Kim Zou discusses major M&A transactions in the climate tech ecosystem during 2023.
Insight
Zou: Climate tech success is graduating to project finance, not mega-rounds
“Specific to climate tech, it might not make sense to define success as an absolute dollar in venture investment, because at the end of the day, when we think about all this hardware and, you know, hard tech that needs to develop into projects, you want these c…”
Opinion
Zou: Carbon accounting is oversaturated and behaves more like consulting than SaaS
“Carbon accounting isn't necessarily a market that needs 200 or 300 players. And also I think a lot of them end up being a bit more consulting advisory based than traditional enterprise SaaS like generalist investors understood.”
Assertion Partly supported
Zou: Transportation gets 30% of climate VC despite causing 15% of emissions
“We've tracked transportation accounting for 15% of total emissions. As per the IPCC 2019 report, but receiving 30% of venture and growth investment since 2020. Whereas on the other hand, you know, energy deals, or energy investment made up 22% of overall fundi…”
Assertion Supported
Zou: Climate tech deal count fell only 3% in 2023
“Deal activity was only down three percent, so you could call that even a tapering relative to twenty-twenty-two rather than a significant decline, so Deals are still getting done. Early stage seed series A still getting done, but that absolute dollar amount th…”
Assertion Supported
Zou: Series A climate investment dropped 41% in 2023
“Series A investment was down 41% compared to twenty-twenty-two. That's the first time we've seen series A investment drop since we started tracking the space, you know, four years ago.”
Assertion Supported
Zou: Food and land use climate investment fell 55% in 2023
“This time around, in 23, appetite for food and land use evaporated. There is a distaste for food and land use, in other words, and we saw that That sector was down 55% in investment to three billion this year.”