Feb 18, 2022
Climate Change and Agri-Tech: Startups funding on the Rise
Environmental start-ups are making every effort to repair the damage done till now. The urgent need to protect the planet and practice environmental sensitivity intensifies every second. Agriculture and climate change have recently been more widely discussed topics in the venture capital process. Even while protecting the environment has always been important, businesses are responding by designing their products to reflect the growing customer knowledge of these issues. Startups for climate venture capital in the environmental sector see the environment as the core of their business. Thus, being environmentally friendly is a key component of whatever it is they are offering.
Startups are capitalizing on the fact that the environment and economy are intertwined
Despite popular belief, there is little chance of separating the economy from the environment because of their interdependence. Even if many firms do not intend to have an impact on the environment, they nonetheless have a negative impact. Natural disasters, unusually high temperatures, and poor air quality are just a few signs of how climate change is affecting the planet. Despite efforts, it is difficult to dispute the scientific evidence that these changes are taking place and will harm future generations irreparably. The environment and the economy are intertwined. The environment is becoming irreversibly damaged due to human activity. The ability of humans to reverse global warming, save threatened species from extinction, or even locate a suitable home for them is now lacking. Fortunately, Earth has not quite reached this stage. There is still much that the people of Earth can do to protect their planet, even while the thought of creating life bases on other planets looks less and less far-fetched and more plausible with each passing day. Investment for startups in the environmental sector, at the nexus of business and technology, seeks to improve the world. Numerous environmental companies focus their efforts on finding answers to world issues, from plastic trash to renewable energy.
Change is the law of Nature
Agritechs are being funded well and they propel extraordinary change
Agritech startup uses technology in the agriculture industry to help farmers. Similar to how digital companies have impacted every other industry in recent years, they have also attempted to revolutionize agriculture by introducing numerous technology. The lack of proper startup financing is the official constraint that left the sector significantly underinvested until recently. According to Entrackr's data tracking platform Fintrackr, close to 100 agritech businesses were funded with almost $1.33 billion over 139 deals between January 2020 and June 2022. This comprises approximately 44 transactions by Startup Seed funding companies totaling $539 million this year, 37 transactions worth $155 million in 2020, and 58 transactions worth $636 million in 2021. According to statistics from analytics company Venture Intelligence, agritech firms fared better in FY23 than in FY22, when funding reached a record $878 million in 54 deals. On a calendar-year basis, investments increased 67 percent to $393 million in the first nine months of 2022 from $235 million the previous year. This also happens at a time when investors are less likely to fund high-growth firms and are more optimistic about profitable ventures.
Numerous firms have been using data analytics, artificial intelligence (AI), machine learning (ML), blockchain, software as a service (SaaS), and the Internet of Things (IoT) to handle issues with supply chain, packaging, storage, payments, credit, and advisory. Ninjacart, one of the top-funded agritech firms and supported by Walmart, Flipkart, and Tiger Global, uses internal applications to link farmers and direct food producers with merchants, eateries, and service providers. While Ninjacart only deals with fresh farm produce, WayCool, supported by Lightbox, provides restaurants and retail outlets with both fresh farm produce and grains. In their most recent investment round, Ninjacart and Waycool respectively raised $145 million and $117 million.
ClimateTechs: The Hot-Shots
Investors think that climate technology will be the biggest disruptor in future
The number of species risking extinction has increased as a result of declining air and water quality, and ice caps are still melting. Numerous climate tech firms have been established worldwide as a result of growing worries about climate change, and they have received enthusiastic funding from venture capitalists. 120 of these businesses have received more than 200 fundraising rounds in the last five years from 272 investors in India alone. As of September 2022, 1.4 billion USD has already been invested in these businesses, according to Tracxn data. Except for 2020, when climate tech firms got a total of USD 375.5 million, there has been a consistent rise in investment in this sector since 2019. Investments in this area were USD 836.7 million in 2021. Numerous VCs launched funds expressly for this industry. But as the market started to decline, there was an abrupt lull. With another investment boom in climate technology on the horizon, it appears that the industry is once again in the spotlight. Investors think that climate technology will be the biggest disruptor in the next five to ten years, ranking only behind fintech and artificial intelligence, according to a Pitchbook survey. Because there is a strong business rationale for climate innovation, investment in early-stage businesses is particularly strong.
Since the Paris Agreement, venture capital funding for climate technology businesses has increased dramatically. The US and China are leading the pack in terms of investments in climate technology between 2016 and 2021, according to the research "Five Years On Global Climate Tech Investment Trends since the Paris Agreement" by London & Partners and Dealroom. Co. The fastest-growing region overall, however, was discovered to be in Europe, where VC investment in this sector increased seven-fold between 2016 and 2021. On this list, India came in ninth place. India, the second-most populated nation and third-largest emitter is a significant contributor to the climate issue.
Investments in startups in cleantech and climate change sectors are projected to surpass $6.4 trillion by 2023. Several new businesses enter this rapidly growing industry each year. ZeroAvia, a ClimateTech firm based in California, provides an aircraft hydrogen powertrain with zero emissions. Their objective is to reduce expenses and CO2 emissions to make aviation more environmentally friendly. Their website states that during the next 10 years, demand for their powertrain of 100,000+ units is anticipated. A robotic device that can recycle garbage was developed by the US-based tech business AMP Robotics. They claim that the system they are utilizing has a 99% accuracy rate for identifying recyclable materials. AMP Robotics was included on the CNBC Disruptor 50 list this year.
Sustainability: The big Differentiator
Startups have been leveraging Technology to create sustainable solutions
Both of these startup domains, AgriTech & ClimateTech, share the same objective of improving the course of our future. The most ambitious professionals in the globe have created solutions that have previously been demonstrated to have a good influence for that reason by utilizing technology. Finally, rather than focusing only on short-term earnings, all of these exciting environmental firms have sustainability in the medium to long term as their primary financial objective.
JCTeamCapital is a Canadian based venture capital firm that provide seed funding to early-stage startups to take the businesses to the new heights.