Expertise

Cleantech Venture Capital Investment Trends 2021

The overall cleantech investment trends tell a story of global and sector diversification as well as significant increases in deal sizes. Cleantech Venture 2021 closed at a record $66.3 billion invested across 2663 deals. This represents a 50% increase from 2020, the previous record year. Since 2018 the total number of cleantech deals has remained relatively static but overall VC amount invested double, meaning we are seeing much larger average deal sizes at both early and late stages.

cleantech-solar-panels

In 2021 we also saw the continued globalization of cleantech venture capital investing from North America to Europe & Israel and Asia Pacific. 2021 was the first year that European and Asia Pacific-based companies took more than 50% of the global cleantech investment pie.

Whilst Agriculture & Food and Transportation & Logistics were the 2 most funded cleantech industrial sectors taking 26% of all cleantech VC funding each, the remaining 3 verticals, Energy & Power, Materials & Chemicals and Resources & Environment all saw significant growth in amounts invested as well showing that recognition of the need for sustainable technologies is more pervasive than ever.

Energy & power – A Year in Review

The energy and power sector saw record growth in 2021 in terms of total deal amount, with annual venture capital investment reaching $9.7 billion. The year started with a huge leap from the $1.2 billion invested in 1Q21 to $2.8 billion invested in 2Q21. 4Q21 saw $3.3 billion invested, even as deal volume dropped, indicating larger investment rounds were happening. Europe & Israel increased its deal volume and share, making up 42% of total deals in 4Q21 compared to 29% in 3Q21. Conversely, North America’s deal share dropped from 3Q21 (56%) to 4Q21 (44%). We also saw corporate participation continue its upward trend, with 29% of rounds receiving some form of corporate involvement. Some themes that have been constant throughout the year include energy storage, Distributed Energy Resource (DER) management and flexibility, hydrogen, and fusion energy.

Variability and grid instability are becoming global issues as shares of renewable energy increase in many countries. Due to these grid imbalances, the need for DER is increasing, driving interest in areas such as grid interactive buildings, DER aggregation, and flexibility marketplaces. Swiss innovator Hive Power has developed a community manager module to optimize community self-consumption, simplify aggregation, and provide economic benefits to both users and operators. Hive Power was selected to participate in Plug and Play’s energy program and in the Global Tech Connect’s UK Cleantech Bootcamp in 2021.

With over $500 billion committed for hydrogen’s global scale-up through 2030, and public financing becoming available in Europe, efforts across the value chain are showing signs of progress. Swiss innovator H2 Energy, who closed a $20 million Series A round in December of 2020, has recently announced a joint venture with Phillips 66 to develop up to 250 retail hydrogen refuelling stations across Germany, Austria, and Denmark by 2026. EH Group Engineering, Swiss developer of lightweight and compact fuel cells, announced a $5.5 million Series A funding round in January 2022, led by AP Ventures. The financing will go towards the continued development of the company’s first commercial fuel cell stack products, as the company looks to raise additional capital in 2022 to finance its commercial scale roll-out. EH Group was also selected alongside Hive Power to participate in Global Tech Connect’s UK Cleantech Bootcamp in 2021.

Resources & Environment – A Year in Review

As with the rest of the cleantech ecosystem, the Resources and Environment sector had a record year for venture capital investment amount at $5.9 billion with Europe and Israel making up 40% of deal volume by geography, North America 49%, and Asia Pacific 9%. Key investment areas include battery recycling, circular fashion, wastewater treatment and air quality for health and wellbeing - particularly in countries with major cities like the US, Singapore and the UK that are keen to foster productivity and encourage people back to commercial buildings.

One of the breakthrough markets of 2021 includes carbon management tools. This has been led by action on corporate net-zero commitments and oncoming mandatory disclosure regulations from the EU, New Zealand and possibly the US. The regulations are applying top-down pressure from investors and are forcing laggards to engage with carbon accounting tools. Innovations include tools to accurately account for and monitor corporate and individual emissions, carbon removal and avoidance projects as well as monitoring, validation, and transactional tools. For example, in 2021 Swiss Direct Air Capture developer, Climeworks, became a customer of ClimaCrux a Swiss broker of carbon removal credits via subscriptions.

In the carbon accounting and monitoring market many innovators shifted from seed to later stage  funding rounds. B2B emissions monitoring service provider, Persefoni, raised $101 million in a Series B round and spending-based carbon accounting software developer, Enfuce, raised $50 million in a Growth Equity round.

Links

Share

Official program