The boom in the European CleanTech startup sector, and in the capital markets that have poured billions of pounds into accelerating those enterprises, has seen an incredible array of waste-repurposing and pollutant-reducing innovations come to market. We’ve been fortunate to see a few of these in our client portfolio, from green energy storage & managed-distribution systems, through to conversion technologies that bring cleaner outcomes to the fossil-fuel-driven logistics industry.
Deal values last year across the CleanTech space once again increased significantly on previous investment levels, rising from €7.3 billion to €9.7 billion across Europe. Looking at the stats behind the headlines, the number of transactions being financing is flat-lining, whilst the value of those deals is increasing. The average size of a financing round has risen from €3.3m in 2020, and €6.6m in 2021, to reach €10.7m average investment ticket in 2022. And there’s logic behind those numbers.
The upward trend we’ve witnessed is largely due to the industry maturing from its emergence as a nascent sector just a few years ago, which has led to a higher number of later-stage and follow-on financings at higher ticket levels. On top of this the sector has witnessed a number of notable megadeals including Northvolt, Climeworks, Sunfire, and Infarm to name a few – all of which booked rounds in the hundreds of millions. Impressive values, irrespective of the sector.
So if you’re a CleanTech founder pushing the boundaries – and pushing on the doors of venture capitalists – where is the optimal country to put down roots? If we look at recent stats (yep, we keep going back to the stats) Sweden tops the table, at least by deal volume. With a cumulative financing volume of €6.4 billion over the past four years, Sweden is significantly ahead of second-runner, the UK, with €4.0 billion, and Germany in third with €2.8 billion. Admittedly these numbers are a tad misleading, with Sweden’s Northvolt running four successive mega rounds, single-handedly taking €4.7 billion of that funding.
And if you’re still contemplating which vertical to delve into for your next CleanTech venture? The recent few quarters have seen energy-storage & E-mobility attract the highest funding. With a deal volume of €6.8 billion, the energy storage sector leads the way across Europe. Interestingly this is driven in part by the rise of the second largest vertical, e-mobility, as well as the expansion of renewables, which collectively create additional storage demand. Again, without Northvolt’s bull run the energy storage vertical would only be ranked 4th, with energy generation running up alongside storage.
A clear pattern has emerged through this first era of CleanTech, with the largest verticals being notably synergistic and helping to spur growth and innovation interconnectedly, whilst still remaining specialist enough in their own right to evolve independent industries unto themselves. Though, as time has shown us on many occasions, convergence and consolidation are never too far into the distance. Nevertheless we see exciting times ahead for a welcomed and warranted industry of innovators.