Environmental protection is at the heart of my investment thesis — as it is for many impact investors who want to get returns from mission-driven startups. Impact investing is a sustainable way to solve climate change and biodiversity issues. Contrary to nonprofits that constantly rely on donations, climate startups can independently have a long-lasting impact once they reach profitability. Climate startups can tackle many problems. But which ones are investors actually backing?
A few weeks ago, I had the chance to learn about the US Climate Finance Tracker at San Francisco’s impact investing conference. This interactive map tracks climate investments and groups them by different categories, such as transportation, farming, water, or waste. It gives us a good idea of where climate funding goes. Renewables, solar power, and electricity get 17% of climate funding, while carbon capture and storage receives less than 1%.
These funds come from either grants or venture capital (VC) investments. And there’s a clear preference when it comes to VC dollars. Projects related to natural resources, agriculture, biodiversity, and water largely get capital from grants. Meanwhile, VC investments are more likely to back renewable energies, electric vehicles, waste, food, and transportation projects.
There’s a clear funding gap between natural resource organizations and tech-based projects. Does this mean that venture capitalists do not want to back slow tech (a movement of using technology more conscientiously) and natural projects? Or are there not enough startups growing in these areas?
I believe that it is a bit both. Investors are looking for financial returns, and it is not as easy to make a profit while making sure natural resources thrive. On the other hand, cars and solar panels are easy to sell and can bring profits to investors. But that absolutely does not mean startups should stop trying to save natural resources. We need startup innovation to protect biodiversity, access to water, and farming.
There are plenty of business models that can work to this end, especially with new technologies. Startups can support forest preservation by selling carbon credits, produce low-carbon proteins through aquaculture, or even incentivize land owners to maintain biodiversity on their properties through ecotourism.
And a few startups supporting biodiversity and natural resources started raising in 2022. There are not a lot, but it’s your lucky day: most of them are still accepting investments!
Continue reading to learn about these startups.
Biodel AG – Top Deal
Soil can absorb and store carbon, but agricultural activity causes soil to release its carbon stores back into the atmosphere. Biodel AG’s product, Sequester, uses a microbe called cyanobacteria to restore soil health and transition agricultural lands to regenerative practices. Sequester rapidly restores the microbes’ ability to remove salt and save water in soil. Cyanobacteria can also act as a carbon removal solution. Biodel AG has five patents and 12 patent applications in progress. It reported 151% revenue growth year over year.
World Tree is not a typical equity crowdfunding investment opportunity. The company uses investor funds to plant batches of fast-growing timber. After 10 years, it harvests the trees, sells them, and shares its profits with farmers and investors. World Tree sells the timber to high-end markets, including furniture, window blinds, veneers, musical instruments, and surfboards. It offers investors the opportunity to offset their carbon footprint while expecting a good financial return
Whooshh Innovations helps fish and hydropower coexist with fish passages that sort out invasive species. Whooshh Innovations’ sustainable fish passage solutions save fish and restore native populations.
Royal Caridea is a shrimp farming company focused on commercializing its transformative and sustainable shrimp farming technology. Royal Caridea has the capacity to produce Pacific whiteleg shrimp on a continuous and predictable basis, without having to use destructive farming techniques.
Eva’s Wild weaves together the best in food, storytelling, and impactful experiences from California to Alaska. It sources wild salmon from indigenous suppliers and brings them to customers and restaurants. Eva’s Wild also supports sustainable fisheries and carbon mitigation, and it has created award-winning documentaries about protecting wild spaces.
Forests can absorb carbon dioxide and help stop — or even reverse — global warming. Undesert has developed a patented water desalination technology that helps reforest desert areas. Running entirely on solar energy, the technology converts saline water from underground or bodies of water into distilled water and dry salt. Undesert is already operating commercially and has successfully operated in the United Arab Emirates for two years.