2022-04-06-dealroom.co-The_rise_of_European_climate_tech_36页_3mb

Overview
Climate tech is rapidly transforming Europe's economy, driven by technological innovation and policy shifts. The European Green Deal aims for climate neutrality by 2030, with startups focusing on decarbonization and sustainability. - Foreword highlights entrepreneurial opportunities due to AI, synthetic biology, and policy support. Consumers and corporations are increasingly demanding climate responsibility, boosting sustainable product growth rates.

Growth Metrics

• The European climate tech ecosystem is valued over $100B, doubling since 2020.
• In 2021, investments reached $11B, a 2.2x increase from 2020, with 13% of European venture capital allocated to climate tech.
• Dedicated climate tech funds raised $2.6B in 2021, up from $1.3B in 2019. Early-stage investment grew 2.5x, with Series A rounds seeing the highest increase.

Comparison with US
Europe excels in regulation, industrial R&D, and stakeholder mentality, while the US leads in capital scale and risk-taking due to venture capital responsiveness. Europe has higher energy prices and grant availability, contrasting with the US's focus on moonshot innovations. Both regions are complementary, with Europe emphasizing foundational work and the US scaling high-risk bets.

Deep Tech Focus
Climate deep tech combines high R&D and product-market risks but has proven business models, such as direct-air-capture. These companies require more capital for development, with median Seed rounds higher than non-deep tech peers. Examples include synthetic biology and solid-state batteries.

Unicorns and Notable Companies
Europe now has 16 climate tech unicorns, with 11 created in 2021 alone. Key startups include Carbo Culture (carbon removal) and Ynsect (insect-based protein), overcoming initial challenges through market fit and investor scrutiny.

Sector Highlights

• Carbon capture: Emerging with VC investment of $29.5M in 2021, but underfunded.
• Alternative protein: Dominated by insect-based companies, with $608M invested. Larger market acceptance and taste improvements driven innovation.
• ESG measurement: Growing with $27M funding, filling data gaps for sustainability, supported by global funds reaching $3.9T in 2021.

Talent Impact
Climate tech startups created significant employment, with companies like Babylon employing thousands. Job openings surged in 2021, indicating high demand for specialized roles.

This analysis underscores Europe's leadership in climate tech with robust growth, policy backing, and increasing global collaboration.