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Europe’s heatwave is wake-up call to invest now in climate solutions

Whether for environmental reasons or purely a business transaction, investors must fund green technology

Wildfires rage as parts of Europe battle its record heatwave

This morning I was talking to my dear friend Abdullah at Seedra Ventures, one of Saudi Arabia’s top venture capital firms. We discussed how locals were returning to Riyadh earlier this summer, ready to start businesses. 

Wildfires and heatwaves across Europe have made the traditional western summer haven for GCC citizens a less tempting offer in 2022. 

We joked about how we should have built a company creating tours to countries with more amenable climates, with South Africa being one that is currently in winter. 

As Andrew Woodman wrote in PitchBook’s Weekend Pitch, “Nothing screams ‘climate emergency’ quite like seeing smoke billowing down your street – in 104-degree heat – as three wildfires rage within a mile or so of your home.” 

I am writing this column in my home office in London, with my doors and windows open as wide as possible to catch the lightest breeze. 

This summer scorching temperatures have damaged homes, roads and railways, and fires have raged all across Europe. 

With funding available and the impacts of climate change increasingly being felt, we are in a time of what I believe will be significant change – an awakening of sorts. 

My hope is that the challenges experienced this year will give birth to a new generation of climate change tech enthusiasts who will innovate and find solutions to reverse the damage.

According to PitchBook’s first quarter 2022 Global Private Fund Strategies Report, fund managers have around $3.2 trillion in committed but unallocated capital at their disposal and $9.9 trillion in overall assets under management. 

To give you some idea of tangible impact, global sea levels have risen eight or nine inches since 1880, a process that is rapidly accelerating, threatening to take underwater major global cities like Jakarta, Lagos and Miami. 

According to the National Oceanic and Atmospheric Administration, in 2021 the US experienced 20 weather and climate disaster events with losses exceeding $1 billion each. 

Over the past five years the US has experienced $750 billion in total damages from extreme weather events. Soon, some parts of the planet will become uninhabitable. 

If not killing us, we are losing the beauty of our world: coral reefs are at risk of severe degradation by 2100, with a 1.5°C increase in temperature resulting in 70 percent loss. With 2°C of warming, nearly all coral reefs will be lost.

Legendary venture capitalist Chris Sacca, who is well-known for his investments in major tech giants Twitter and Uber, wrote in August 2021 after closing Lowercarbon Capital’s $800 million fundraising to support the launch of four new climate tech funds: “There has never been a better time to start a company focused on emissions reduction or actively removing carbon already in the atmosphere. 

“There is massive unmet demand for climate investments, and humanity’s only shot is if we get as many people and as many resources focused on solutions.

“The total addressable markets are literally the biggest in history and we have no doubt that multi trillion-dollar market caps are just up ahead.” 

According to PwC’s State of Climate Tech report, the first half of 2021 set a record for climate tech investment, with in excess of $60 billion raised by more than 600 such startups. 

Between 2013 and 2021 there has been roughly $222 billion of investment into the space through more than 3,000 identified climate tech startups. Of every $1 of venture capital investment, roughly $0.14 currently goes to one. 

The crowdsourced funding platform Indiegogo, meanwhile, reported that greentech fundraising efforts raised 282 percent more money in the first half of 2021 than in the same period in 2020.

Sacca acknowledged that raising for a climate fund amid an unprecedented heatwave had probably worked in the company’s favour. A similar impetus might be seen in Britain – and as Abdullah and I discussed – in the Middle East too, in the coming months.

However, Sacca added that investors that don’t care about the environment but like to chase financial returns had also supported his fundraising.

“Of course, that’s part of our underlying thesis: massive change will happen because these types of investments will pay off for sheer business reasons alone.

“Thus, for everyone emotionally unburdened by the existential crisis facing all living things on the planet, welcome!”

Romanna Dada is head of venture funds at Brinc MENA