Biodiversity startups are gaining interest from investors

Dear climate community,

According to CapitalforClimate, investment in nature-based solutions (NbS) must reach US$500b annually by 2050 for the world to meet its climate change and biodiversity targets.?

Current economic systems do not adequately value nature-based resources despite their inherent value. This results in a tragedy of the commons scenario where they are insufficiently financed. The financing gap is substantial.?

The biodiversity financing gap

The biodiversity financing gap for the next decade is estimated to be US$711 billion per year. ?The Paulson Institute (Deutz et al. 2020) estimates that the financing gap to reverse the decline in biodiversity by 2030 is between US$598 billion and US$824 billion per year (US$711 billion per year on average).

Investment in NbS ought to at least triple in real terms by 2030 and increase four-fold by 2050 if the world is to meet its climate change, biodiversity and land degradation targets.

This acceleration would equate to a cumulative total investment of up to USD 8.1 trillion and a future annual investment rate of USD 536 billion.

Nature-tech start-ups offer investors access to biodiversity data and analytics to drive superior investment decision-making.

Asset managers, financial institutions, impact investors, private equity, VCs and corporates are all investing in some form of NbS or nature-tech.

In a recent Credit Suisse report, 51% of investors mentioned ‘biodiversity’ as one of the most important topics for investors by 2030. ?An additional 71% of investors cite data availability and metrics as a critical barrier to better investment decisions for biodiversity.

Here are a few examples of institutional investors backing biodiversity startups.

Investment Manager Schroders Invests in Natural Capital Research (natcap)?

natcap, the nature intelligence company for finance and enterprise, has closed a ￡2.5m seed round. natcap's investors include the investment companies Oxford Science Enterprises and leading asset manager Schroders.

Schroeders is an investment manager who manages ￡726.1 billion (€846.1 billion/$923.1 billion)* of wealth and investments (as of 30 June 2023)

Founded at Oxford University in 2018, natcap’s team is drawn from various industries and specialisms – from academia and software engineering to consulting and enterprise.

Natcap is developing the next generation of nature intelligence technology to help companies and financial institutions measure the nature-related impacts and dependencies of their operations, portfolios, and supply chains across factors, including hydrology, soils, biodiversity, and carbon.?

Asset Managers see an opportunity to invest in start-ups that helps them account for nature risk, and its opportunities and enable them to fulfil their fiduciary duty to their clients.

Urban sustainability-focused VC 2150 and NatureMetrics

NatureMetrics has raised €14 Million in funding to transform the scale, comprehensiveness and accessibility of biodiversity data around the world, creating a comprehensive database of life on earth which will help us identify how best to protect it.

Using cutting-edge technology, NatureMetrics, which was founded in 2014, brings the power of genetics to frontline ecology. With comprehensive DNA analysis, the platform monitors biodiversity and measures nature capital in the environment.?

2150 deploys ‘Constructive Capital’ centred on the conviction that sustainability provides both superior returns and meaningful impact in today’s challenges. ?Additional investors included Ananda Impact Ventures, SWEN Capital Partners’ Blue Ocean, BNP Paribas Solar Impulse Venture Fund, and Systemic Capital.

“Biodiversity data has not been quantified as effectively as other data sources, yet its measurement at scale is critical to protecting and preserving it. By leveraging the decreasing costs of genomics and its world-leading academic expertise in environmental DNA and analytics, NatureMetrics is essentially creating the Google Maps for nature, so we in the future can understand and report on how the Earth is doing in a heartbeat” - 2150

OTPP takes majority stake in GreenCollar

The Ontario Teachers’ Pension Plan, led by OTPP’s Natural Resources Group, acquires majority stake in the Environmental Markets Platform GreenCollar.?

Founded in 2011, New South Wales-based GreenCollar is Australia’s largest environmental markets investor and project developer. The company helps farmers and land managers to create commercial opportunities through nature-based projects that generate environmental credits, while also providing environmental, social and economic benefits.

GreenCollar holds more than 220 Australian carbon projects and has contracted more than 126m Australian Carbon Credit Units and more than 44,000 reef credits.?

GreenCollar aligns with OTPP’s mission to restore and enhance natural capital in areas like biodiversity and water quality. GreenCollar is a proven leader in delivering positive environmental outcomes with market-based solutions and OTPP’s thinks companies such as GreenCollar will become more valuable over time.

Investible has invested in Xylo Systems through its Climate Tech Fund (Pre-seed stage)

Xylo Systems are using data aggregation and AI decision-making to build an easier way to connect, track and manage wildlife conservation projects.

Xylo Systems is a cloud-based, data and AI platform that supports those conserving and impacting biodiversity to measure and manage their footprint. Xylo Systems is one of eight companies backed in the first investment round by Sydney VC Investible’s early-stage Climate Tech Fund.

The total committed by Investible to the climate startups was not revealed, with the fund still raising towards its $100 million target, having so far gathered $30 million in commitments.

Space Intelligence has completed a Seed Round led by Equinor Ventures, Equinor’s corporate venture capital arm.?

Space Intelligence is a data analytics SaaS MRV company. It sells business intelligence to forestry project developers, corporations and governments seeking to mitigate their environmental impact. The demand for this insight has grown so fast that Space Intelligence has seen a 10x growth in just three years. The company is using the investment to accelerate the expansion of its Artificial Intelligence and satellite data technologies to support the digital monitoring and reporting on nature-based solutions for climate change.

Apple uses Space Intelligence’s remote sensing technologies to expand its Restore Fund, which champions nature-based carbon removal projects.?

UK-based Pivotal has raised a Seed round of ￡4.5 million to help it transform the economics of biodiversity tracking and build a platform to measure biodiversity at scale.?

Octopus Ventures led the round and includes AENU, The Clearing Ventures, with existing investors, Pale Blue Dot.

Through Pivotal’s platform, both the owners of credit projects and the buyers of those credits can track changes in biodiversity over time and link the value of a credit to real, measured gains.?

Pivotal is using advances in technology – from ground-based sensors and cinematic drone flights to acoustic sensors and AI – to build the most detailed set of annotated, species-level biodiversity data ever to be compiled – while providing scalable, quality-controlled analytics to show evidence of any biodiversity gains on the ground.?

Pachama raised $55 million in a funding round led by venture capital firm Future Positive

In 2022, Nature-based carbon credit platform Pachama raised $55 million in a funding round led by venture capital firm Future Positive. Pachama was founded in 2018 and immediately attracted talented engineers and scientists in addition to the support of investors such as Y Combinator, Breakthrough Energy Ventures, LowerCarbon Capital and the Amazon Climate Pledge Fund. Pachama has since assisted Fortune 500 corporations in investing in high-quality nature-based carbon credits.

Pachama is building machine-learning models that integrate satellite data, field plots, and 3D airborne lidar imaging to map forest carbon over entire regions, and, eventually, anywhere in the world. This satellite-based carbon mapping unlocks a more scalable, cost-efficient future for crediting.?