E-101: Climate Tech Funding Defies Slump

2024 is turning out to be a good year for climate tech startups.?

This sounds counterintuitive, since globally, startup funding has not fully recovered yet.?But a new report by climate tech data and research platform Net Zero Insights predicts that global climate funding in 2024 will be stronger than that of 2023.

Well, it is not the first time climate tech startups have stood out during the funding winter.?

For instance, 2022 was one of the worst years for startups. High geopolitical tensions, high inflation, high interest rates, and crushed investor confidence—all of this put together led to a severe funding crunch.?

However, 2022 was the peak year for climate tech, when the yearly global funding reached US$103.6 billion, as per the Net Zero Insights report. This funding included equity, debt, grants, and other financial instruments while excluding exits and post-exit financing.?

Now again in 2024, the climate tech startups are defying the general trend.?

Net Zero Insights expects 2024 climate tech funding to slightly exceed 2023 levels , driven by large debt-structured rounds and strong investor optimism in market-ready solutions. It projects that global climate tech ventures will raise over US$88 billion this year, compared to US$84.1 billion in the whole of 2023.

In fact, climate tech funding reached US$50 billion in the first two quarters of 2024 according to the report, so it seems to be on track to surpass 2023. This is despite the decline in equity deal activity due to market sentiment, amid economic uncertainties and speculated regulatory changes.

Zooming in, Europe witnessed the most climate tech funding activity in Q2 2024 with US$8.3 billion raised, followed by North America, where climate ventures raised US$6.7 billion. Meanwhile, Asian climate tech funding stood at US$1.3 billion in the quarter.

Speaking of Asia, a couple of interesting developments happened this week in the climate tech space.?

Earlier this week, Singapore-based Clime Capital announced investing up to US$10 million in Upgrade Energy Philippines (UGEP), a key player in solar leasing projects for commercial and industrial customers in the Philippines. This capital is intended to support UGEP to expedite the deployment of solar energy infrastructure in the country.? This deal comes two months after Clime Capital wrote checks for Southeast Asian renewable energy companies—Vietnam’s Nami Energy and Indonesia’s Xurya.

Meanwhile, the International Finance Corporation signed a deal to provide US$60 million in green financing to Indonesian steel producer Gunung Raja Paksi (GRP) to boost low-carbon steel production in Indonesia, reducing greenhouse gas emissions and supporting the country’s climate goals.

This momentum is likely to continue for the rest of the year if we go by industry experts’ conjecture.?

On that note, let’s dive into this week’s recap.?

Buzzing Deals

Adding on to the climate tech deal activity in Southeast Asia mentioned above, two EV companies landed checks from investors for creating an ecosystem for driving green transportation adoption.

? Vietnamese electric two-wheeler maker Dat Bike recently raised a US$4 million convertible loan from InfraCo Asia. The startup sells its EVs both to consumers and businesses. The latest funding takes the total amount raised by Dat Bike to over US$25 million. The company will use the new funding to accelerate the deployment of over 30,000 electric motorcycles over the next two years, which will potentially reduce nearly 26,000 tons of CO2 emissions annually. ?

? Singapore-based electric vehicle (EV) charging operator Charge+ completed its Series A round with a total of US$8 million raised . While Series A was led by TRIVE Venture Capital, TNB Aura led the recent Series A2 round. The new funds will help Charge+ accelerate the expansion of its EV charging infrastructure throughout Southeast Asia. This includes building 4,000 EV charging points for the Singapore Land Transport Authority and constructing Indonesia's largest EV charging hub in the Batang district in Central Java.

Other noteworthy deals that happened during the past week are:

? Singapore’s Digital Asset Exchange SDAX just closed a US$50 million Series B2 funding round , led by the Oman-based Muscat Precious Metals Refining Company. SDAX is a MAS-regulated investment and trading platform for institutional, accredited, and retail investors. It specializes in private credit, real estate, and impactful investment opportunities. The company will use the money for its expansion plans in Asia and the Gulf Cooperation Council region. To that end, SDAX is set to launch a digital asset exchange in Oman. A part of this money will also go into client acquisition and incorporating other business lines such as wealth and fund management.?

? Malaysia’s ZUS Coffee netted US$57 million in a private equity round from a consortium of investors including PE firm KV Asia Capital, pension fund KWAP Malaysia, and Indonesian FMCG player Kapal Api Group. The tech-enabled coffee chain operates over 600 stores in the region, with about 550 stores in Malaysia and the rest in the Philippines. With the fresh money in the kitty, the company will step up expansion into new geographies. It plans to enter Singapore and Brunei this year and is in discussions with potential partners in other international markets.?

? Tokyo-based AI R&D company Sakana AI landed an eye catchy US$137 million series A check . Its investors include big names like New Enterprise Associates, Khosla Ventures and Lux Capital. NVIDIA also participated in the round and agreed to collaborate with Sakana on research, infrastructure, and AI community building in Japan. Sakana focuses on research and development of new kinds of foundation models based on nature-inspired intelligence. The company will the new capital invest in talent and infrastructure for advancing nature-inspired, sustainable, and energy-efficient AI technologies.

What Stood Out This Week

More Funds: Singapore-based Genesis Alternative Ventures raised US$125 million in the final close for its second venture-debt fund focused on Southeast Asia. Its investors are mostly the backers from the venture lender’s first fund, including Sassoon Investment Corporation, Korea Development Bank, Silverhorn, Aozora Bank, and Mizuho Leasing. Japanese banking firm Mizuho Bank and US-based investing platform OurCrowd came in as new investors. Genesis Alternative has already deployed about 20% of the fund in firms like drone service provider Aonic, orthodontics brand Zenyum, and reverse logistics firm Returnkey.

Merger: Two of Singapore’s biggest dating agencies, Lunch Actually and Paktor Group, have merged and the new entity will be called Lunch Actually Paktor Group. Lunch Actually is a 20-year-old offline matchmaking services agency that connects singles over lunch dates and has more than 1.2 million members regionally. Paktor Group is an 11-year-old online dating app with 20 million users.?

The brands under both companies will continue to operate independently after the merger, with Violet Lim, co-founder and chief executive of Lunch Actually as a group CEO. The merger is expected to expand the pool of potential matches for their customers and help the two brands offer more personalized experiences.

Acquisition: Indonesia-based enterprise performance management software startup Happy5 is acquiring Singapore-based startup SugarOKR for an undisclosed sum to strengthen its global presence. SugarOKR is an objectives and key results (OKR) tracking software provider.

Aside from significantly enhancing Happy5’s product capabilities, Happy5 will leverage SugarOKR’s tools and expertise to step up its expansion into new territories including the US market, where SugarOKR has an already established presence.

Stepping Back: Indonesia’s GoTo Group is exiting Vietnam , where its ride-hailing business has been struggling to compete with Grab and local players like Be Group. This is considered a move to reach profitability by focusing on operations in Indonesia and Singapore.

This aligns with GoTo’s previous loss-cutting moves like exiting Thailand in 2021 and offloading its e-commerce arm Tokopedia to ByteDance’s TikTok in a US$1.5 billion deal late last year. The company’s Gojek brand—which offers ride-hailing, food delivery, and courier services, and accounts for less than 1% of GoTo’s gross transactions—will close its Vietnam business effective Sep 16.

New Collab: Singapore and India have signed an MOU to partner and cooperate in semiconductors . The collaboration is aimed at creating government-led policy exchanges on ecosystem development, supply chain resilience, and workforce development in this area. Singapore already accounts for 11% of the global semiconductor market, with 20% of global semiconductor equipment manufactured in the country.

This deal may give Singaporean firms a greater role in supply chains in the Indian market. Meanwhile, India has sharpened its focus on semiconductors, with a US$10 billion package in place, to step up and compete in the future with countries like chipmaking giant Taiwan.?

And that’s the wrap for this edition of #ICYMI , our weekly curated highlights from the Asian tech ecosystem. Subscribe to receive it every Thursday and stay updated on the noteworthy tech developments you might have missed during the week. Like this newsletter? Share it with your friends and colleagues here .