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Climate tech investments gain momentum in SE Asia, cross $1b mark in first 11 months

Private funding for climate technology companies in Southeast Asia reached $1.11 billion in the first 11 months of this year, marking a significant uptick in momentum for such businesses, DealStreetAsia’s latest report finds.

This is the first time that climate tech startups – defined as those focused on reducing greenhouse gas emissions or addressing the impact of climate change – have raised more than a billion dollars in a year, according to The State of Climate Tech in SE Asia 2022. In comparison, the total funding raised by climate tech startups in the whole of 2021 stood at $607 million.

Looking back at data since January 2012, homegrown companies tackling climate change have raised no less than $2.82 billion, comprising $2.6 billion in equity funding and at least $222 million in debt financing, the report shows.

The contribution of climate tech investments to overall private capital funding in the region is also improving. In terms of equity funding, climate tech accounted for 7.8% of overall venture funding in the region this year, significantly higher than 2.6% in 2021.

The distribution of funding in the region, however, is a major cause of concern as Singapore-based climate tech startups received 80.4% of all funding since 2012, whereas most countries in the region got less than 1%.

As a far more developed climate tech category in terms of its underlying technologies and business models, renewable energy received the most capital since 2012, with total funding trending above $200 million annually since 2019.

Overall, renewable energy has accounted for 41.5% of all climate tech funding since 2012, the largest among the 11 categories covered in the report.

“Renewable sources of energy such as solar and wind have reached a levelized cost of energy that is lower than traditional fossil fuels – without the need for government subsidies,” said ABC Impact chief investment officer Than Shao Ming.

John Colombo, the Indonesia manager for Clime Capital, said he anticipates growing emphasis on projects that address the needs of electricity grids and industrial customers by providing renewable solutions coupled with storage to facilitate a reliable supply of power.

The agriculture sector, which is responsible for 21% of greenhouse gas emissions according to a study by Rhodium Group, is also being impacted by sustainable farming technologies and food tech startups developing alternatives to meat consumption.

“Increasingly, investors understand that they can meet climate goals by seeking out opportunities in complementary industries,” said Circulate Capital investment partner Caroline Wee, while adding that the financial sector is becoming more focused on the climate impacts of plastics and waste. Thanks to investments in deep technologies, advanced materials and high-tech industrial products with decarbonization knock-on effects are contributing to the global effort to decarbonise. RWDC, the developer of Solon, an environmentally friendly alternative to petroleum-based materials for single-use plastics, is the second most funded climate tech company on our list.

Other companies in the advanced material space include producers of nanofiltration systems SEPPURE and SOLV8 Technology, graphene producer Graphene Life and Fortuna Cools, which makes sustainably sourced insulation products.

Many deep tech solutions have the potential to fast-track decarbonisation and contribute to the fight against climate change. In fact, three of the most active investors in the climate tech space are deep tech-focused fund managers. They are Singapore-based SEEDS Capital, global venture firm SOSV and UK-headquartered Entrepreneur First.

These deep-tech investors have the unique ability to cross-pollinate resources between relevant scientific fields, laboratories and world-class universities, allowing for new technological innovations to reach the market faster and helping startups avoid long gestation periods.

Although EF has decided to shut down its Singapore operations next year, it is leaving the city-state’s deep tech landscape in a far better position than when it first set up shop in 2016. Our recent joint study with Enterprise Singapore finds that investments in Singapore’s deep tech space in the first nine months of this year grew 90.9% year-on-year to $1.64 billion. This follows a 165.7% growth in the same period of 2021.


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