Silicon Valley Bank's Climate Tech Report Highlights the Technologies and Economics of a Sustainable Future
On July 13, 2021, Silicon Valley Bank (SIVB) released its Future of Climate Tech report, predicting a record $58B in venture investment in climate tech for 2021, surpassing the previous $35B record from 2020. The report highlights a surge in fundraising, with climate tech-focused funds on track to reach $26B. SPACs are also becoming a key liquidity vehicle, potentially channeling $35-40B to US climate tech companies in the next 24 months. Despite growth, companies in transportation and energy sectors faced significant revenue declines due to pandemic impacts, emphasizing the need for innovative financial solutions.
- Venture investment in climate tech expected to reach a record $58B in 2021.
- Climate tech fundraising projected at $26B, indicating strong investor interest.
- SPACs could facilitate $35-40B in funding for US climate tech companies over the next two years.
- Transportation and energy climate tech sectors experienced revenue declines of 48% and 44% respectively due to pandemic-related demand drops.
SANTA CLARA, Calif., July 13, 2021 /PRNewswire/ -- Silicon Valley Bank (SVB), the bank of the world's most innovative companies and their investors, today released its Future of Climate Tech report. This report analyzes the trends in venture capital investing, fundraising and exits that are shaping climate tech and helping to address the significant risks of climate change.
"As the dangers of climate change have become clearer and the technologies aimed at reducing these impacts have matured, more investors and entrepreneurs have turned their attention to climate tech," said Kelly Belcher, Managing Director of SVB's Energy & Resource Innovation (ERI) practice and author of the report. "While the effects of the climate crisis are sobering, we are optimistic about a sustainable future based on the innovations and technologies we see coming to market and the capital being committed to the sector."
Key highlights from the report include:
- Venture investment in climate tech is on track for a record year. SVB anticipates
$58B of capital invested by the end of the year, beating out the previous record of$35B set in 2020. In the first four months of 2021, nearly$30B was invested in climate tech companies. - Similarly, venture fundraising for climate tech-focused funds is on track to hit a record
$26B this year, as environmental, social and governance (ESG) factors have become a priority for limited partners in venture capital funds. Today, the typical climate tech fund takes a year to close, five months less than the industry average. - Climate tech companies are taking advantage of the popularity of SPACs and leveraging the vehicle for liquidity and capital. SVB anticipates
$35 -40B will flow to US-based, VC-backed climate tech companies through SPACs in the next 24 months. - Food and agriculture saw a slight boost (four percentage points) in revenue growth in 2020 compared to 2019, but many climate tech companies in the transportation and energy categories were exposed to lower revenue growth (48 and 44 percentage points decrease for transportation and energy respectively) like much of the rest of the global economy due to decreased consumer demand from the pandemic. As demand waned, companies placed greater emphasis on expense reduction and management in these verticals.
- Climate tech companies tend to be far more capital intensive than most tech companies and require innovative financial instruments to provide low-cost capital to asset-intensive business models such as robotics, infrastructure, energy and transportation companies. Many companies are gravitating toward a hardware-as-a-service model by deploying units under long-term contract vs. a one-time sale and are searching for cost-effective ways to finance this model.
Climate tech encompasses sectors focused on technologies and business models to mitigate climate change:
- Renewable Energy & Infrastructure
- Mobility
- Food & Agriculture
- Water & Air
- Waste Management
- Energy Transition
SVB's Energy & Resource Innovation practice partners with innovators whose passion and purpose lie in building businesses to develop sustainable resources and protect our planet. SVB delivers access to a foundation of banking and financing solutions and a team with decades of industry experience.
SVB will host a live webinar with Kelly Belcher to discuss the report and the future of the climate tech industry on July 13, 2021 at 10:00 a.m. PT with Milo Werner, Partner at Ajax Strategies, Mona Maitra, Managing Director at Silicon Valley Bank, and Lafe Vittitoe, Managing Director at Silicon Valley Bank. Register for the live event here.
Read SVB's Future of Climate Tech report here: bit.svb.com/climate-tech-report
About Silicon Valley Bank
For nearly 40 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators. Learn more at svb.com.
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SOURCE Silicon Valley Bank
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