Morning reader,

L’exception française? Not in climate tech. Like most of Europe, France is going green — and it’s placing its chips on the startup table to do so. 

Last year, climate tech startups in France bagged just under $3bn, according to Dealroom data. That’s about a third of total funding in the country, making climate the hottest sector of 2023 — even more so than headline-grabbing AI companies, which brought home 19% of funding.

It’s been quite a turn around. Just five years ago, French climate startups were cashing less than $1bn a year. Saish Rane, who is currently raising a pre-seed climate fund in Paris, tells me: “18 months ago, I would’ve said that France is at least three years behind its European counterparts [...] my opinion has since changed.”       

Today, I’m going behind the scenes of France’s climate tech boom. 

Elsewhere, there’s a €10m seed raise for a grid tech startup launched by Zettle and Spotify alumni, we unpack the startup using plywood for wind turbines and the heads of Germany’s €1bn climate and deeptech fund sit down with Sifted.

— Daphné Leprince-Ringuet, French tech reporter

French tech's climate boom

When French battery maker Verkor bagged a record-breaking €850m equity round last year to build a gigafactory in the north of France — which is fast becoming known as the country’s “battery valley” — it got kudos from the very top: president Emmanuel Macron himself took to social media to share the news.

Verkor ticks all the boxes for what the French government has been trying hard to do over the past years. In 2022, Macron launched the “France 2030” plan — a €54bn programme dedicated, among other things, to dealing with the climate crisis. First in line to meet the plan’s objectives? Startups.

Together with public bank Bpifrance, the government has deployed billions into the French tech ecosystem to support climate tech, from small nuclear reactors and hydrogen through to mobility — with a soft spot for capital intensive industrial startups that are building big factories like Verkor, and who benefit from extra support and dedicated pockets of money. A thank-you of sorts for helping to reindustrialise the country, keep innovation at home and create lots of jobs.

Bpifrance says that just between the end of 2021 and the start of 2023, the number of climate tech companies in France grew from 1,800 to 2,153, and that half of them are industrial. “[It’s] a Cambrian explosion in terms of industrial startups,” says Rane.

These companies are drawing on multiple sources in their hunt for capital — which is plentiful. In 2023, two of the top three biggest rounds in France were in the climate sector — Verkor and insect-based food producer Ynsect, which raised €160m; 2024 started with EV-charging startup Electra bagging a €304m Series B.

Part of this drive has also been prompted by ESG regulations that are kicking in across the EU. That’s making VCs sit up and take note — in the past year, several firms, such as Partech and Breega, have launched funds that include a focus on climate. 

“2023 was a pivotal year for climate tech in France,” says Renaud Visage, a Paris-based investor currently raising a climate fund. “The energy transition should continue to attract the most funding in France, but we [also] see an increasing number of tech startups providing solutions to industrial decarbonisation.” 

Of course, keeping up with the funding required by these companies — especially infrastructure startups — will be a challenge. With $2.9bn raised by climate tech startups in 2023, France is on an overall upward trajectory, but it is still behind some of its European neighbours. The UK saw a $6.5bn injection of cash in the sector last year, while Swedish climate startups raised $3.8bn.

“It’s still early days,” says Rane. ”France is showing remarkable promise in keeping up with its neighbours, but this year will be key if we are to pull ahead.”

Which climate tech startups should I be following? Are other trends shaping up in France (I’m looking at you, alternative foods)? And which regions are emerging as contenders to becoming France’s next climate hub?

I’m interested in your thoughts. Get in touch! 

— Daphné Leprince-Ringuet, French tech reporter

⚡️ Stockholm-based grid startup Fever has announced a €10m seed funding round led by General Catalyst, with participation from Swedish impact investor Norrsken VC. The Swedish startup helps utility companies build their own virtual power plants — which are networks of small energy-producing or storage devices that are pooled together to serve the electricity grid. It is now looking to expand in Europe. 

• The company has a fintech-heavy founder list — something it shares with Fuse, another grid startup in Europe. Three of Fever’s founders are alumni of payments hardware company Zettle, while the fourth is from Spotify. 
• According to the CEO Klas Johansson, there’s a large overlap between fintech and energy. “Both are critical infrastructure in society, have high demands for resilience and security, and quite a lot of data,” he tells Sifted.

☀️ The world’s biggest solar manufacturer has said that Europe and the US risk putting the brakes on decarbonisation if they halt Chinese companies from their renewable energy supply chains.

• Dennis She, vice president of Longi Green Energy Technology, told the FT that western countries would “at least slow down” the transition away from fossil fuels if they restricted Chinese solar supplies — which make up the bulk of European solar imports – and costs would go up. Of the modules installed in the EU, 95% are imported from China, according to The Economist.

🌞 Spain's Holaluz: Waiting for the sun to shine.

🪵 Thought plywood was an Ikea thing? This startup is using it to build wind turbines.

💰 There's a lack of growth capital in Europe — Germany's $1bn deeptech and climate tech fund wants to change that.

🇫🇷 The french startups that could be the country's next unicorns.

🤪 Hydrogen is starting to navigate the hype cycle. (FT)

🥩 Lab-grown 'beef rice' could offer more sustainable protein source, say creators. (The Guardian)

🔋 Batteries for Europe's grids may finally be ready to take off. (Bloomberg)

Bergamo, Italy-based Daze, which manufactures charging systems for electric vehicles, raised €15m in Series A funding. CDP Venture Capital led the round and was joined by investors including EIC Fund, SIMEST, Founders Future, PranaVentures, 035 Investimenti.

Delft, Netherlands-based CarbonX, which is working on a cost-competitive and more sustainable alternative to graphite to be used in EV batteries, raised €10m in funding. Innovation Industries, InnovationQuarter and Borski Fund led the round. 

Copenhagen-based Aegir Insights, a data-driven research and analytics company for offshore wind decisions, raised €8.5m in a Series A funding. Seaya Andromeda led the round and was joined by investors including Climentum Capital.

Copenhagen-based Portchain, which uses AI to help ports improve the berth schedule of container ships and quayside operations, raised $5m. Angular Ventures led the round. 

Berlin-based Pacifico Biolabs, which creates fermentation-based alternatives to meat and fish products, raised $3.3m in pre-seed funding. Simon Capital and FoodLabs led the round and were joined by Exceptional Ventures and Sprout & About Ventures.

If you'd like to submit a deal, get in touch.