Morning Alan,

It’s easy to be enchanted by futuristic tech solutions which could one day make a significant dent in emissions. But climate change is happening now: so what about the (often less flashy) tech that could help us to survive in our rapidly changing climate? 

Adaptation tech — tech which, as the name suggests, helps us adapt to climate change — receives just 7.5% of the global climate tech funding pie, according to data from the Oxford Climate Tech Initiative covering 2019-2020. 

So why is adaptation tech so underfunded? Lena Thiede, partner at Planet A Ventures, sums up a central dynamic. “The communities most immediately and severely affected by climate change typically have limited access to capital and social prestige, representing customer segments that technology companies have not traditionally prioritised,” she says. 

More on adaptation tech’s funding gap here (including a little scoop on adaptation software startup Climate X’s latest funding round 👀 ).

Elsewhere this week, we’re digging into the state of play for Europe’s fermentation startups and bringing you a list of the climate tech companies that could soon clinch a unicorn valuation. 

Plus: we’ve just launched super early bird tickets for the Sifted Summit, our annual event in London on 2-3rd October. Last year had a lot of great climate content, from how to fund infrastructure to biodiversity innovation. Grab your ticket here.

— Freya Pratty, senior reporter

Fermentation-based food startups have a chicken and egg dilemma 

For at least 10,000 years, humans have been using fermentation to brew alcohol. Startups are using the same methods to create healthier and more eco-friendly alternatives of everything, from dairy-free cheddar to cocoa-free chocolate. 

Investors are taking note: in 2023, fermentation-focused startups raised $259m in Europe, 64% more than the year before and the highest for the subsector so far, according to Dealroom. 

The spotlight shifting to fermentation-focused startups is good news for the climate as swathes of African rainforests are being cut to make way for cocoa crops. And even if we did have enough space for them, the crops themselves are becoming harder to grow in a changing climate.

Chocolate production already uses an element of fermentation, with farmers mixing cocoa beans with microbes and leaving them in warm temperatures. But Win-Win, a London-based startup that raised a $5.6m Series A in February 2023, is taking it a step further, using cereals and plants to make its chocolate that does not require deforestation.

Another startup, Planet A Foods, which raised a $15.4m Series A round in February, ferments oats and sunflower seeds instead of cocoa to make a chocolate alternative. 

Elsewhere, startups are honing in on other climate-intensive foods: Berlin’s Pacifico Biolabs, which just raised a $3.3m pre-seed round, is using biomass fermentation to make alternatives to fish and seafood. Infinite Roots, also from Germany, also uses biomass fermentation on mushroom mycelium to make alternative meatballs, sausages and steaks. It closed a $58m Series B last month. 

Then there’s precision fermentation. London’s Better Dairy encodes yeast with the DNA sequences of milk proteins and ferments it to make animal-free casein, a key ingredient for making cheese that is usually found in cow’s milk. It raised a $22m Series A in February 2022. 

While there are decades of fermentation research for startups to piggyback off, one obstacle is what Christian Guba, partner at FoodLabs, calls a “classic chicken-and-egg dilemma”. 

“[Startups] need to demonstrate commercial traction and strong unit economics to secure funding for expansion [...] but achieving these milestones typically requires the scale that only comes with funding,” he tells Sifted. 

Another issue is reducing production costs enough to competitively price the product and appeal to consumers, says Marie Asano, partner at European Circular Bioeconomy Fund. Especially when the original food products being replicated are already sold at relatively low prices.

But despite these challenges, the payoff could be huge, she says: “If a handful out of hundreds of ventures succeed, it would forever change the landscape of the food industry.” 

— Sadia Nowshin, editorial assistant

🦄 The climate tech soonicorns. Two new climate tech unicorns were created in Europe in 2023: French gigafactory startup Verkor and Germany’s 1Komma5, which supplies heat pumps and solar panels to households. 

• We’ve run the numbers to work out which companies are close to clinching a unicorn valuation and could do so this year.

❌ Renewcell, a Swedish company which recycles textiles, filed for bankruptcy this week after failing to secure long-term funding. Its backers included H&M. The bankruptcy marks a blow to efforts to introduce sustainability efforts into the fashion industry. 

💰 A new huge fund to wager on the green shift. A former partner at London-based hedge fund Clean Energy Transition, Nishant Gupta, is planning to launch his own long-short equity fund, Kanou, to invest in sectors like clean energy and the electrification of transport. 

• Gupta’s fund, Kanou, will join a new breed of managers buying stakes in companies helping the transition, while also betting against firms that are failing to shift. “We will see a lot of investment in the energy transition in the next 25 years,” Gupta told Bloomberg. “There will be many winners and losers, so it’s a perfect time to start.”

🔆 Enviria, a Frankfurt-based startup which provides solar panels, secured €200m from BlackRock through its Global Renewable Power IV fund. Unlike companies like Enpal and 1Komma5 which supply solar panels to customers, Enviria supplies its tech to businesses. 

🚗 Portuguese startup PowerDot, which operates electric vehicle charging stations, has secured €100m in new funding. The round was led by Antin Infrastructure Partners and Arie Group. 

• Powerdot has installed 5k charging points and plans to use the fresh investment to install 15k new ones across Portugal, Spain, Belgium and Poland.

💰 UK hydrogen power startup GeoPura raised £56m in new investment. The company, based in Newcastle, secured the funding from investors including the UK Infrastructure Bank, plus Barclays Sustainable Impact Capital. 

• GeoPura sells hydrogen-powered generators which can be used to power events like festivals and the running of construction sites. It’s also working on transforming a former coal plant into a site to produce green hydrogen. 
• For more on hydrogen, we dug into the debate here.

💸 Hellas Direct, a climate-risk insurance startup, has secured €30m in new funding, led by ETF Partners. The company, classed under the adaptation tech umbrella, is creating insurance plans linked to seasonal threats like wildfires and floods. Hellas works across central and southern Europe. 

📜 London-based startup Climate Policy Radar secured $6.8m from investors including Google, the Sequoia Climate Foundation and Schmidt Futures, the philanthropic initiative founded by Eric and Wendy Schmidt. The company allows people to search through climate policy using AI.