Europe-based in-store vertical farming startup Infarm raised $200 million in a Series D funding round in December 2021 to take its company valuation above $1 billion and become Europe’s first vertical farming unicorn.

Oliver

Europe-based in-store vertical farming startup Infarm raised <a href="https://techcrunch.com/2021/12/16/vertical-farming-startup-infarm-raises-200m-for-international-expansion/">$200 million in a Series D</a> funding round in December 2021 to take its company valuation above $1 billion and become Europe’s first vertical farming unicorn.
<img src="https://illuminem.b-cdn.net/articlebody/d91c655c8a2e86741c1d31e6e5b01d0525cac9b7.jpg" alt="Figure 1: Infarm Facility in Copenhagen, Denmark. Photograph: Fruitnet">
Despite the relatively small number of building-based climate-resilient vertical farms in Europe, they have experienced rapid expansion across the globe with increasing investments and consumer awareness.
The global vertical farm market is expected to <a href="https://www.futurefarming.com/smart-farming/report-vertical-farming-market-worth-%E2%80%899-7-billion-by-2026/">grow</a> from $3.1 billion in 2021 to $9.7 billion by 2026.
Vertical farms are intended to grow crops all year round more efficiently by stacking them in trays or vertical planters in indoor climate-controlled conditions to optimize light and growing conditions anywhere, offering the globe large food chain solutions.
<h1>The Vertical Trigger</h1>
Thanks to rapid technological advancements, it has been found that vertical farming produces <a href="https://verticalfarmingplanet.com/is-vertical-farming-better-than-traditional-farming/#:~:text=It%20has%20been%20found%20that,is%20superior%20to%20traditional%20farming.">240 times</a> more crop yield than conventional farming practices using 99% less land, 95% less water, and zero chemicals.
The continued rise of next-generation AI-powered vertical farms across Europe has been stimulated by the following:
(1) the drop in the price of LED lighting technologies, (2) growing consumer demand for sustainable local produce and (3) vacant buildings that arose after the global financial crisis of 2007–08 to accommodate building-based vertical farm infrastructures.
Growth opportunities for market players include the potential to <a href="https://pipphorticulture.com/the-future-of-cannabis-is-growing-vertical/">cultivate cannabis.</a> Legislation in respect to medical cannabis has been modified and is under debate across European countries.
A more alarming growth opportunity is the need to meet future food demands of the growing global population expected to reach <a href="https://sdg.iisd.org/news/world-population-to-reach-9-9-billion-by-2050/">9.9 billion people by 2050</a>.
To meet this population growth, an estimated <a href="https://www.meilirobots.com/resources-list/vertical-farming">1 billion hectares</a> of new land will be needed to reach this goal — about 20% more than the land represented by Brazil.
<h1>High Rise Verticals</h1>
Although North America led the vertical farming market in 2020, the architect Carlo Ratti, who runs MIT’s Senseable City Lab is proposing to take vertical farming to new heights in Asia by developing the <a href="https://www.bloomberg.com/news/features/2021-12-13/farmscraper-design-takes-vertical-farms-to-new-heights">world’s first 51-story farmscraper</a> in Shenzhen, China that would be capable of feeding up to 40,000 people per year.
The farmscraper would be a model for integrating farming around the shell of a skyscraper ensuring that the vertical farm would be less reliant on artificial light and heating by harvesting energy from the sun.
It is envisioned to be a self-contained circular food chain, with crops cultivated, sold, and consumed in the same building.
<img src="https://illuminem.b-cdn.net/articlebody/7da9de3ab34f1fb0473c62be4a5ccd1757acfc58.jpg" alt="Figure 2: The facade of the 51-story tower in Shenzhen, China. Photograph: Bloomberg">
China is an ideal location for vertical farming. With roughly 1.4 billion people to feed, the country needs a boost in agriculture productivity having been obstructed by poor soil, contaminated water and overuse of fertilizer and pesticides.
For more dense regions of the world like Singapore that has more than 30 vertical farms and aims to <a href="https://www.globalconstructionreview.com/german-urban-farm-company-to-open-vertical-megafarm-in-singapore/">produce 30% of its own food by 2030</a>, applying a vertical farming model makes sense to produce a larger share of local food, decrease dependency on imported food and reduce food wastage.
<img src="https://illuminem.b-cdn.net/articlebody/b0498d664a41dae01a519ca514daec1886db609c.jpg" alt="Figure 3: Citiponics’ farm, located on the rooftop of a multi-story car park in Singapore. Photograph: Vertical-farming">
Vertical farming is ideal for farmers in Asia that face a number of increasing future problems, including extreme weather, pressure on vital resources such as water and growing populations.
<h1>Vertical Burdens</h1>
Vertical farming is a young and capital-intense agriculture practice carrying prohibitive startup costs with the most profitable way of utilizing the sector remaining to be established.
Vertical farms are some of the <a href="https://agfundernews.com/vertical-farming-is-headed-for-the-trough-of-disillusionment-heres-why-thats-a-good-thing.html">most expensive per acre on Earth</a>. An initial investment per square meter of vertical farms can be up to <a href="https://www.agritecture.com/blog/2021/3/4/vertical-farms-vs-greenhouses-the-first-consideration-location">10 times higher</a> than that of a high-tech greenhouse. Common in urban areas of expensive cities such as Singapore, New York or London.
Despite being indoors to avoid harsh climate conditions, a further limitation is the sector&#x27;s reliance on costly technology. Exampled by the sectors need for environmental controls to create ‘ideal’ growing conditions, including temperature, air circulation and humidity control. Hence, factors such as losing power remains a large risk concern for producers.
Moreover, while most things can technically be grown in vertical farms, production costs, high technology costs to new entrants and pressure by v<a href="https://agfundernews.com/vertical-farming-is-headed-for-the-trough-of-disillusionment-heres-why-thats-a-good-thing.html">enture capital (VCs) investors to expand</a> tend to limit farming diversification with a heightened focus on producing higher-value leafy greens.
<blockquote>Rabobank analyst Cindy Rijswick states vertical farming will only ever be “part of the mix among various growing systems”.</blockquote>
<h1>Looking Ahead</h1>
Despite vertical farming remaining in its infancy, one thing clear is that vertical farming is here to stay.
For as long as consumers demand higher quality food products and the increased activity of climate change continue, the future of food will have a place for vertical farming.
But to have a real place in the global food supply chain, the sector needs to become more affordable through greater cohesion between stakeholders and VC investors needing to invest more patient capital to allow vertical farmers to have a greater chance at not only growing plants but also their companies for all of society to benefit.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

The New Heights of Vertical Farming

Aligning to the heightened sense of urgency to tackle climate change, money is pouring into the maturing asset class of climate technology at an unprecedented rate to decarbonise carbon-intensive sectors to help prevent the increasing existential threat of climate change.

Aligning to the heightened sense of urgency to tackle climate change, <a href="https://qz.com/2074714/2021-has-already-shattered-yearly-records-for-startup-funding/">money is pouring into the maturing asset class</a> of climate technology at an unprecedented rate to decarbonise carbon-intensive sectors to help prevent the increasing existential threat of climate change.
Highlighted in the <a href="https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf">Net Zero by 2050 report</a> by the International Energy Agency (IEA) that
<blockquote> in 2050, almost half the [forecast emissions] reductions come from technologies that are currently at the demonstration or prototype phase.</blockquote>
The reality is that these technologies exist but have not yet reached scale — and society needs them to scale as quickly as possible. It’s a scenario that plays to the strengths of venture capitalists (VCs), which has a successful track record in scaling up technology rapidly.
For VCs, climate change is a perfect storm of disruption offering plenty of promise not only for financial returns but also environmental, and social by investing in early-stage climate tech startups to overcome the ‘valley of death.’
<blockquote>The decarbonisation opportunity over the coming decades is the biggest business opportunity since the Internet revolution, perhaps even 100x bigger than that revolution. So imagine the Googles, Amazons, etc., we’ve seen — we’ll see more in climate tech” stated by Yair Reem, General Partner of Extantia Capital.</blockquote>
<h1>The Climate Tech Boom</h1>
To advocate for the boom, climate tech investment has increased by 210% year on year.
In the first six months of 2021, climate tech set a record by attracting more than $60bn raised by more than 600 climate tech start-ups to account for 14 cents of every VC dollar going to climate tech.
<img src="https://illuminem.b-cdn.net/articlebody/b61929bbe1fc679e1e81e8c83800f1b9b2a9c707.png" alt="Figure 1: Investment into climate tech startups and number of deals (PwC, 2021)">
The US remains the leading climate tech investor with the San Francisco Bay Area at the forefront, attracting nearly 65% of VC investment, $56.6bn from H2 2020 to H1 2021. Beyond San Francisco, the next most active climate tech investment hubs are London, Berlin, New York, and Boston.
Mobility and Transport is the most heavily invested challenge area, raising $58bn between H2 2020 and H1 2021 to represent 60% of the overall climate tech funding in the period.
Driven by the investor attraction to not only electric vehicles (EVs) but also electric mobility, battery technology and charging infrastructure, the EV ecosystem interest is validated by the megadeals of Lucid Motors raising $6.9bn, lithium-ion battery manufacturer Svot raised $1.6bn and Northvolt raised $2.8bn.
Northvolt’s raise enabled them to roll out <a href="https://www.theguardian.com/business/2021/dec/29/northvolt-rolls-out-europes-first-gigafactory-era-car-battery">Europe’s first lithium-ion battery ‘gigafactory-era’</a> in Sweden and challenge US rival Tesla with its <a href="https://www.cnbc.com/2021/12/24/teslas-german-gigafactory-faces-local-hurdles-as-it-nears-completion.html">own Berlin car and battery gigafactory plant</a> to be running in 2022.
<img src="https://illuminem.b-cdn.net/articlebody/1760a3e934e2a809b3520bdaa6f1896adac320a4.png" alt="Figure 2: The Northvolt Ett site in Skellefteå, Sweden. Photograph: Northvolt/Reuters">
<blockquote>“We’ve seen the volume of investment in climate tech accelerate in 2020 and, this year (2021), it’s absolutely off the charts,” says Emily Reichert, Chief Executive of Greentown Labs — North America’s biggest climate tech start-up incubator. “We are seeing our start-ups be funded faster and in larger rounds than ever before.”</blockquote>
Heady climate tech valuations and investor FOMO (fear of missing out) coupled with the very real need to fund planetary-scale innovation have provided an enormous headwind for climate tech.
<blockquote>“I would expect valuations will continue being driven up,” said John Carrington, CEO of clean-energy storage firm Stem Inc.</blockquote>
Optimistic climate tech valuations are an implicit promise from founders to investors that their companies will grow to match expectations. For the climate’s sake, it is vital that a healthy number of highly valued climate tech startups succeed in that.
<h1>The Bigger Tickets</h1>
The average deal size nearly quadrupled in H1 2021 from one year prior, rising from $27m to $96m. Megadeals (ticket size of more than $100m) have driven much of the top-line growth in climate tech startup funding.
The average megadeal has risen in size from $130m in H1 2013 to over $430m in H1 2021 (and has correspondingly increased the average size of all deals to $96m), indicating that investment growth is being powered by a cohort of high-potential start-ups raising increasingly large amounts.
<img src="https://illuminem.b-cdn.net/articlebody/d3701cc168674b274461b6397a82514b1b784688.png" alt="Figure 3: Climate tech startup funding by deal sizes (PwC, 2021)">
<h1>Untapped Potential</h1>
Although capital is pouring into climate tech and the success of larger startups showcases climate tech as a growing mature asset class, the number of early VC, seed and Series A investments in climate tech has remained largely stagnant. Since 2018, there have been 260 and 320 deals in each of those half years.
VCs are focused on technologies that do little to reduce carbon emissions leaving those with greater potential starved for cash.
According to the <a href="https://www.pwc.com/gx/en/services/sustainability/publications/state-of-climate-tech.html">PwC State of Climate Tech Report</a>, of the 15 technology areas analysed, the top five that represent over 80% of future emissions reduction potential by 2050 received just 25% of recent climate tech investment between 2013 and H1 2021.
Alongside this, VCs remain deterred from taking on a higher risk profile when it comes to diversifying and taking on risk. Investors have been focused on startups with demonstrated success, late-stage funding pipelines and limited by geography/challenge areas.
Iterated earlier by the mobility and transport sector drawing in 60% of all climate tech investment between H2 2020 and H1 2021.
<blockquote>Hampus Jakkobson, General Partner of Pale Blue Dot states, ‘Climate change is a transboundary issue. Therefore, we can’t look at climate tech with traditional siloed geographical and sectoral lenses.’</blockquote>
Despite the signs of vast VC investment to fight climate, how can VCs overcome early-stage growth stagnation and avoid missing the opportunity to deploy capital to startups in line with the potential to decarbonise the planet and prevent the earth warming by more than 1.5°C?
<h1>Filling the Gaps</h1>
To support investors, policies are needed to provide incentives and clear government action plans for investors. Furthermore, support of a consistent carbon price and R&amp;D investment are needed to accelerate private-sector investment and technological innovation.
Investors willing to take on early-stage startup risks out of their ‘normal’ pipelines could be greatly rewarded by increasing funding activity with high-ERP challenge areas and less mature technologies.
<blockquote>“Hard-to-abate sectors with higher emissions often rely on climate technology solutions that are less proven or require yet-to-be implemented policy changes to become commercially viable,” Emma Cox of PwC said. “The investors that lean into that, and take the right risks, will create the next set of climate tech unicorns.”</blockquote>
The allocation of climate tech capital needs to be further defined. As 97% of funding is going towards technologies that mitigate climate change and only 1% going into adaptation.
If mitigation technologies are not accelerated, large-scale adaptation will be required to deal with the impacts of climate change in the short and longer-term. Hence, a deeper focus on adaptation technologies is dramatically needed.
More patient capital from VC’s is needed to fund innovation in capital-intensive technology areas that can also deliver the necessary financial returns, alongside outsized environmental and social impact.
<blockquote>Vinod Khosla, the founder of Khosla Ventures, states, ‘Matching the time horizons of climate tech start-ups with investors is a key challenge. Patient capital is needed, which is why Breakthrough Energy Ventures has set up a 20-year fund, rather than demanding returns within the traditional ten years.’</blockquote>
The challenge lies in convincing investors beyond only the ‘impact-first’ tribe to operate in this way and unlock the hundreds of billions of dollars of capital that is available.
<h1>Surfing the Wave</h1>
The wave of climate tech financing shows no sign of slowing down. With their pockets full, VCs are uniquely placed to achieve a double bottom line of high financial returns and high climate impact. But to realise it, they must examine climate tech more holistically and uncover with a deeper focus on cross-sectoral decarbonisation opportunities that could flourish into future gigacorns.
This includes realigning their willingness to risk, looking beyond the low-hanging fruit to scale underfunded technologies across all challenging areas and the deployment of more patient capital.
For as long as capital continues to flow into climate tech solutions, new instruments and funds will emerge ranging from SPACS to sector/challenge specific micro funds.
Climate tech investing is not only influenced by VCs but also public opinion, related industries, and government’s incentivised to prolong the party to ultimately have a shot at tackling one of the biggest challenges of our times, climate change.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

Navigating the Climate Tech Investment Boom

The European Commission intends to reach carbon neutrality by 2050. To mitigate the climate crisis and meet its targets, the EU has utilised biomass; the biomass feedstock of forestry has become the main source for renewable energy in the EU and is a key part of the European Green Deal. 

The European Commission intends to reach carbon neutrality by 2050. To mitigate the climate crisis and meet its targets, the EU has utilised biomass; the biomass feedstock of forestry has become the <a href="https://publications.jrc.ec.europa.eu/repository/bitstream/JRC109354/biomass_4_energy_brief_online_1.pdf">main source for renewable energy</a> in the EU and is a <a href="https://www.euractiv.com/section/biomass/news/eu-plans-sweeping-bioenergy-review-by-end-2020/">key part of the European Green Deal</a>. Although the EU nations produce biomass themselves, they have also turned to importing biomass from developing countries, such as Denmark importing from Brazil. While this supports European countries in reaching their environmental goals, what cost does it incur on the environments of developing countries?
—
In the EU, forestry is the main feedstock (logging, residues, wood chips and fuelwood etc) for bioenergy, accounting for more than 60% of all EU domestic biomass supplied for bioenergy with 96% of biomass produced domestically and 4% imported from non-EU countries. But to reach environmental targets, several EU countries have <a href="https://www.vox.com/science-and-health/2019/3/4/18216045/renewable-energy-wood-pellets-biomass">subsidised the biomass industry</a>, including Germany, France, Italy, Sweden and the UK, the largest bioenergy consumers.
With this in mind, the European Commission is aiming to conduct a further ‘<a href="https://www.arc2020.eu/wp-content/uploads/2020/05/Biodiversity-Strategy_draft_200423_ARC2020.pdf">transformative approach</a>’ to increase their reliance on biomass for renewable energy purposes.
<h1>Woody Biomass: A Carbon Neutral Energy Source?</h1>
While the burning of forest biomass has been promoted as a cleaner and more renewable alternative to coal and gas, it is believed that biomass is ‘a carbon emission accounting loophole’, which could destabilise the global climate.
UK-based researchers <a href="https://www.bbc.com/news/science-environment-39053678">found</a> last year that burning wood is a ‘disaster’ for climate change as older trees release large amounts of carbon when they are burned and aren’t always replaced and even when they are, <a href="https://www.sciencedaily.com/releases/2018/03/180322140915.htm">it can take up to 100 years</a> to cultivate an area that soaks up as much carbon as was previously released.
<h1>The Double Standards of Denmark’s Carbon-Neutral Mission</h1>
Biomass is the most dominant source of energy in Denmark, embodying more than <a href="https://ens.dk/en/our-responsibilities/bioenergy/solid-biomass">two thirds of its overall consumption of renewable energy</a>. It represents an important component of Denmark’s mission to make its capital city, Copenhagen, the <a href="https://www.telegraph.co.uk/travel/discovering-hygge-in-copenhagen/worlds-greenest-city/">world’s first carbon-neutral capital by 2025</a>. Denmark is the second-largest consumer of wood pellets in the EU, using 2.1 million tons in 2018 to generate heat and power with woody biomass usage set to increase by 130% by 2025.
<h1>Business with Brazil</h1>
Although Denmark is considered the global poster child for renewable energy, driven by its advancements in onshore and offshore wind power, the Danish energy supplier, Hovedstadens Forsyningsselskab (Hofor), has been <a href="https://nyheder.tv2.dk/samfund/2020-02-23-koebenhavn-braender-trae-fra-amazonas-for-at-hjaelpe-klimaet">denounced for wood chip biomass</a> feedstock importations. These imports, approximately 60 000 tons of wood chips since mid-November, originate from Brazil’s eucalyptus plantations in the state of Amapá and are used within the Copenhagen biomass plant of BIO4. The biomass feedstock is produced by AMCEL, a large Brazilian pulp company.
However, these importations of Brazilian wood chips are facing strong condemnation for not being sustainable biomass, deriving instead from monoculture plantations aimed at producing cheap raw materials while stimulating economic growth. Additionally, AMCEL has been involved in illegal <a href="https://nyheder.tv2.dk/samfund/2020-02-24-hendes-hus-blev-bulldozet-saa-koebenhavnerne-kan-fyre-op-med-tropisk-trae">land grabbing</a> and deforestation within these specific eucalyptus plantations.
Biomass in Developing Countries: The Amazon for Sale
Deforestation in Brazil’s Amazon rainforest has increased rapidly since the hard-right Brazilian President Jair Bolsonaro took office. The pro-development president once <a href="https://www.washingtonpost.com/world/the_americas/brazils-bolsonaro-calls-amazon-deforestation-cultural-says-it-will-never-end/2019/11/20/ba536498-0ba3-11ea-8054-289aef6e38a3_story.html">stated</a>, “deforestation and fires will never end.” From August 2018 to July 2019, deforestation of the Amazon rainforest <a href="https://uk.reuters.com/article/us-brazil-environment/brazil-deforested-10000-square-km-of-amazon-rainforest-in-2019-up-34-on-year-idUKKBN23H21U">rose 34.4% from a year </a>before, to 10 129 sq kms. Furthermore, between January and April of 2020, the destruction of the forest by illegal loggers and ranchers rose 55% compared to the same <a href="http://terrabrasilis.dpi.inpe.br/app/dashboard/alerts/legal/amazon/aggregated/">four month period</a> last year. It appears that criminal organisations have expanded their operations, as <a href="http://anfavea.com.br/estatisticas">bulldozer sales doubled in Brazil</a> within this four month period. This increase in deforestation activity comes at a time when the COVID-19 pandemic strains Brazil politically and economically, exacerbating Bolsonaro’s government policies to expand the commercial development of the Amazon rainforest, enabling illegal loggers and miners to face minimal risk of punishment.
While illegal loggers, miners and land grabbers have directly contributed to the increase of deforestation, Bolsonaro is arguably responsible. When he was running for president, it was his rhetoric that suggested deforestation-related practices in the Amazon could help lift the country out of poverty at the expense of indigenous people. “The Indigenous person can’t remain in his land as if he were some prehistoric creature as where there is indigenous land, there is wealth underneath it,” he said in February.
It is this attitude that has made it easier for foreign countries to take advantage of the paper and biomass opportunities afforded by the Amazon. Encouraging developing countries, such as Brazil and Indonesia, to cut down their own forests and export their unsustainably harvested wood to meet foreign demand for bioenergy while developed countries protect their own forests is unfair and irresponsible.
<h1>Phasing Out Biomass</h1>
While the importation of woody biomass from developing countries is legal, methods used to cultivate biomass feedstock are arguably unethical. Denmark, an apparent global renewable energy role model, should be held accountable for acquiring biomass feedstock from dubious feedstock sources in Brazil, a developing country with an important responsibility to protect the Amazon but which has a president that promised to <a href="https://www.nationalgeographic.co.uk/2018/10/brazils-new-leader-promised-exploit-amazon-can-he">exploit the Amazon</a>. This showcases how developed countries, such as Denmark, aim to expand their green capacities at the cost of developing countries’ environmental health.
Furthermore, biomass as a reliable energy feedstock remains ambiguous. Unless we can guarantee forest regrowth to carbon parity, recent research indicates that the production of wood pellets for fuel is likely to put more CO2 in the atmosphere and maintain less biodiversity on the land during the next several decades.
If EU countries continue to use biomass to reach their climate goals, they must either closely examine its origins, or phase out all land-based biofuels and devote greater efforts to promoting sustainable renewable sources such as solar, wind and geothermal processes.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

How Developed Countries are Exploiting Developing Countries for Biomass Energy

Discussing the role of maritime start-ups and how they can contribute to the global shipping industry ecosystem to reach decarbonisation goals.

Reaching Net-Zero to Keep the Planet Afloat: Maritime Start-ups

Sweden was labelled at one point to be the breeding ground for unicorns, but does it have the same magic to tackle climate change with climate tech innovation?

Sweden was labelled at one point to be the breeding ground for unicorns, but does it have the same magic to tackle climate change with climate tech innovation?
<a href="https://northvolt.com/">Northvolt</a>is an example of this magic. The startup raised a phenomenal <a href="https://techcrunch.com/2021/06/09/swedish-company-northvolt-raises-2-75b-to-accelerate-european-battery-production/">€2.4bn in 2021</a> with a valuation of €10.7bn. It assembled the first lithium-ion battery cell at the Northvolt Ett ‘gigafactory’ in Skellefteå, northern Sweden to directly compete with Tesla. Not only commencing a new chapter for the green mobility &amp; transport sector across Sweden but also for Europe.Northvolt’s rise to unicorn status is not the only Swedish startup to do so with the country’s innovation legacy built on the unicorns of Spotify, Klarna, and recently, Oatly.
To face the oncoming and unprecedented challenge of climate change, does Sweden have more than Northvolt to tackle humanity’s greatest challenge of our time?
<h1>Let the Numbers Talk</h1>
While the US was on top for venture capital climate tech investments with €42bn ($48bn) between 2016 to 2021, Sweden ranks 3rd globally for climate tech investment with €5bn ($5.8bn).
<img src="https://illuminem.b-cdn.net/articlebody/7e6358aa334909b458d131beaf146a501fc26a0b.png" alt="Figure 1: Total VC Investment per HQ Country 2016 to 2021 Combined (Dealroom, 2021)">
Stockholm-based startups received over 93% of the total Swedish funding with €4.7bn ($5.4bn) with the city competing amongst London, Paris, and Berlin to be one of the driving forces behind Europe’s rapid growth in climate tech.
In terms of Europe, Sweden was ahead of both large startup markets of the UK at €3.8bn ($4.3bn) and France with €3.2bn ($3.7bn).
In 2021, the climate vertical of affordable and clean energy attracted the most investment of €2.8bn with clean energy giant Northvolt attracting a large portion of that amount, raising €2.4bn.
<img src="https://illuminem.b-cdn.net/articlebody/deb9cae49a56c6047c2e62b311a98c937431c01d.png" alt="Figure 2: Total VC Investment per Tech Hub 2016 to 2021 Combined (Dealroom, 2021)">
The maturing Swedish climate tech ecosystem is supported by a growing number of domestic specialised climate tech VCs.
This includes Norrsken that raised €121m ($138m) participated in 32 funding rounds and Pale Blue Dot that raised €84m ($96m). Both are thought of as some of Europe’s largest climate tech VC firms.
<h1>Potential Swedish Climate Tech ‘Soonicorns’:</h1>
<img src="https://illuminem.b-cdn.net/articlebody/9eb4fe458a712523dfc71d0a57e4ac89d00cebd7.png" alt="Figure 3: Heart Aerospace ES-19 Aircraft. Photograph: Finnair​">
<h1>1. <a href="https://heartaerospace.com/">Heart Aerospace</a>​</h1>
Founded in 2018, Heart’s mission is to create the fastest, most affordable, and sustainable mode of transport for regional travel to serve the market in every corner of the world
The first aircraft is the ES-19, a nineteen-passenger airliner with an operating range of 400 km. The ES-19 is a fully electric regional aircraft capable of seating 19 passengers and runs on batteries and electric motors instead of jet fuel with a goal to have the aircraft certified for commercial operation by 2026.
In 2021, Heart received an <a href="https://techcrunch.com/2021/07/13/heart-aerospace-raises-35m-series-a-lands-order-with-united-and-mesa-airlines-for-200-aircraft/">order of 200</a> of the ES-19 model from United Airlines and its regional airline partner, Mesa Air Group.
Heart joined Y Combinator in 2019 after closing €1.9m ($2.2m) seed and raised €30m ($35m) Series A funding round in 2021 with Bill Gates’ Breakthrough Energy Ventures, United’s venture arm and Mesa leading the round. Seed investors EQT Ventures and Lowercarbon Capital participated.
Total funding: <a href="https://www.crunchbase.com/organization/heart-aerospace">$37.3m</a>​
<img src="https://illuminem.b-cdn.net/articlebody/0c3974789085ea41c009b4418a00e98c9dca39de.png" alt="Figure 4: Volta Truck. Photograph: Carscoop​">
<h1>2. <a href="https://voltatrucks.com/">Volta Trucks</a>​</h1>
Founded in 2019, electric truck maker Volta Trucks saw its headcount grow the fastest in the last year up by <a href="https://sifted.eu/articles/fastest-growing-climate-tech-startups/">422% to 120 employees.</a>​
Volta Trucks has launched a purpose-built <a href="https://www.forbes.com/sites/neilwinton/2020/09/03/volta-trucks-electric-zero-promises-increased-efficiency-safety-logistics-ability/?sh=51440fe54fe5">16-tonne electric truck</a> that can drive up to 200km on a single charge. It’s expecting to sell 500 of them in 2022, and 5,000 by 2025.
Total funding: <a href="https://sifted.eu/articles/fastest-growing-climate-tech-startups/">$63m</a>​
<img src="https://illuminem.b-cdn.net/articlebody/e2812f53c59a37f3421f7123e52db5dcd95778c8.png" alt="Figure 5: CAKE Electric Bike. Photograph: dk.e-scooter​">
<h1>3. <a href="https://ridecake.com/en/">CAKE</a>​</h1>
Founded in 2016, CAKE has developed a minimalist electric off-road motorcycle. The range of bikes are designed to be light, quiet and capable to be used for either trail or free riding.
The company has <a href="https://techcrunch.com/2020/05/22/cake-brings-a-swedish-take-on-e-motorcycle-design-to-the-u-s/">sold 300 motorcycles</a> in the U.S. this year and America makes up 60% of its sales market, according to its CEO.
Total funding: <a href="https://sifted.eu/articles/fastest-growing-climate-tech-startups/">$74m</a>​
<img src="https://illuminem.b-cdn.net/articlebody/915c98e05cb0a53085498ab8a95431664dd9683b.png" alt="Figure 6: Doconomy App. Photograph: Trendingtopics​">
<h1>4. <a href="https://doconomy.com/">Doconomy</a>​</h1>
Founded in 2018, Doconomy is a Sweden-based fintech company that provides leading impact data services for individuals and corporations to help educate, engage, and reduce environmental impact.
<a href="https://www.trendingtopics.eu/doconomy-17-million-for-the-fintech-that-calculates-the-carbon-footprint-of-purchases/">According to Doconomy,</a> around 90 million transactions are calculated every month. The start-up has already won several prominent customers, including Klarna, BNP Paribas and Bank Nordea.
Doconomy is active in 20 markets and plans to expand into ten new markets this year.
Total funding: <a href="https://www.crunchbase.com/organization/doconomy">$17m</a>​
<img src="https://illuminem.b-cdn.net/articlebody/e6c9f2fb879764129b45263a61c17632964a9068.png" alt="Figure 7: The Normative Team. Photograph: Techcrunch​">
<h1>5. <a href="https://normative.io/?gclid=Cj0KCQiAoY-PBhCNARIsABcz771U2QEJPfbLH6FxAzWkW6fB0ijdzSEqIHnmtFVxlWqtN5BwNM9n8SwaAmRIEALw_wcB">Normative</a>​</h1>
Founded in 2014, Normative is the only software capable of assessing a company’s social and environmental impact automatically by analysing their purchases using AI combined with the world’s largest sustainability research database to decrease a company’s environmental impact.
Billed as wanting to become the <a href="https://techcrunch.com/2019/09/18/normative/">“QuickBook of carbon reporting,”</a>Normative is a SaaS that plugs into various data — both a company’s internal systems and external databases on the environmental impact of goods and services. Existing clients include Summa Equity, Bonava and Ikano.
Total funding: <a href="https://www.crunchbase.com/organization/normative-io">$13.7m</a>
<img src="https://illuminem.b-cdn.net/articlebody/be30f6b5913ed563d60a22183c0f08b6d89ce5e9.png" alt="Figure 8: Einride Truck. Photograph: Einride​
">
<h1>6. <a href="https://www.einride.tech/">Einride</a>​</h1>
Founded in 2016, the freight technology company that operates one of Europe’s largest electric truck fleets aims to tackle the diesel-fueled freight trucks that account for roughly <a href="https://time.com/collection/best-inventions-2021/6113141/einride-pod/">7%</a> of the world’s total emissions.
Einride’s all-electric autonomous pods can carry up to 35,000 lb. of goods, promising to reduce carbon emissions by more than 90% compared with a conventional big rig. With no front cab, Einride’s ‘pods’ drive themselves with a cloud-based remote monitoring system.
<a href="https://techcrunch.com/2021/11/03/einride-launches-autonomous-pods-and-electric-freight-operations-in-u-s/">Expanding into the US market</a>, oat milk company Oatly is already a partner of Einride’s in Europe and is now expanding that partnership to the U.S as well as the tiremaker, Bridgestone. to become customers.
Total funding: <a href="https://www.crunchbase.com/organization/einride">$152.3m</a>​
<h1>The Groundwork</h1>
With a sparse population of 10.13 million people, ranked <a href="https://www.worldometers.info/world-population/population-by-country/">91st in the world</a>for population size, its people share a strong climate-conscious culture.
This is attributed to more than <a href="https://www.nbcnews.com/news/world/sweden-s-environmental-education-building-generation-greta-thunbergs-n1106876">80% of Swedes</a> living within 3 miles of one of its 30 national parks, 4,000 nature reserves or many other conservation sites as well as an active environmental awareness is fostered within Swedish schools from a young age.
Sweden’s eco-history legacy is best represented by Greta Thunberg and government ambitions to be <a href="https://sweden.se/climate/sustainability/sweden-and-sustainability">fossil-free by 2045</a>. Conditions that have attracted a 2nd and 3rd generation of Swedish entrepreneurs to tackle climate challenges.
<img src="https://illuminem.b-cdn.net/articlebody/42da4c91ececa0f524d060ad1cd576099526dd13.png" alt="Figure 9: Greta Thunberg. Photograph: denstoredanske​">
​Sweden’s system of high-tax, high-spend with a welfare state structure that does not reflect ‘normal’ startups conditions to thrive within.
However, its successful startup history will tell you otherwise, possessing conditions for climate tech startups to prosper.
Sweden ranks 2nd in the world by <a href="https://www.insead.edu/newsroom/2021-global-innovation-index-2021-innovation-investments-resilient-despite-covid-19-pandemic">INSEAD Business School’s Global Innovation Index.</a> Highlighting Sweden’s innovation strengths to incubate startups.
More than <a href="https://sweden.se/work-business/business-in-sweden/a-country-of-innovation">3% of GDP</a> is invested in R&amp;D with substantial patent families and research/technical papers produced.
In addition, the population is highly educated with one-third of the population having post-secondary education, and social stability is high enabling entrepreneurship to flourish.
<h1>Always Thinking Globally</h1>
Much like <a href="https://www.forbes.com/sites/glennsolomon/2021/09/30/israel-is-pumping-out-billion-dollar-software-companies-how-it-transformed-from-startup-nation-into-scale-up-nation/?sh=3779815a73b8">Israel</a>, Swedish entrepreneurs believe in expanding globally from the outset due to its limited market.
According to <a href="https://www.slideshare.net/StripeonDeck/the-swedish-startup-toolkit">research conducted by payments company Stripe</a>, 76% of participants said that it’s more important for Swedish startups to be international than for startups from other countries.
<blockquote>Tictail co-founder Birk Nilson <a href="https://www.theatlantic.com/business/archive/2017/09/sweden-startups/541413/">believes</a> “we’re kind of raised to think about exporting.”</blockquote>
<h1>Connectivity</h1>
Sweden is heavily connected both in-person and online. <a href="https://www.weforum.org/agenda/2017/10/why-does-sweden-produce-so-many-startups/">Directly financed and subsidized by its government</a>, fibre-optic infrastructure has been rolled out across the country to enable <a href="https://datareportal.com/reports/digital-2021-sweden">9.93 million people</a> to use the internet at a 98% internet penetration rate.
Making Sweden the <a href="https://datareportal.com/reports/digital-2021-october-global-statshot">6th country</a> in the world to have the highest internet adoption behind Denmark, UAE, South Korea, Saudi Arabia and the UK.
The Swedes also thrive within informal networks that are a strong contributing factor to startup growth.
<blockquote>Professor Robin Teigland from the Department of Marketing and Strategy at Stockholm School of Economics <a href="https://www.business-sweden.com/insights/articles/the-land-of-unicorns/">states</a> “Resources flow through these networks and Sweden’s low power distance and flatter organisations, as well as it’s ‘lunching out’ culture, enable the building of networks and the sharing of resources.”</blockquote>
<h1>Societal Encouragement of Trust and Collaboration</h1>
The country shares a high level of generalized trust deeply rooted within Swedish culture.
A factor that benefits both entrepreneurs and intrapreneurs to thrive and the creation of an environment with strong social safety nets attracting talent from around the world and a strengthened understanding of one another to solve pressing problems.
People are encouraged to share knowledge between entrepreneurs of all levels sharing a high level of trust for one another with ease to find advisors. Enough for large companies to trust small startups to collaborate and share knowledge with them.
The strength of societal trust is personified by the high levels of intrapreneurship that thrives with high levels of trust.
According to a <a href="http://www.projectfires.eu/wp-content/uploads/2017/02/D5.4-Working-Paper.pdf">study</a> by Stam and Mikael Stenkula, of Stockholm’s Research Institute for Industrial Economics, 28% of working Swedish adults were involved in an intrapreneurial activity compared to 11.7% of Americans.
Making challenges of climate change more likely to be solved through a system of encouragement.
<h1>Drawbacks</h1>
Sweden struggles to attract key talent and compete in the international labour market due to regulatory holdbacks and complex labour laws.
The country does not have any rules in place that mandate a minimum wage, but trade unions may have their own agreements that set the standard for individual industries and types of work.
Holdbacks of bureaucratic and complicated migration rules, an acute housing shortage and high individual tax rates make it challenging to recruit international talent in competition when compared to other cheaper and more open European cities.
<a href="https://www2.deloitte.com/content/dam/insights/us/articles/43149-the-nordic-social-welfare-model/DI_The-Nordic-social-welfare-model.pdf">Deloitte concluded</a> that a common challenge in the Nordic region is that the region has strict regulation and a lack of governmental support for startups.
Although the entrepreneurship networking effect is felt throughout Sweden with <a href="https://liu.diva-portal.org/smash/get/diva2:1233821/FULLTEXT01.pdf">important networks</a> in Kiruna, Eskilstuna, Linköping and Jönköping, the three largest cities of Stockholm, Malmö and Göteborg possess the most entrepreneurial activity.
This concentration of innovation activity has had a knock-on effect for a brain drain of talent both domestically and internationally for Sweden.
<h1>The Future is Green</h1>
Sweden’s dynamic high tax and robust safety net economy have proven its worth with past successes.
For climate tech stimulation, if the climate tech investment continues to flow into Europe and the ecosystem of Sweden continues to mature, the startup quality will consequently continue to improve.
Like all challenges, society needs a cohesive effort across all stakeholders. This is the case for Sweden, needing deeper government institutional support, VC concentration and research in a greater variety of fields to tackle climate change.
Ultimately, with a compact ecosystem vision to thrive across the country and reach the global corners of the world. It is possible with Sweden’s supportive infrastructure to utilise to compete against not only European cities but also global for climate tech investment and innovation stimulation.
Much like Northvolt is striving to do now, many more entrepreneurs in Sweden can do the same for a better collective world.
Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem

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Oliver Yorke

Oliver Yorke

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