How can we enable a future where we’re not polluting our environment, where we’re not wasting our resources, yet we still ensure our future generations can live sustainably?
In this article, we take a closer look at why we invest in deep tech ideas and innovations which are shaping the future of our environment.
Safeguarding our environment is a hotly debated topic, and quite rightly, as it’s one of the most pressing issues that humankind faces. There is no single solution or set of solutions that will reverse the impact climate change is having on our environment, and on our future. This is why the whole of society needs to get involved – change can’t just be up to the few, the ‘many’ have to come together to play a part.
So, what’s the role of venture capital investment in this?
Simply put, our role is to find, fund, support, and grow companies that are creating compelling breakthrough technologies that aim to solve some of the toughest environmental challenges.
But a key issue for many venture capital companies is knowing where to start and which technologies, and therefore investments, are going to make a difference. We’ve taken the approach of breaking the environment down into buckets – energy, water, materials, adaptation, and emission elimination.
Here’s some insight into our thinking:
1. Energy:
An obvious way to start making a difference is to look at how we can sustainably produce and use energies that minimise emissions, reduce energy poverty, and maximise how much bang for our buck we get from energy.
This means finding technologies trying to produce energy more efficiently or producing energy that manages, or minimises, emissions. If we take a look through our current portfolio companies, both Vortex Power Systems and Cetogenix are really good examples of technologies that aim to generate energy more efficiently and effectively.
2. Water:
Fresh water is a resource which is going to continue getting scarcer than it already is, particularly with climate change. With a current population of 8 billion, which is projected to reach 10 billion by 2050, we need to find ways to manage, feed and hydrate both our communities and our source of food –our crops etc without comprising other uses of freshwater.
So how do we source enough water to hydrate a rapidly growing global population and grow more food to feed them?
We are focused on opportunities that either use water better or create water in a more cost-effective way.
While we have huge oceans, there is a large energy penalty and emission profile when converting saltwater to freshwater. What we need are technologies that reduce the energy penalty of water production while also making sure we reserve and preciously use our freshwater resources.
Complex? We completely agree, but then, that’s the nature of deep tech. And that is why we have invested in Dewpoint, a startup developing coating technologies to passively harvest water from the atmosphere. And that is also why we believe in Nanobubble Agritech’s mission to reduce the amount of water used in open crop farming.
3. Materials:
Up until now, we’ve lived in a very linear environment – we extract, we use, and we dispose. This linear process uses cheap energy (and often fossil-derived energy), to make products which ultimately end up in a landfill, contaminating our groundwater resources, or floating in our oceans.
We are now more aware of how much energy it costs to build products and the waste that occurs as a result of linear thinking. We have realised this is not sustainable and have reached the point where we need to manage how we think about how we use our finite material resources.
This shift in how we do more with less raw materials manifests into investment opportunities that are full circle.
We’ll explain with a hypothetical example. Say it takes 100 kilograms of water to produce 1 kilo of beef. Typically, because we take cuts of meat rather than eating the whole carcass, there’s lots of waste left over. This means, not only do we use a lot of natural resources in production, but these are inefficiently used as we generate lots of waste. There is value in finding opportunities for ways to use this waste product.
As an example, to produce plant and animal oils (e.g., medicinal cannabis, fish oils), you need a certain concentration of that oil to occur naturally in the plant or animal. Typically, if the concentration is low, then you are not able to extract that oil. For medicinal cannabis providers, roughly 50% of their crops do not have the level of concentration and farmers are forced to throw these crops away.
That is what we invested in NE Tech, which is a company looking at how they can extract oils from fish and plant waste which would have otherwise been discarded. Not only are they reducing the amount of waste, but they’re also creating a valuable product that’s got a market.
4. Adaptation:
Adaptation refers to how we support our natural and built environment. What used to be 1 in 200-year events, are now likely to be more frequent. The extreme natural events we’ve all experienced over recent years, are likely to happen again, and again…..and again.
So how can we use breakthrough technologies to make our communities more resilient?
Earthquakes, while horrific, showcase the true cost of these events. Not only do we have real human and financial costs – we also “pay” for the carbon energy that’s been wasted because the concrete building is now, at best, useless.
When we think of our environments – both natural and built –everyone is coming to the realisation that they’re going to change. So we need to be finding ways to be more resilient and adapt to events that are, inevitably, going to happen. Importantly, this resilience and adaptation need to happen before the event, otherwise, in the case of earthquakes, the buildings will fall down.
Tectonus is a company that is focused on adaptation right now. They have developed seismic strengthening technology that helps a building recentre and take the load during an earthquake. What’s exciting about this technology is that it’s probably the only product in the market that works in timber buildings, which are growing in popularity because, compared to steel or concrete buildings, they emit less carbon and can actually store embodied carbon.
5. Emission elimination
This is about how we reduce CO2 emissions. Interestingly, when we first look at companies seeking investment, they come to us with the value proposition of what they will ‘do’, e.g., Tectonus is seismic strengthening, yet the bigger opportunity is a product which can be used in mass timber construction.
Another example is Geo40, a company developing ways to extract silica and lithium from geothermal brine waste. While Geo40 solves an important problem (i.e., extracting lithium from waste), a by-product of their technology is the ability to potentially store CO2 in the brine waste after the silica and lithium have been extracted.
So, in addition to waste extraction, we’re looking at how companies can solve our global emission problem.
Ultimately everything we do, whether creating pharmaceuticals, building factories, and cities, or growing food, relies on energy – oil, gas, coal. So fundamentally, to achieve a sustainable future, we need to find ways to transition from fossil energy to non-fossil.
Our role as a deep-tech venture capital funder is to invest in technologies that have the potential to fundamentally impact the future of our environment.
