Sustaining Australia’s Climate Tech Industry: The Crucial Role of Funding

But because of the country’s naturally dry and biodiverse climate, it’s particularly vulnerable to extreme weather events that have been exacerbated by climate change. Australia has experienced its fair share of a climate catastrophes, which has only fueled its climate tech startups into action. The hype for climate tech in Australia is real, as long as it can be sustained. Local VCs are most excited about the sector this year, with climate and cleantech dominating in funding and deal count in Q3 2023. In 2022, climate tech in Australia raised $553 million in capital, compared to $338 million in 2021, according to a report from Climate Salad, a community of Australian climate tech stakeholders.

Australia is a land of natural wonders, from the Great Barrier Reef and Daintree Rainforest to Kakadu National Park and the Blue Mountains. However, due to its naturally dry and biodiverse climate, Australia is significantly vulnerable to extreme weather events that have been intensified by the effects of climate change. As a result, all of these beloved natural wonders have been impacted by bushfires, heat waves, rising temperatures, and floods.

In the aftermath of Cyclone Ilsa, Queensland is currently facing the worst flooding ever recorded in its history. This is on top of the aftermath of La Niña that occurred last year, which brought about severe flooding and record-breaking rainfall to Eastern Australia. And before that, during the Black Summer of 2019 and 2020, the country endured its most catastrophic bushfire that ravaged over 30,000 square kilometers of land and resulted in the loss of 3 billion animals. Additionally, an alarming 90% of the Great Barrier Reef’s coral has turned white due to rising sea temperatures.

Despite these daunting challenges, Australia’s climate tech startups have been spurred into action.

The island continent is largely uninhabited, especially in its flat, dry, and sunny center known as the Red Centre. This area offers ideal conditions for harnessing solar and wind energy. As a result, massive solar and wind farms have sprung up across the country in recent years, driving the share of renewable energy in Australia’s grid from 16% in 2011 to 32% in 2022. In fact, the government has set a target of achieving 82% renewable energy by 2030.

“Right now, there’s a perfect convergence of environmental concerns, policy support, and technological readiness that positions climate tech, particularly in Australia, to reach the next level in terms of scale over the next five years,” says Jack Curtis, Chief Commercial Officer at Neara.

However, the lack of capital needed to advance startups to the scale-up phase could hinder access to Australian innovation – a challenge that is affecting the entire startup sector.

Neara is a company that collaborates with utility companies worldwide, and they recently secured an additional $24 million in funding. This capital will assist their clients, such as Southern California Edison, in future-proofing their infrastructure by creating 3D visualizations to simulate how their assets would respond in real-world environments during events like droughts or floods.

The buzz surrounding climate tech in Australia is genuine, as long as it can be sustained. In Q3 of 2023, local venture capitalists collaborated in greater numbers with the industry, leading to climate and cleantech startups dominating in terms of funding and deal count. These startups raised $116 million in the third quarter alone, representing a significant increase from the $60 million raised in the second quarter and $40 million raised in the first quarter, according to data from Cut Through Venture. (Please note: all numbers are in AUD unless stated otherwise.)

This trend has been gaining momentum over the past few years. In 2022, the climate tech sector in Australia secured a total of $553 million in capital, compared to $338 million in 2021, according to a report from Climate Salad, a community of Australian climate tech stakeholders. The goal for this year was to raise an additional $1.5 billion. However, the sector has fallen short due to unsuccessful and delayed capital raises, as pointed out by co-founder Mick Liubinskas.

As per startup founders, securing significant funding is a major obstacle, but it is also crucial for their long-term growth and survival.

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Max Chen

Max Chen is an AI expert and journalist with a focus on the ethical and societal implications of emerging technologies. He has a background in computer science and is known for his clear and concise writing on complex technical topics. He has also written extensively on the potential risks and benefits of AI, and is a frequent speaker on the subject at industry conferences and events.

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