How to find climate tech startups in FinTech to invest in?

Climate tech startups are addressing the urgent need for sustainable solutions in a world threatened by climate change. Every year, new companies are joining this ever-expanding sector to work towards creating a cleaner future. 

Climate tech startups have raised more money in 2021 than in any previous year—and nearly five times more than in 2016, just after the Paris climate agreement was signed. So far this year climate-focused startups have raised US$32 billion, according to a new report from Dealroom and London & Partners.

Climate tech definition

Climate tech startups are companies that are applying technologies to reduce greenhouse gas emissions or addressing the impacts of climate change, either by helping to decrease carbon footprints, improving waste management, or creating energy-efficient solutions.

Investment in climate tech is likely to continue growing with hubs such as the bay area and London driving much of this growth. 2022 is set to be full of opportunities for climate tech startups to attract funding and support from both policy makers and investors.  

There are three main drivers behind the surge in climate investments: a growing consumer demand for more sustainable technologies, more funding available to these startups from venture capital investors, and the COP26 global climate conference.

The conference ended with the signing of the Glasgow Climate Pact to strengthen near-term climate targets and move away from fossil fuels. 

Climate tech startups in FinTech

As the number of companies addressing climate change has grown, in the last year the number of FinTechs offering various ways for consumers to reduce and mitigate their carbon footprint boomed.

The public’s focus on climate change is here to stay and this impetus spurs on more exciting innovations in financial services that are determined to create a greener world. 

FinTechs can play a crucial role in tackling the crisis, especially in the following areas:

• Carbon pricing: carbon credits look to be a quickly emerging global asset market. This is generating ecosystems of related products, services and enabling technologies, such as carbon offsetting. 
• More sustainable technologies: the cloud technology that FinTech tends to use requires less energy to run and has a much lower carbon footprint. 
• Tracking: FinTechs are using blockchain technology that allows the consumer to track where their money is being spent and how their green investments are being used.  
• Financial accountability for emissions: the climate impact of a company is increasingly seen as essential to assessing potential investment. Climate impact management & ESG (environmental, social and governmental) reporting software is another key opportunity.
• Changing consumer habits: the move to digital banking not only increases convenience for the consumer but also drastically reduces carbon emissions. 

One example of a financial product with a climate focus is Stripe Climate. The product lets online businesses redirect some of their proceeds towards emerging technologies focused on reducing carbon footprints. It also allows companies to publicize their climate credentials to customers who are increasingly conscientious in their shopping habits.

Where to find climate tech startups to invest in

Every single person has a role to play in the fight against climate change, but putting money into an account solely investing in green assets has twenty-seven times greater impact on reducing emissions than other activities we undertake to reduce our carbon footprint. 

There is a growing list of startups at the intersection of FinTech and climate that have raised funding in recent months. They are developing various technologies such as carbon-tracking debit cards, robo-advisor platform for offsets, and products that make it easier for investors to value the ESG assets of a company.

A substantial amount of recent investments tend to be in the earliest stages, so when looking at startups for investment opportunities you should consider the following factors: 

• Size and immediacy: how much of an impact will this startup have on emission reductions?
• Influencing customer behavior: do you sense that the team will be able to build a community around its company?
• Do the founders have an authentic motivation, and are they great at communicating their passion?
• Does the company know exactly how much funding they need, have a robust business model and a solid business plan to monetize emission reductions?

You are looking for founders with a vocation for reducing carbon emissions, but they should also be serious about their organization and business strategy. 

The discovery tool on the Finnovating platform makes it much easier to find climate FinTech startups from all over the word. The «open-to-capital» button allows you to quickly identify which startups are open to investment. Also, Finnovating allows you to set up sustainability goals in your profile, which allows you to discover and invest in startups that align with yours.