainable tech companies accelerate their growth.
As a result, we have developed our Net Zero1 programme that will take a cohort of 30 mission driven companies to aid the fight to reduce global Carbon Dioxide (CO2) levels. In 2019, the UK became the first major economy to pass legislation to reach Net Zero by 2050, and we believe this programme will help fulfill this ambition.
“I am pleased to see that Tech Nation is providing another channel for these founders, increasing the enthusiasm among founders to create sustainable companies.”Naveed Chaudhry, Centre for Climate Change Innovation
Net Zero is the balance between the amount of greenhouse gas added and removed from the atmosphere, globally we will reach Net Zero when the amount we add to the atmosphere is not more than the amount that is taken away. To achieve this, challenging changes will need to take place both on a micro and macro scale. These adjustments involve all industries working together and opting to use less fossil fuels and more renewable energy.
Net Zero is fundamentally different to Gross Zero, which is often discussed within the sustainability sector. Gross Zero means stopping all emissions which is largely untenable across many sectors. Year on year the earth is getting warmer, heavily in part to the amount of greenhouse gases we emit into the atmosphere. The 20 warmest years in history have been within the last 22 years which highlights the importance of acting now.
This report investigates venture capital backed Net Zero companies in the UK in terms of their investment, types of companies and clusters. The report also compares these companies to our European, North American, Asian and African counterparts, because to truly solve this crisis it needs to be a global effort.
BNP Paribas is one of the world’s pre-eminent banking groups. Headquartered in Europe, we are active globally and have a major presence in the UK. We are a pioneer in digital technology, working closely with startups and fintechs to establish new ways of working and to deliver the best possible customer experience. We are also a world leader in sustainable finance.
But while we are at the forefront of change, we are in it for the long term. In 1867, we became the first French bank in the UK. Our presence across the country, with 10 businesses in 21 core locations, equips us to provide British companies and investors access to a full suite of products and solutions locally, in Europe and internationally. Our role is simply stated: to help clients achieve their goals by combining local know-how and global reach. In so doing, we seek to make a positive, sustainable contribution to the UK economy and to UK society.
BNP Paribas UK is honoured to support Net Zero 1.0. Our mission is to contribute to a responsible and sustainable economy, providing clients financing and advisory services according to the highest ethical standards and in line with the UN SDGs. We offer secure and innovative financial solutions to individuals, corporates and institutions, including support for the energy transition and cleantech startups, while striving to address the big challenges of today. And there are no bigger challenges today than the environment, local development and social inclusion.
We are engaged with our clients to create a better future.
We are the bank for a changing world.
- Euromoney Awards for Excellence 2020: Best Bank for Corporate Responsibility, Western Europe
- Environmental Finance Bond Awards 2020: Lead Manager of the Year for Corporate Green Bonds
- The Banker Investment Banking Awards 2019: Most Innovative Investment Bank for Climate Change & Sustainability
- Euromoney Awards for Excellence 2018: World’s Best Bank for Sustainable Finance
- In 2019, the UK received £336mn in VC investment for Net Zero companies, 55% more than France, which received £216mn, and 18% more than Germany with £283mn.
- Between 2018 and 2019, VC investment in Net Zero companies in the UK grew by 28% (from £261mn to £336mn), compared to 22% in France (from £176mn to £261mn).
- The UK has a substantial number of Net Zero companies; there are 323, compared to 207 in France (35% less) and 150 in Germany (53% decrease).
- 37% of UK Net Zero companies are at an early stage, showing an impressive pipeline.
- 26% of UK Net Zero companies are late stage, which highlights the immense growth already in progress to meet emission targets.
- The main UK Net Zero clusters (based on the number of companies) are London (98), Edinburgh (15) and Cambridge (15).
- The key clusters in the UK in terms of investment are London (£597mn), Oxfordshire (£232mn), Bristol (£260mn) and Cambridge (126mn).
- Within Net Zero, Energy is the sector which has raised the most in venture capital, with £1.2bn since 2014 across 118 companies, amounting to 36.5% of the total. The next largest was £385.2mn, raised by Business to Business companies across 90 companies, accounting for 27.8% of the total.
- Since 2014, the UK invested £1.2bn in Net Zero companies in the United States.
- Since 2014, UK Venture Capital firms also invested £110mn to Canada, £77mn to Sweden, £179mn to Switzerland, 36mn to India, £9.7mn to Kenya and £13mn to Israel.
Tech Nation Cohort
Figure 1 Tech Nation Net Zero cohort map
Source: Tech Nation 2020, Pitchbook 2020
Airex has a mission to end fuel poverty. Aiming to reduce home energy consumption, Airex is an IoT-enabled smart ventilation control that helps reduce heat demand in homes, whilst managing indoor air quality. The system's in-built smart sensors monitor and analyse environmental conditions, while its cloud based algorithms automatically regulate air flow. Airex is approved by UK energy regulator Ofgem to be adopted under the ECO (Energy Company Obligation) scheme.
The road freight market is worth £2.5 trillion, but it's a big culprit when it comes to carbon emissions. Antonym is tackling the issue with smarter, safer, cleaner and greener logistics. Using proprietary in-house EV technology and advanced manufacturing techniques like Metal 3D printing, Antonym offers a bolt-in plug and play solution to electrify existing diesel trucks to make them electric, zero-emissions, and noiseless.
Dairy farming emits over 1.7 billion tonnes of CO2 equivalent a year, more than five times the global aviation industry. Better Dairy is building the future of food by developing completely animal-free dairy products that are molecularly identical to traditional dairy, using a similar process to beer brewing. Removing animals from dairy production isn’t only great for animals and the environment, but gives consumers better food options and food manufacturers better ingredients.
“We are humbled to join the many game changers who have been through Tech Nation's programmes over the years and are excited to work alongside those in this particular cohort towards building a more sustainable future.”Jevan Nagarajah, Co-Founder & CEO
The best way to drive adoption of clean energy is to lower the cost. Boxergy’s mission is to provide home energy cheaper, greener and smarter by selling it, and the hardware required, as a service. Their Hero platform brings together existing low carbon technologies to maximize efficiency and integrates them with their smart tariff. This allows customers to buy energy when it's cheap and green, and use it when they want.
Manufacturing and recycling supply chains are complex, global and often involve dealing with human rights or environmental issues. Circulor empowers businesses to fully manage their supply chains and drive responsible sourcing and recycling. Circulor creates an immutable record of the chain of custody of materials, linking the end products to their source. This traceability data also enables organisations to make informed decisions to reduce their carbon footprint.
“We are super excited to be joining this prestigious programme and have the opportunity to work with and learn from leaders and experts in the sustainability and net zero impact communities.” Veera Johnson, Co-Founder
Moving to electric vehicles en masse is impossible without the corresponding infrastructure. Connect Kerb’s EV charging and smart cities infrastructure champions sustainability, connectivity and flexibility. Connected Kerb are innovating and developing an entirely new, environmentally sensitive combined infrastructure that has the potential to enable everyone to transition to electric vehicles, while providing an interoperable platform for current and future technologies.
“The Net Zero programme has come at a pivotal time for the UK, as action to fight climate change must be taken now. The private sector has a significant role to play and fast-growth, innovative companies are crucial to shaking things up. We are incredibly excited to be involved in the programme alongside like-minded companies and individuals who want to get the UK moving towards a sustainable future.” Beth Stavert, Communications Executive
CupClub is a platform for brands and retailers to manage and track consumer reusable packaging for the Food and Beverage industry. On a mission to reduce single-use plastics from circulation, CupClub enables customers to halve CO2 consumption by switching to reusable packaging. CupClub manages its end-to-end reuse system by charging customers a flat per order fee to collect, sanitise and redistribute their packaging.
“In partnership with Tech Nation, CupClub plans to scale its reuse system to make zero waste a reality for consumers, brands and retailers UK wide.” Safia Qureshi, Founder & CEO
Earthly is a tech platform giving businesses a new way to lead the fight against climate change. Focused on natural carbon removal, Earthly helps businesses invest in natural climate solutions that take them beyond carbon-neutrality to become climate-positive. Investments support projects that protect, restore and re-establish crucial ecosystems like forests, peatlands, mangroves and seabeds. Each project is vetted by an independent scientific board, monitored by satellite, and visualised on a shareable immersive platform.
“We're excited to join a community of like-minded projects and mentors to share, learn and collaborate on ways we can fast-track our collective progress to Net Zero and beyond.” Oliver Bolton, CEO, Earthly
Ecologi (formerly Offset Earth)
Bristol, South West
Ecologi is a subscription service for your carbon consumption, kind of like Netflix for the planet. With the overarching aim to avoid 2/3rds of all carbon emissions, individuals and businesses can remove their carbon footprints by subscribing to grow their own forests or contribute to other carbon reducing activities. Customers have complete transparency to where their money goes each month, and can set themselves personalised eco goals.
“Green tech comes with its own challenges; it’s such a great opportunity to work together on these and push through. With climate matters, time is of the essence!” Elliot Coad, Co-Founder
Current top-down energy management tools are unable to accommodate increasing renewable energy generation or distributed energy assets on the grid, resulting in costlier grid constraints and missed opportunities for consumers to use zero carbon power. Electron is creating a next generation market platform for low-carbon electricity systems and networks. It enables multiple market operators to interact with thousands of distributed energy resources and create incentives to use renewable generation and network capacity more efficiently.
elmo is a carbon neutral electric car subscription service providing flexible and affordable EV 'usership'. The platform offers fully-integrated, personal e-mobility, with insurance, maintenance, breakdown, road tax and a carbon offset donation included as standard. On top of this, elmo is the world’s first MaaS (mobility-as-a-service) platform to include a home charge point, discounted renewable energy and public charging access - all wrapped into a single monthly bill.
“The elmo team is thrilled to be part of the inaugural Net Zero cohort. It's fantastic recognition for our efforts so far in helping the UK decarbonise through our carbon neutral electric car subscription; but more importantly, for the scale our solution offers to produce a meaningful impact on transport emissions. We can't wait to get started and tap into Tech Nation's expertise and network!” Oliver Jones, Co-Founder
Ember is the world's first 100% electric intercity bus operator and is building its own ultra rapid charging network. Ember's mission is to make a zero-carbon, zero-traffic world a reality. Its tech led approach delivers an integrated platform for managing vehicles, chargers, routes and drivers - allowing them to operate EVs at a higher utilisation than anyone else. Ember’s technology improves the passenger experience, supporting a modal shift away from cars and improving social inclusion.
“We're at a pivotal moment in the global transition to net zero, and being part of a focused initiative that helps drive this ambition forward is a real privilege. This topic needs to be on everyone's radar so having the weight of Tech Nation behind it will hopefully raise the issue and accelerate tech-led solutions to solving the problem.” Keith Bradbury, Co-Founder
Tyres are the automotive industry’s big dirty secret, contributing enormously to carbon-emissions, air-pollution and micro-plastic pollution. Despite electric vehicles (EVs) accelerating towards a carbon-neutral future, tyres have thus far been neglected. EVs are heavier and have higher torque, wearing tyres faster and creating more harmful tyre pollution than normal cars. ENSO addresses this problem by developing more efficient, durable and sustainable tyres for EVs.
“The ENSO team is super excited to be part of Net Zero, allowing us to showcase how better tyres can improve EVs, while reducing air pollution in our cities, and micro plastic pollution in our oceans.” G Erlendsson, Co-Founder
Giki Social Enterprise
The average UK carbon footprint is 9 tonnes per person per year. To help people live more sustainably, Giki’s mobile app enables people to find more sustainable and healthy products in UK supermarkets. Giki Zero is an interactive, step by step guide to a sustainable life, which helps people to understand, track and reduce their environmental footprint, drive change through their own actions and set their own personal path towards net zero.
“Being part of the first ever Net Zero cohort gives us the most amazing opportunity to help many more people build their personal path towards net zero. Working together is the only way we will solve the climate crisis, so joining Tech Nation to be part of the next generation of companies, built to help solve one of the biggest challenges humanity faces, is a real privilege.” Jo Hand, Co-Founder
How businesses and big buildings consume energy needs to change if we’re going to hit net zero in 2050. Hark is tackling this issue by helping enterprises increase efficiency, maximise yield and reduce waste. Hark provides energy analytics and industrial IoT for enterprises, allowing Energy Managers and Asset Operators to easily connect to, monitor and control their buildings, energy meters and industrial process assets.
“We are excited about the potential to build on and around areas we may not have considered, as well as applications of our tech we may have overlooked. Ultimately, we want to surround ourselves with smart, talented and innovative people. This programme focuses on core elements of Hark's mission and that is exciting!” Jordan Appleson, CEO
Bristol, South West
LettUs Grow design the farms of the future. Their aeroponic farming technology and farm management software for indoor and vertical farms delivers higher crop yields, reduces the environmental impact of agriculture and makes farmers’ lives easier. The products also enable people to grow produce nearer to the point of consumption, which eliminates the carbon footprint left by fresh produce.
Tackling the issue of unsustainable materials, Lixea’s BioFlex process takes any type of woody biomass that normally would be unrecyclable and separates the components to make them usable by converting them to products, such as high-quality fine and bulk chemicals, bioplastics, renewable fibres and biofuels once again. It does this by using low-cost, environmentally friendly solvents, called liquid salts or ionic liquids.
Naked Energy is redefining solar energy solutions and tackling the global challenge of decarbonising heating and cooling. Their product ‘Virtu’ is 44% more efficient than existing solutions and takes up 40% less space. Virtu combines solar heat and power, saves the customer money and saves the planet - all within a single elegant product that is easy to install and maintain.
“Our core mission is to help decarbonise the built environment and it’s why we developed the world’s highest energy density solar technology that produces both heat and power. With half of all global energy use going on heating and cooling buildings, we hope that Tech Nation can help us continue our mission to help businesses and communities around the world take a significant leap towards net-zero.” Christophe Williams, Co-Founder & CEO
Petalite wants to reinvent the electric vehicle industry by creating a charging technology that’s cost efficient and more reliable. Their patented SDC charging technology lowers charger costs, increases reliability and lengthens lifetime - all whilst keeping similar efficiency to existing competition. Petalites' goal is to be a key player in the adoption of electric vehicles over the next 5 years.
Poole, South West
Pivot has innovated to create a platform and solutions that enable building owners to act with confidence and speed towards the goal of net zero. Through the application of risk analytics and insurance, we bridge between energy management and risk management delivering carbon efficiency with capital efficiency.
“To be part of an ecosystem and network where all parties are seeking to break down barriers to energy efficiency at scale is genuinely exciting and the perfect backdrop for true innovation. Pivot accommodates and encourages a systemic solution, with multiple technologies and revenue models working together in partnership to be most effective. This is what we hope the Net Zero Programme will deliver.” Tim Meanock, CEO and Founder
The true extent of the environmental and climatic impact of our throwaway culture is becoming worryingly clear. Reath enables businesses to break the pattern and transition away from single-use, by applying track and trace technology to solve the data problems inherent in reuse models. They are currently developing the world's first global Open Data Standard for reusable packaging.
“We agree that the tech sector has a vital role to play in tackling the climate crisis. The collaborative tools Reath are building will enable companies to integrate and reuse data effectively into their own systems. The opportunities for impact are endless. Data builds a foundation on which to make informed and innovative decisions, many of which resonate for decades.” Emily Rogers, Co-Founder
Route Konnect makes traffic more predictable and more eco-friendly by making smarter junctions and predicting the amount of vehicles and people. By using real-time automated insights from their combined camera and LiDAR traffic sensors, they’re able to produce a dashboard giving the ability to see the road network at any time during the day, enabling people to make smarter choices that avoids traffic jams and causes unnecessary pollution and burning of fossil fuels.
Changing the focus of the housing industry to decarbonisation, Sero supports housing providers and their residents to reach net zero by sitting at the intersection of home comfort, construction and energy. Sero develops homes that complement changing energy systems using their energy platform, expertise, optimised design, construction and the new commissioning process of new and existing homes. This saves residents money, effort and it’s more planet-friendly.
Small Robot Company
Salisbury, South West
Small Robot Company is reimagining farming to make food production sustainable. By using robotics and artificial intelligence to maximise the yield from crops, they offer a brand new model for sustainable, efficient and profitable farming called Per Plant Farming. It involves their farmbots individually caring and farming each plant. This increases yields, soil quality, biodiversity, and reduces carbon emissions and chemicals by up to 90%.
Spark EV Technology
Cambridge, East of England
Spark EV Technology develops and supplies personalised journey prediction and map display software for electric vehicles of all sizes. By combining data (such as vehicle size, driver experience, weather predictions) with Machine Learning algorithms, it significantly improves journey prediction accuracy compared to existing vehicle systems. Their goal is to accelerate EV adoption by providing their automotive customers a trusted on board system to remove range and time anxiety for drivers.
Surple helps businesses make smarter energy decisions through their energy management software. They pull data from buildings into their cloud-based software, which runs analytics to provide actionable insights to their users, helping them to reduce energy use, carbon emissions and ultimately their costs. Businesses in the UK have an opportunity to collectively save £6bn through energy efficiency and Surple is making this process easier to manage.
“I'm excited to be part of a cohort that is both inspiring and making change for the better. We really have to think differently to get to net zero and I'm glad to be involved in a group of startups that are at the forefront of thinking differently.” Peter Allan, CEO & Founder
Maidenhead, South East
Tepeo tackles the UK’s biggest challenge to achieving it’s Net Zero target: rapid and low cost decarbonisation of domestic heating. Their product combines electric resistive heating with ultra-high density dry core thermal storage (40kWh) to deliver the performance of a fossil fuel boiler without the associated emissions. In parallel, the enormous amount of flexibility it provides supports self-consumption of renewables and supports balancing of the electricity grid.
“We're so proud that our tech has been recognised as having the potential to revolutionise heating. We look forward to being inspired by Tech Nation’s impressive network of entrepreneurial talent and sharing our experiences and learnings with other pioneers of the net zero transition.” Johan du Plessis, Founder & CEO
Topolytics analyses waste at scale and generates invaluable insights for the recycling industry and waste management sector, preventing more materials from ending up in landfills or seeping out into nature. By using data science, they make the world’s waste visible, verifiable and valuable. Analysing data on commercial, industrial and post-consumer waste from multiple sources and systems, they use machine learning and mapping to make sense of this complex combination of materials.
“I love being an entrepreneur. Creating value from scratch - there is nothing better. While it does have its challenges, recognition from a credible organisation like Tech Nation is important. Having access to the network of skills and experience through the Net Zero Programme is vital nourishment!” Michael Groves, Founder & CEO
Manchester, North West
Creating intelligent homes for a sustainable future, Wondrwall is a technology company dedicated to changing the way we live and how we use energy. Combining intelligent AI powered home automation with clean energy production and super efficient heating systems, Wondrwall helps the world's homes save money, time and the environment.
“The size and scale of the challenge ahead in our journey to net zero will require not only technological innovation, but progressive public policy and innovative commercial solutions. At Wondrwall, we always favour taking a collaborative approach amongst all stakeholder groups and strategic partners and we are most excited by the fact that Tech Nation's Net Zero programme shares those values.” Jonathan Williams, Marketing Manager
Zeigo uses machine learning to reduce the complexity surrounding renewable energy procurement, making it easier for corporations, renewable energy developers and suppliers to switch to, or offer, renewable energy solutions. It’s a one-stop-shop for stakeholders to transition to clean energy through Power Purchase Agreements (PPAs) and short-term contracts. Zeigo uses data insights to increase market transparency.
“Being recognised by Tech Nation as a valuable solution to achieving net zero is a great achievement. We will look forward to evolving Zeigo with the support of the Tech Nation community to advance our commitment to creating a more sustainable future.” Juan Pablo Cerda, CEO
UK Net Zero
UK Net Zero investment has risen rapidly from 2017
In the build up to the Net Zero legislation that was passed in 2019, the UK was already increasing investment in Net Zero companies. In 2017, £138mn was invested which increased to £261mn in 2018. Investment then further increased by 28% reaching a peak in 2019 of £336mn. One of the largest UK based Net Zero companies is Oxford PV, they raised a total of £133.26mn to create solar technology. Oxford PV is a spin out from Oxford University which highlights the important role higher education institutions play in creating a strong pipeline of climate neutral companies.
Figure 2 Net Zero VC investment in the UK (2014-2020)
Source: Pitchbook 2020 Notes: 2015: £300mn; 2016: £158.16; 2017: £138.18; 2018: £261.33; 2019: £336.43; 2020: £262.62
United Kingdom Clusters
Key Net Zero investment clusters in the UK are London (£597mn), Bristol (£260mn), Oxfordshire (£232mn) and Cambridge (£126mn)
The key clusters in the UK in terms of investment are London (£597mn), Oxfordshire (£232mn), Bristol (£260mn) and Cambridge (£126mn). As shown with Oxford PV, University institutions play a big role in NetZero company creation and the leading cities in the UK all have strong higher education ties. In fact many of these Universities offer courses on sustainability such as Cambridge University, which offers a postgraduate degree in Sustainability leadership and Climate Change by King’s College London.
“A significant proportion of our companies, both on our accelerator and through Climate Launchpad have come out of universities.”Naveed Chaudhry, Centre for Climate Change Innovation
Figure 3 VC NetZero investment UK clusters
Source: Pitchbook 2020
Figure 4 VC Net Zero investment sectors
Source: Pitchbook 2020.
“The energy sector has been active during lockdown in the UK however energy should be broken down and considered by the sub-sectors such as energy generation, energy distribution, energy storage and energy trading.”Nick Lyth, Green Angel Syndicate
In 2018, the top sectors for greenhouse gas emissions were transport and energy with 124.4mtc02e and 104.9mtc02e (Department for Business, Energy and Industrial Strategy, 2020). The UK has pioneered several interesting companies within these sectors which help in meeting Net Zero targets including Elmo, which offers monthly subscriptions to electric cars.
Net Zero companies span a wide range of industries, in the UK the venture backed sectors are Business to Business3 (B2B), Business to Company4 (B2C), Energy, Financial Services, Healthcare, IT and Materials and Resources. The sector which received the largest amount of venture capital funding is energy with £1.2bn since 2014 with 118 companies, 36.5% of the total. £385.2mn was raised by B2B companies with 90 companies, 27.8% of the total.
Scaling investment is reaching UK Net Zero companies
''Corporates are important as they provide a lot of the later stage investment and acquisition that is needed to attract the early-stage investors. They are often also the first customers for start-ups, providing concept validation and pilot projects.”Pippa Gawley, Zero Carbon Capital
UK companies are securing an impressive amount of deals at the initial stages of investment - seed investment and early stage investment both make up 46.75% of the total investment into Net Zero enterprises. In comparison, later stage investments make up only 26.63% of investment.
|Stage||Proportion of investment|
|Early stage VC||37.2%|
|Late stage VC||26.6%|
Global Net Zero
Europe is cleaning up
In 2017, the European Union (EU) had some of the highest levels of CO2 emissions worldwide with 4,483 MT (European Environment Agency, 2019). There has been increased pressure to decrease this figure with the European Union2 now putting together legislation, to be known as the European Climate Law, which will enable the EU to be climate neutral by 2050 (European Commission, 2020).
“I have never been more optimistic about this sector, there are a lot of positives happening in the media which in turn is increasing angel investing into sustainable companies.”Andrew Wordsworth, Sustainable Ventures
In 2019, European Net Zero companies raised over £2.21bn, compared to £962mn in 2018, a 129% increase via venture capital funding. Europe also had 357 deals closed between 338 different companies. Europe is producing great Net Zero companies such as InFarm, an indoor vertical farming company, which aims to improve the environmental footprint of food based in Berlin. InFarm has raised £286mn in total.
France has received significant investment in their Net Zero companies, with a growth of over 500% between 2015 and 2019 from £33.9mn to £216.2mn. The highest peaks in investment were 2017 and 2019 with £152mn and £216mn. Similarly to the UK, in 2019 France also voted in a Net Zero bill to cut carbon emissions and be Net Zero (Felix, 2019). Several innovative Net Zero companies derived from France including Seabubbles, a Paris based developer of eco-friendly water transport and have received a total of £101mn VC investment, the largest in France.
Figure 5 VC Net Zero investment in France
Source: Pitchbook 2020 Notes: 2015: £33.96mn; 2016: £85.75mn; 2017: £152.47mn; 2018: £176mn; 2019: £216.26mn; 2020: £99.45mn
Germany has put climate change at the forefront of their agenda with a climate cabinet being created by Chancellor Angela Merkel to meet emission targets. In 2020 (between January and May), Germany has already received over £285mn in investment, between 2015 and 2019 investment increased over 1000% from £24.39mn to £283mn. As well as possessing Infarm, Germany boasts several other impressive Net Zero companies including WIND Mobility, which has raised £56.6mn with e-scooters to facilitate eco-friendly mobility.
Figure 6 VC Net Zero investment in Germany
Source: Pitchbook 2020. Notes: 2015: £24.39mn; 2016: £103.17mn; 2017: £96.44mn; 2018: £85.42mn; 2019: £283.03mn; 2020: £285.93mn
The Netherlands have one of the most aggressive emission goals, which is to lower carbon emissions by 49% in 2030, with further increases to 95% by 2050 (Government of the Netherlands, 2020). From 2015 to 2019, venture capital investment in Net Zero companies in The Netherlands saw a 20% decrease from £36.7mn to £29.4mn, however in 2018 there was a peak at £176mn which was one of the largest in Europe. The Netherlands have an extensive list of Net Zero companies including Lithium Werks, which creates large industrial batteries to aid the move from fossil fuels5 for energy storage and transportation.
Figure 7 VC Net Zero investment in The Netherlands
Source: Pitchbook 2020. Notes: 2015: £36.76mn; 2016: £115.29mn; 2017: £40.21mn; 2018: £176.09mn; 2019: £29.45mn; 2020: £67.10mn
Under the Paris Agreement on Climate Change, Switzerland aims to halve carbon emissions by 2030 (The Federal Council, 2019). Investment in Switzerland grew over 10,000% between 2015 and 2019, growing from £1.58mn to £166.91mn. In 2019, Swiss Investment was one of the highest in the world, this growth has brought forward several companies including Climeworks which raised £97.17mn to create carbon removal technology.
Figure 8 VC Net Zero investment in Switzerland
Source: Pitchbook 2020. Notes: 2015: £1.58mn; 2016: £34.46mn; 2017: £4.94mn; 2018: £52.75mn; 2019: £166.91mn; 2020: £63.72mn
Net Zero in Asia is dominated by large players
Asia received a total of £2.52bn in Net Zero companies in 2019. There were 187 deals completed by 177 companies with the largest being Youxia Motors, based in Shanghai China which has raised £976mn to create sustainable high performance vehicles.
Singapore is leading with Net Zero spaces, 4.9% of the world’s emissions come from electricity within buildings (Ge and Friedrich, 2020). In 2019, The National University of Singapore launched its first Net Zero building including solar panels and a hybrid cooling system (Wong, 2019). Singapore saw a 35% decrease between 2015 and 2019, from £36.4mn to £23mn; however, in 2018, there was a spike of £73mn. Net Zero companies are growing in Singapore such as Sunseap which provides clean energy services.
Figure 9 VC Net Zero investment in Singapore
Source: Pitchbook 2020. Notes: 2015: £36.46mn; 2016: 0; 2017: £3.78mn; 2018: £73.18mn; 2019: £23.35mn; 2020: £229.59mn
China has invested heavily in Net Zero companies. Between 2015 and 2019, China saw an increase of over 1000% from £206.8mn to £2.47bn. China has doubled down on sustainable vehicles including Youxia Motors and Byton based in Nanjing, which has raised a total of £939.8mn to create electric vehicles.
Figure 10 VC Net Zero investment in China
Source: Pitchbook 2020. Notes: 2015: £206.84mn; 2016: £281.88mn; 2017: £3.96bn; 2018: £3.51bn; 2019: £2.47bn; 2020: £1.02bn
Similarly to Singapore, India is also investing in Net Zero infrastructure. In 2014, the Indira Paryavaran Bhavan was created using energy efficient materials (Perappadan, 2014). Between 2015 and 2019, Net Zero investment in India increased 500% from £74.53 to £495.37. In 2019, India had one of the highest investment levels in Net Zero of any country. Road transportation accounts for 11.9% of greenhouse gas emission worldwide which is being challenged in India with companies such as OLA electric, which is based in Bangalore and provides a clean energy mobility system.
Figure 11 VC Net Zero investment in India
Source: Pitchbook 2020. Notes: 2015: £74.53mn; 2016: £45.19mn; 2017: £58.59mn; 2018: £145.47mn; 2019: £495.37mn; 2020: £125.94mn
151 local governments in Japan including Tokyo and Yokohama have announced their decision to be Net Zero by 2050, these local governments represent 56.1% of Japan’s population (Ministry of Environment, 2020). This highlights efforts in Japan to be carbon neutral. Between 2015 and 2019 Japan’s VC investment increased from £11.67mn to £80.52, an increase of over 500%. Companies in Japan are not only looking at what can be done on the ground to support climate change, Astroscale raised £109mn to offer space debris removal.
Figure 12 VC Net Zero investment in Japan
Source: Pitchbook 2020. Notes: 2015: £11.67mn; 2016: £53.66mn; 2017: £29.50mn; 2018: £27.17mn; 2019: £80.52mn; 2020: £7.27mn
Across the Americas £5.37bn was invested in Net Zero companies in 2019
There were 447 deals completed by 388 companies with the largest being Faraday Future, which produces intelligence electric vehicles, based in Los Angeles in the US who have raised a total of £3.25bn.
United States of America
The United States (US) has one of the largest Venture Capital markets in the world, this is evidenced with leading investment into Net Zero companies. The US saw an increase of 300% between 2015 and 2019 from £1.19bn to £4.76bn, which in 2019 was the largest total investment of any country. The United States also has the Net Zero company with the highest total investment, ChargePoint raised a total of £546.5 to develop a charging network for electric vehicles.
Figure 13 VC Net Zero investment in the USA
Source: Pitchbook 2020. Notes: 2015: £1.19bn; 2016: £2.57bn; 2017: £2.81bn; 2018: £4.09bn; 2019: £4.76bn; 2020: £3.25bn
In 2010, British Columbia became the first government at state level in North America to take 100% responsibility for Greenhouse Gases emission (United Nations, 2019). The public sector in British Columbia has successfully achieved carbon neutrality each year from 2010 to 2017. This emphasizes the importance of greenhouse gas reduction in the country. Canada has seen significant investment in Net Zero companies. Investment increased from £147.8mn in 2015 to £496.6mn in 2019, an increase of £236mn. In 2016, 600mtco2e came from Energy (Ge and Friedrich, 2020). However, their largest VC backed Net Zero company is Enerkem, which raised £544mn to create clean fuels and green chemicals.
Figure 14 VC Net Zero investment in Canada,
Source: Pitchbook 2020.
Net Zero in Africa is small scale but on the rise, with ample scope for growth
Africa received a total of £56.1mn in Net Zero companies in 2019. There were 20 deals completed by 19 companies with the largest being Sunfunder, based in Kenya which finance solar energy businesses, and have raised a total of £24.68mn.
Strathmore University has become the first carbon neutral education institution in Kenya through its use of rooftop grid tied solar panels (Strathmore University, 2012). Between 2015 and 2019 Kenya saw a 70% decrease in Net Zero investment from £23.7mn to £6.9mn, however in the first two quarters of 2020 Kenya has already received £29.7mn in Net Zero funding having also seen a peak year in 2017 receiving £55.3mn in funding. Alongside Sunfunder, Virunga Power, based in Nairobi have raised a total of £10.95 to develop sustainable power generation to provide reliable electricity to rural communities.
Figure 15 VC Net Zero investment in Kenya
Source: Pitchbook 2020. Notes: 2015: £23.73mn; 2016: £6.01mn; 2017: £55.33mn; 2018: £9.58mn; 2019: £6.92mn; 2020: £29.71mn
Between 2016 and 2019, Nigeria saw an increase of over 2000% Net Zero funding from £1.07mn to reaching their peak investment level at £23.58 in 2019. Nigeria is expanding its Net Zero presence with companies including Rensource, they provide power to replace individual fossil fuel generators.
Figure 16 VC Net Zero investment in Nigeria
Source: Pitchbook 2020. Notes: 2015:0; 2016: £1.07mn; 2017: £750k; 2018: £2.54mn; 2019: £23.58mn; 2020: £2.3mn
UK second only to the USA for global Net Zero investment in 2015
Investment in Net Zero companies has fluctuated significantly across the world over the last five years. In 2019, the USA received the highest investment in Net Zero with £4.76m. China, on the other hand, reached their peak amount which was the third highest raised overall in 2017 with £3.96bn. In 2015, Net Zero investment in the UK was the second highest worldwide, after the USA, with £300m invested. Since 2015, the UK has not keep pace with the other tech giants and by 2019, was in 5th place, behind the US, China, Canada and India.
On a European scale, between 2018 and 2019 VC, investment in Net Zero companies in the UK grew 28% (from £261mn to £336mn), compared to 22% in France (from £176mn to £261mn). In 2019, the UK received £336mn in VC investment for Net Zero companies, 55% more than France which received £216mn and 18% more than Germany with £283mn.
Figure 17 Net Zero VC investment by country
Source: Pitchbook 2020
China is the world leading polluter - followed by the USA
China is one of the world's leading emitters of CO2, they produced 10,877MT in 2017, which was more than Canada, France, Germany, Japan, Kenya, The Netherlands, Nigeria, Singapore, Switzerland and the United Kingdom combined. The United States also produces a significant amount of CO2 with 5107 MT, nearly 50% of that produced by China - but more than the other countries combined.
Figure 18 Pollution by country (MT)
Source: European Commission, 2019
The highest emitter of CO2 in Europe is Germany with 797MT, the UK produces 52% less than Germany with 379MT, however this is 12% more than France with 338MT.
These figures highlight how much more needs to be done to stimulate the growth of new Net Zero companies in order to cut down on the emissions being produced globally and meet NetZero targets.
UK investors are heavily targeting companies overseas
UK Venture Capital firms invest heavily abroad and there is no change with Net Zero companies. From 2014, £1.2bn has gone to companies in the USA in companies such as Bolt Threads, based in Emeryville which creates fibres and fabrics to help new materials be more sustainable. UK funds also invested £110mn to Canada, £77mn to Sweden, £179mn to Switzerland, 36mn to India, £9.7mn to Kenya and £13mn to Israel.
Figure 19 UK VC investment in the rest of the world (2020)
Source: Pitchbook 2020
VC investment in Net Zero is lagging
Figure 20 illustrates the differences between total VC investment in 2019 in comparison to total Net Zero investment. In the UK, 3.5% of all VC deals done went to Net Zero companies in comparison to 15.2% in Canada and 12.5% in Switzerland. The United States also invests a significantly higher proportion in Net Zero companies with 5%.
Figure 20 Investment in Net Zero compared to other VC investment by country (2020)
Source: Pitchbook 2020.
“Supporting early-stage technology innovation can make proven solutions better and cheaper, as well as creating new solutions in the hard-to-abate areas like industrial heat and land use. Both approaches can make a real difference to the speed of the net zero transition.”Pippa Gawley, Zero Carbon Capital
PitchBook specialises in collecting comprehensive financial data on private and public markets. Pitchbook gathers their data from more than 650,00 web crawlers which scan the internet capturing relevant articles, websites, press releases and regulatory findings.
Pitchbook data was used as the primary data source to access venture capital deals within Net Zero companies worldwide. These companies were accessed using several Pitchbook tags including CleanTech, Sustainability, Agtech, Greentech, Renewable, Sustainable, Energy and Carbon Footprint. This data was used in the country specific Net Zero investment sections for deals completed between 2015-2020. Pitchbook data was also used in the Net Zero UK investment cluster and the Net Zero investment sectors which included deals from 2015-2020. Data that accounts for 2020 only accounts for January-May.
European Environment Agency
The European Environment Agency (EEA) provides independent data on the environment in close collaboration with the European Environmental Information and Observation Network (Eoinet). The EEA gathers data on a wide range of topics related to the environment including air pollution, climate change adaptation and climate change mitigation. EEA data was used to measure the CO2 emissions for European countries within the report C02 level in 2017.
The World Resources Institute
The World Resources Institute (WRI) is a Global research organisation who aim to sustain natural resources through work with leaders in various different sectors. They focus on seven key areas, climate, energy, food, forests, water, cities and the ocean. Data from the WRI was used in the report to show emissions within different sectors on a global scale.
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1- Net Zero refers to achieving an overall balance between emissions produced and emissions taken out of the atmosphere.
2- The European Union is an economic and political union between 27 EU countries that together cover much of the continent.
3- Business to Business refers to the exchange of products or services among companies.
4- Business to customer is the type of commerce transaction in which businesses sell products or services directly to consumers.
5- Fossil fuels are coal, crude oil, and natural gas as they were formed from the fossilized, buried remains of plants and animals that lived millions of years ago.