Inside the climate tech financing ladder: part III – climate fintech
In the third instalment of this series, we focus on technologies assisting investors in their net zero journeys
If google search data is anything to go by, fintech is a relatively recent buzz. Its popularity in search terms rose sharply nearly a decade ago. Yet, the concept has been around for longer. Think Barclays unveiling the world’s first ATM in 1967, the arrival of PayPal in 1998 or the launch of Nasdaq - the world’s first electronic stock exchange - in the 1970s.
From the onset of digital finance to the facilitation of cross-border capital flows, every new step the financiers took, technologists have followed suit.
This is seemingly true in the world of climate investing too. Rising climate solutions allocations have opened up windows of opportunity to build technologies that investors base their decisions on.
In part III of our series on climate tech startups in the UK, we zoom in on climate fintech: companies and technologies assisting investors in their net zero journeys.
Data demand
As regulations have evolved, so too has the demand by investors for new forms of climate-related information and intelligence. Data is perhaps climate fintech’s greatest opportunity.
“A surge in environmental regulation and reporting requirements have placed greater focus on the impact of investment portfolios on climate, nature, and biodiversity. However, many financial institutions lack the data and frameworks to contend with this scrutiny”, Matthieu Maurin, CEO of Iceberg Data Lab, told Net Zero Investor.
Iceberg Data Lab’s product range answers an array of investor data demands from carbon footprint metrics and climate risk measures to indicators of biodiversity impact.
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Longview Networks Institutional Venture & Growth Forum | 24 September | London Stock Exchange
The data opportunity is becoming increasingly competitive. Another nominee, Net Purpose claims to have built the highest-quality, sustainability dataset in the market. The company’s co-founder Samantha Duncan was previously head of impact at Leapfrog Investments.
Both Iceberg Data Lab and Net Purpose are leveraging AI in their offerings.
Carbon markets
Data demands in carbon markets have been particularly pronounced. BeZero Carbon, another nominee, operates in perhaps its most contentious corner: carbon credits.
BeZero Carbon provides investors with an eight-point rating for carbon credits.
“Our independent, risk-based ratings give investors the confidence to channel finance into projects that could have a transformative climate impact”, says CEO and co-founder Tommy Ricketts.
“Carbon markets have undoubtedly had a challenging few years. However, the market has matured in the face of these challenges, and we see a huge opportunity for this sector in the coming years”, he adds.
Another nominee, Kumo Earth is also doubling down on the carbon markets opportunity. The company’s platform facilitates carbon lending – using technology to connect institutional debt investors with the carbon removal industry.
Early traction
Climate fintech products have found an audience in financial institutions and companies have found early traction.
“Iceberg Data Lab’s platform is already utilised by over 60 major financial institutions worldwide, including Natixis, Solactive, HSBC and Amundi”, Maurin adds.
BeZero Carbon has a customer base spread across 30 countries. “We employ more than 180 people and we’ve rated more than 500 global carbon credit projects. Our ratings are available on more than 40 platforms, including the Bloomberg Terminal, and we have more than 100 corporate subscribers to our platform globally”, notes Ricketts.
Financier backing
Climate fintech nominees in our survey have been steadily climbing up the financing ladder in recent years.
BeZero Carbon, for instance, recently raised $32m in a recent series C round – which saw new investors join the cap table.
“Our recent Series C was led by GenZero, a Singaporean state-backed investor owned by Temasek, with additional strategic investment from Japan Airlines and Translink Innovation Fund”, Ricketts told Net Zero Investor.
For Iceberg Data Labs too, the financing story is linked to its ability to build products and expand into new markets.
“In 2024, Iceberg Data Lab secured a $10m Series A led by Beringea, a transatlantic venture capital firm. Additional funding was provided by French venture capital fund Ternel, AXA Investment Managers and other existing investors”, said Maurin.
In total the company has raised over $15m thus far.
Turbulent times
The climate fintech business model is visibly reliant on a shared consensus that climate change is financially material. A consensus that has come under pressure.
“The past 12 months have seen a heightened scrutiny of the role of ESG and sustainability within financial markets, driven by a contentious political debate in this US”, Maurin warns.
In the UK, the government has recently launched a consultation on the future of carbon markets. A review that Ricketts says will work in his company’s favour.
“This acknowledges the central role ratings like ours play in upholding market integrity and enshrines our work as a critical part of carbon market infrastructure. Regulating carbon markets in this way could give businesses the confidence they need to invest in carbon credits”, he notes.
While regulatory interventions continue to inspire the rise of climate fintech, these tailwinds can quickly turn into headwinds. Depending, ultimately, on the degree to which the financial materiality of their product offering is affected.
