Publication date: February 22, 2023
In view of climate change which becoming pressing matter venture capital implements environmentally positive technological solutions. Especially by supporting start-ups.
Venture capital investment is about private equity financing that is provided by venture capital firms or funds to inter alia start-ups that have been deemed to have high growth potential or which have demonstrated high growth. Venture capital firms or funds invest in start-ups in exchange for equity or an ownership stake.
In 2022 there took place a number of events that have had an impact on deal activity in the carbon and emissions technology space including venture capital deals and regulations. In October 2022, Solugen – focused on decarbonising the chemical industry – raised $200.0 million funding used for the ground breaking of their new bioreactor by venture capital deal. Another venture capital deal concerned Svante which raised $318.0 million. On November 30, 2022, the European Commission adopted a proposal for an EU-wide framework to certify voluntary carbon removals, aiming to provide a standard for high-quality carbon removals. On December 13, 2022, the EU stroked a deal to impose a carbon dioxide tariff on imports of certain polluting goods, including cement and steel, thus preventing foreign imports from undercutting EU-produced goods. On the same day, the Biden administration announced the launch of four programs to develop the US carbon capture industry. Funding for these programs involves $3.7 billion from the Bipartisan Infrastructure Law.
The mentioned examples of carbon emission technology companies, Svante and Solugen are worth paying attention to. Svante is Canada-based carbon capture hardware company. They make filters and machines that capture and remove carbon dioxide from industrial emissions and the air. Svante developed carbon capture technology which is scalable, eco-friendly and commercially available. They raised $318.0 million in a deal led by Chevron Technology Ventures which was the largest carbon and emissions technology deal in Q4 2022. The funding from this deal will be used to support filter manufacturing facility in Vancouver. Also, among the largest deals that year was green chemical company Solugen’s – $200.0 million. Solugen is carbon negative molecule factory. They combine elements of fermentation with petrochemical processing to create the world’s first carbon negative molecular manufacturing platform – the Bioforge. The Bioforge achieves highly profitable and carbon negative molecular manufacturing which enables to convert inexpensive feedstock directly into valuable product molecules while avoiding the formation of waste products.
The technology investments are a challenge but the tide of rising of it definitely gives hope to fill dire need for sustainable solutions in the matter of climate change.
Poland and Polish market has also its say in the sector of carbon emission start-ups and funding. Polish start-ups in this respect are involved in, inter alia, advanced technologies consisting of specialized drones, cameras, sensor networks, applications, algorithms and artificial intelligence for fire detection or fire crisis management; advanced software to prevent crop damage; or desalination and purification of water.
Some examples of start-ups in this sector include DAC – Dynamic Air Cooling. This is a start-up that has developed a technology that allows for very effective cooling, without the participation of freons. The technology consists in the prototype that cools the air in the room four times more efficiently in terms of energy than traditional refrigeration devices.
Another start-up is Wind panel. This is an idea for small wind turbines that can be integrated, e.g. with a fence or facade of buildings. They can work with even small breeze, which gives the opportunity to generate energy almost without interruption. Thanks to this, instead of traditional panels or rails, there are many turbines, whose total efficiency is comparable – in terms of performance ratio – to popular photovoltaic solutions. Importantly, turbines can use the already installed elements of solar installation (e.g. inverters), which allow to build hybrid models.
Another innovative solution is presented by SWG – Silesian Wind Generator. This is an idea for a wind turbine with a vertical trading axis, intended for households. They are quiet, safe and efficient in all climatic conditions, and their performance is comparable to traditional turbines.
High risk capital investments in the startup industry implementing positive technological solutions for the environment, so called climate tech, have been growing several times faster for several years than the average investment rate for all market sectors. These include young technology companies, whose activities are part of the implementation of the objectives of the UN (SDGS) sustainable development.
Poland is an important player in terms of startup development in Central and Eastern Europe. According to the analysis of the Polish Development Fund entitled “Start-ups and ecology. What green solutions do Polish technology companies create?” as many as 43 percent of young companies implementing solutions related to limiting climate change have its headquarters in Poland. The areas of their operation are, among others: green energy transformation, environmentally balanced fashion and beauty, water and air protection, transport, food production and gastronomy.
KIELTYKA GLADKOWSKI actively advises international investors and VC companies in investments in Polish start-ups, covering wide spectrum of legal assistance related to shareholders’ agreements, corporate solutions, M&A, joint ventures, IP protection, licencing, milestones setting, application of proper and tailored made clauses in investors’ agreements.