Open Scout - 9

Hello 👋,

Welcome to the first 2023 edition of the, your go-to source for venture insights!

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STARTUPS OF THE WEEK

Startup Name: Databar.ai

Geography: US

Description: Finding reliable, high-quality data can be a challenge. Databar.ai is a no-code API connector that enables users to both download and analyze custom datasets on any topic. It simplifies the process of acquiring and analyzing data, without requiring any coding or data science knowledge. It allows users to scrape social media sites, track news articles, and access enterprise-grade alternative datasets, such as anonymized foot traffic and satellite data.

Founder(s) background: Investment @ Capital, AltaIR Capital

Backed by (public source): N/A

Startup Name: re:collect

Geography: US

Description: If you're someone who collects a lot of information, whether it's for work, research, or personal projects, then you know how overwhelming it can be to keep track of everything. But what if you could put all that information to work for you?

re:collect is an AI-powered thought partner that helps users ideate and create without disrupting their flow. Designed to mimic how the mind works, it uses machine-learning models to connect and retrieve digital information effortlessly. No tagging, organizing, or linking is required.

Founder(s) background: Head of AI Strategy @ Cloudera, Data Scientist @ Simple Finance, Yahoo

Backed by (public source): Raised ~$2.6M from Betaworks Ventures, GMG Ventures, Brooklyn Bridge Ventures, Sriram Krishnan, & Packy McCormick

COLUMN

Just in case you haven't noticed, the Earth is getting warmer, and it's all thanks to us. Human emissions of greenhouse gases have already warmed the Earth by 2°F since pre-industrial times, and its effects are palpable. But don't worry, there's a silver lining—Climate tech.

Climate tech has come to the fore like never before, with its potential to be a safe haven investment in a macroeconomic environment of uncertainty. According to PwC's State of Climate Tech 2022 report, climate tech funding in 2022 represented more than a quarter of every venture dollar invested, in the upper half of the 20-30% range observed since the start of 2018. Investment in climate tech has been in the US$15-20 billion range per quarter, in line with the first half of 2021.

Russia's illegal invasion of Ukraine has been a big catalyst for increased interest in climate tech—specifically energy-focused climate tech that takes us away from petrochemicals and fossil fuels—as Europe has been so dependent on Russian energy for so long. Furthermore, money from previously overheated sectors is also moving to climate tech due to its real-world applications and contrast with businesses that secured tens of millions at inflated valuations without a product or team in place. This means that valuations and rounds in climate tech are holding their ground despite the wider market slumping.

Investing in climate tech currently presents one of the biggest financing opportunities in history. PitchBook forecasts that in the next five years, the climate tech sector will become a $1.4 trillion market—a compound annual growth rate of 8.8%. Moreover, BCG estimates global investments of up to $150 trillion are needed to reach net zero by 2050. In addition, government-backed incentives, such as the $369 billion package of climate investments provisioned in the Inflation Reduction Act, have been put in place as voters demand increased action on green issues.

According to a report from the International Energy Agency (IEA), global consumers paid the highest total energy bill ever in 2021, surpassing $10 trillion—a record-breaking amount. A staggering 80% of this bill was attributed to coal, oil, gas, or electricity generated from these fossil fuels. However, there is some good news on the horizon as the trend has shifted and annual investments in clean energy have surpassed those in fossil fuel systems, with a total of $1.4 trillion invested in clean energy compared to $1 trillion in fossil fuel systems.

This is not the first time the climate tech industry has experienced growth. Cleantech 1.0 saw a rapid rise and subsequent decline between 2006 and 2011. According to a well-known post-mortem study, of the $25 billion that VC investors poured into Cleantech 1.0 from 2006-2011, more than 50% was lost by 20151. For instance, solar-panel developer Solyndra attracted over $1 billion in private and government funding, only to go bankrupt in 2015. Biofuel manufacturer KiOR was once valued at $1.6 billion but had burned through over $600 million of capital and went bankrupt in 2014. Successful investments of during Cleantech 1.0 include smart thermostat firm Nest (Kleiner Perkins), which Google acquired in 2014, and Enphase, a solar energy company that went public in 2012.

At a macro level, investments in Cleantech 1.0 dried up because of two factors: the 2008 economic recession and the onset of the U.S. oil and natural gas boom, which dropped fossil fuel prices and made more expensive clean energy even less financially attractive.

However, there is hope that Climate tech 2.0 will be more successful due to a combination of government regulations and the cost-effectiveness of sustainable technologies. The price of wind and solar power has dropped by 70-90% over the past decade, making them more accessible and feasible for widespread adoption.

Market hype can no longer be a justifiable reason for backing a company2. We are now seeing much deeper analysis among those investing in climate tech, such as World Fund's Climate Performance Potential (CPP) metric or initiatives such as Project Frame.

It remains to be seen if 2023 will be a breakthrough year for climate tech, but the current investments and advancements in the industry offer hope for a more sustainable future.

That’s all for this week.

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Kenneth