Morning Fabiana,

It’s International Women’s Day tomorrow, a fitting time as any to do a whistle stop tour of the *depressing* climate tech funding stats. Companies run by female founders closed 58 climate tech funding rounds globally in 2023, according to Pitchbook. At the same time, male founders closed 826 climate tech rounds.

There was more frustrating news recently when Azerbaijan announced the committee for this year’s global climate summit – COP29, which the country will host in November – comprising 28 men and no women (after a backlash, it’s now brought in 12 women).

I won’t rehash the reasons why that’s a problem. I’ve been following She Changes Climate, which is doing interesting work behind the scenes to support diplomats in appointing more women into leadership roles at COP conferences. In the tech world, accelerators like Carbon13 are making strides to support female founders. 

👉 In today’s newsletter, the new generation of DAC startups hoping to bring the price of the tech down, inside Europe’s only nuclear unicorn, Newcleo and €500m for hydrogen startup Sunfire.

— Freya Pratty, senior reporter

/A message from our sponsor Amazon Sustainability Accelerator

A new generation of nimble DAC

This week, German startup Greenlyte raised €10.5m for its direct air capture (DAC) tech — which removes carbon dioxide from the air. The company was founded in 2022 and plans to have its first plant deployed in Canada by the end of this year.

It got me thinking about the vastly shortened timelines newer DAC startups are able to work to. Europe’s best-funded DAC startup, Climeworks, was founded in 2009 and was 12 years old before it delivered its first plant. 

The landscape has changed drastically since then. Working on similarly fast timelines to Greenlyte, Sirona, a Belgian DAC startup founded in January last year, plans to begin mass production of its machines at the end of this year.  

“Climeworks built the market,” Florian Hildebrand, CEO and cofounder of Greenlyte, says. “They were the innovators in a market which nobody understood at the time, and they created the tracks for everybody else.

“I think now you see an amount of people with previous entrepreneurial experience and you see different forms of capital in the market, that leads to faster iteration,” he says. 

Indicative of the upsurge in DAC innovation is the number of patents being filed: the global figure has soared from 2017 onwards, according to data from IP law firm Appleyard Lees.

The new cohort of companies aren’t just trying to build faster, they’re also trying to get the price of DAC down. It currently costs between $600-1,000 to remove a metric tonne of carbon dioxide from the atmosphere using direct air capture.

Analysts and policymakers agree that to scale the industry to the levels needed to move the needle, the price needs to drop to around $100 per tonne. 

Hildebrand says Greenlyte is removing CO2 at about $400-500 per tonne. There are three levers that will bring that down further: energy efficiency of the plant design (which it’s iterating on at present), the manufacturing of components at scale and the cost reductions that will come when Greenlyte’s plants are at scale.

The startup is currently removing 100 tonnes of CO2 per year. Once its capacity crosses 10k tonnes per year, it should be able to get the price down to below $100, Hildebrand says. 

​​🦄 Inside Europe’s only nuclear unicorn. By the end of 2024, Europe’s nuclear startup sector could have its first €1bn raise — the goal of UK-based Newcleo, which is developing small modular reactors (SMRs) fuelled with radioactive waste. It could make the first close on its next funding round as soon as April. 

🗣️ How to communicate impact without greenwashing.

♻️ Europe’s plastic ban. Single-use plastic packaging will soon be banned in the European Union, after negotiators struck a deal on Monday to make the packaging of everyday items more sustainable. 

• As part of the effort, all packaging in the European market will have to be recyclable by 2030. 

📉 Climate fintech funding fell in 2023, new data from CommerzVentures shows. The sector secured $2.3bn globally last year, down 19% from the record level seen in 2022. European climate fintech showed relative resilience, however, bringing in 1.5x more VC funding and 3.3x more financing rounds compared to the US. 

• Germany saw the most climate fintech financing in Europe last year, taking over from the UK, which topped the pile in 2022.
• Carbon markets attracted the most investment. Last year, carbon accounting secured the most funding in the climate fintech sector.

Last week, I wrote about the lack of funding for solutions for things that help us adapt to climate change. What we’re calling adaptation tech receives just 7.5% of the global climate tech funding pie, according to data from the Oxford Climate Tech Initiative covering 2019-2020.

A number of you wrote in with your thoughts on the problem. Responses have been edited for clarity.

High tech adaptation isn’t typically venture backable

“Most physical adaptation solutions are either low tech and need high public sector involvement (planting more trees to cool cities, painting rooftops white etc.) or high tech and need high public sector involvement (building the Thames Barrier, drones to fight wildfires).  

There are a few high tech private sector focused startups, but the private sector isn't incentivised to adopt them.  It’s similar in the building retrofit space. Solutions exist, but growth is a real slog. A solution — helping Tesco make every store flood resistant, for example — would be great, but the market tailwinds aren't there.

The high tech/ public sector cases typically aren’t venture backable because of the project time spans and the nature of the stakeholders. These cases have profit and loss statements like defence tech startups, and so you could build a fund to invest in this space specifically. But for a standard VC it’s challenging to pick these startups, which might take 10+ years to commercialise, compared to a standard SaaS growing 10x a year.”

— Burhan Pisavadi, investment manager at PT1 Ventures

Less glamorous than other climate tech

“Climate adaptation tech is stuck between a rock and a hard place: there is a perception of it being a 'less glamorous' investment compared to other first-of-a-kind ground-breaking climate tech (e.g. nuclear fusion), while at the same time many of the adaptation solutions use new untested technologies, which haven't been de-risked from a VC's perspective.

There's also the misconception that a single solution can address multifaceted problems — like wildfires, for example. This leads to the common refrain: "We already have a firetech company in our portfolio," effectively closing the door on a multitude of other innovative approaches.

Complex issues such as wildfires require a diverse ecosystem of solutions across different technology types (AI-powered detection systems, advanced material science for fire-resistant infrastructure and satellite-based imagery can hardly be put in the same tech bucket), each addressing different aspects of the problem.”

— Kseniya Lenarciak, cofounder of Sly

🔆 German startup Sunfire has secured €500m in Series E financing — a combination of equity, debt and grants — to scale up its green hydrogen production technology. The Dresden-based company makes electrolysers which produce hydrogen using renewable energy (at present the majority of hydrogen manufacturing relies on fossil fuels).

• Sunfire secured €215m in equity from LGT, Singaporean sovereign wealth fund GIC, Ahren Innovation Capital and Carbon Equity. Sunfire also secured €200m in grants and €100m in debt from the European Investment Bank (EIB).

💨 Carbon removal startup Greenlyte raised €10.5m from Earlybird, Green Generation Fund, Carbon Removal Partners and Partech. 

⚡ Swiss startup Plexigrid secured €6.5m from the European Innovation Council Accelerator Programme. Plexigrid, based in Stockholm, is working on grid control tech to coordinate  flexible devices in real time. Back in January, we dubbed 2024 “the year of grid tech” — more on the emerging industry here.

🌿 Danish startup Nitrovolt secured €750k from Backing Minds for its green ammonia tech, which can be used to make more sustainable fertilisers. Nitrovolt previously received a grant from Bill Gates’ Breakthrough Energy.