With the world now giving more attention to climate change and global targets to mitigate its effects, investments in climate technology startups are finally gaining momentum.
In Southeast Asia, one of the most vulnerable regions to natural disasters, the annual private funding for climate tech startups crossed the $1 billion mark for the first time ever in 2022, a DealStreetAsia report found. The total funding raised by climate tech startups stood at $607 million in 2021 and only $54 million in 2018.
Since January 2012, climate change-focused private enterprises have raised no less than $2.82 billion — $2.6 billion in equity funding and at least $222 million in debt financing.
In contrast, financial technology investments totaled $4.3 billion through 163 deals in the first nine months of 2022.
Climate tech investments’ contribution to overall private capital funding in Southeast Asia is also showing signs of progress, accounting for 7.8% of overall venture funding last year.
Vietnam, now highly considered a dreamland for venture capitalists, is seeing its climate tech startups take their well-deserved share of the investment pie. Vietnam currently accounts for 5.3% of climate tech funding value since 2012.
Read: On A Green Mission: Looking Into The ‘Small But Growing’ Eco-Focused Startup Community In Vietnam
Dat Bike, the country’s first electric motorbike, raised an additional $8 million in funding in November, just seven months after it secured more than $5 million series A round. Dat Bike’s central vision is to convert all gasoline-powered motorbikes in Vietnam and Southeast Asia to electric. The startup uses lithium-ion batteries, considered non-toxic and up to 80% recyclable.
Fashion recommerce platform Piktina, meanwhile, also bagged fresh capital this year to accelerate its growth and refine its business model. Piktina is a digital merchandise playground that specializes in previously owned fashion items. The startup aims to raise awareness of overconsumption and instill sustainability values in the community to reduce fashion waste and carbon emissions.
While these successful fundings are good reasons to celebrate, the distribution of capital in the region is a “major cause of concern,” DealStreetAsia wrote. Singapore-based climate tech startups have received 80.4% of all funding so far, leaving most countries sharing what’s left.
Indonesia, which accounts for 13.1%, is currently second in the ranking. Thailand, Malaysia, the Philippines, Cambodia, and Myanmar got less than 1%.
The report also noted that renewable energy had received the most capital among 11 categories, with total funding exceeding $200 million annually since 2019.
“Renewable sources of energy such as solar and wind have reached a levelized cost of energy that is lower than traditional fossil fuels — without the need for government subsidies,” ABC Impact Chief Investment Officer Than Shao Ming told DealStreetAsia.
A climate tech investor commented that projects on renewables would continue to expand in the coming years to address the increasing electricity needs of enterprises and households.
Sustainable farming technologies and food tech startups developing meat alternatives have received significant financial support in recent years, as “investors understand that they can meet climate goals by seeking out opportunities in complementary industries,” the financial news website reported.
Other sectors gaining attention include low-carbon mobility, waste management, and air and water treatment.