White Star Capital - Sustainable Global Economy Report

Sustainable Global
Economy
Through the eyes of an
international investor
H2 2023
2
Executive Summary
$18tn $97.3bn
Investment gap to deliver the Amount invested globally
net-zero energy transition in Climate tech in 2022
$370bn $9tn - $12tn

In funding allocated by the Estimation of the climate
Inflation Reduction Act (IRA) tech market size by 2030
to mitigate climate change
Source: Bloomberg (2023), Allianz Research Data (2023), McKinsey (2023), WSC Analysis (2023)
Looking at the Sustainable Global Economy from a VC perspective

The global climate crisis and the urgent need for a green transition are fueling what is being
described as the new industrial revolution and the growth of what we call the Sustainable
Global Economy. As venture capitalists, we get to sit at the forefront of this revolution. We
believe we should be involved in this revolution not only because it is necessary for the good of our
planet, but also because from a purely financial perspective it will undoubtedly see the rise of the
unicorns of the future.
The green transition has been gaining significant momentum in the last few years, driven by
several key factors. Macroeconomic forces, including Europe’s energy crisis, ambitious government
green initiatives (such as the US IRA, the EU Green Deal or Japan’s GX Basic Plan), substantial
technological improvements in renewables, biomaterials, and carbon removal, and finally growing
alignment in capital markets toward green investments are coinciding to drive major change
across industries while creating new ones.
There are many ways for venture capitalists to be involved, and we hope this report sheds a light
as to where and how as generalists we can also participate, without having to completely rethink
our investment criteria. There are amazing new technologies and business models and it is up to
us to discover them. Software will play a pivotal role in this Sustainable Global Economy, the way it
has elsewhere, disrupting industries and powering the green transition.
There will continue to be setbacks, hopefully not as harsh as during the last climate winter, but
we believe this new industrial revolution is underway no matter what. It is up to us to seize
this opportunity.
Sector Lead Authors
Matthieu Lattes Cristina Ventura Sanjay Zimmermann Felix Winckler Blanche Ajarrista Sara Schein
General Partner General Partner Partner Venture Partner Vice President Analyst
CCO
WSC 2023 Sustainable Global Economy Report

3
Contents
Section 1 Sustainable Global Economy: An Overview 12-22
Section 2 Sector Focus 23-45
Green FinTech 24-26
Circular Economy 27-29
Carbon Management, Trading & Capture 30-32
Electric Infrastructure 33-34
Construction 35-36
AgriTech & FoodTech 37-39
Packaging & New Materials 40-42
Clean Energy 43-45

4
The Sustainable Global Economy: a new

avenue of growth for venture capital
Despite the previous boom and bust, the conditions are now right for
traditional VCs to fund the innovations needed to get us to Net Zero
It is now hopefully commonly accepted that a green transition is urgently needed. Indeed, small
shifts in the earth’s temperature have already unleashed dramatic storms, droughts, and floods to
various parts of the globe, displacing millions, deregulating ecosystems, and driving biodiversity
loss. A chilling proof: the last Ice Age, tens of millions of years ago, represented only a 5°C shift in
temperature. The risks of going above 2°C are just too high.
The good news is that after stalled efforts, there appears to be a global concerted initiative to
address climate change and fund the technologies and businesses that will help us get to Net
Zero quickly.
Monthly Mean Global Surface Temperature – Land & Ocean
1.5
0.5
-0.5
-1
1880 1900 1920 1940 1960 1980 2000 2020
Why now?
Regulatory pressure, combined with consumer demand for sustainable and clean alternatives,
are pushing stakeholders to rethink the way they do business while encouraging entrepreneurs to
build the innovative solutions required.
Governments around the world are pushing for major change, with the US allocating more than
$370bn to climate as part of their Inflation Reduction Act while the EU passed a ‘Green Deal’ which
could see them dedicate more than €1tn in public and private funds to mitigating climate change.
Similar pieces of legislation are being passed around the world, from Brazil’s National Plan to
Japan’s GX Basic Plan or the Chinese Five Year Plan. These measures may open up many more
opportunities, which McKinsey estimates could reach $9tn to $12tn in annual investment by 2023.
What does this mean for WSC?

We are at the very beginning of a new industrial revolution, driven by macro and micro
tailwinds, which should see the development of entirely new industries, jobs, and businesses
dedicated to solving a single problem.
Sustainability tech is becoming mainstream. That said, there is a big gap between the types of
businesses that can be funded by traditional VCs and those that will require longer-term, more
infrastructure and moonshot-based approaches. At White Star, we believe we can play here,
without having to redesign our investment strategy, by identifying the sectors and businesses that
match our investment criteria.
Source: NASA (2022)

5
Climate Tech VC has had a chequered past

due to the nature of cleantech companies
Of the $25bn that VC investors poured into Climate Tech from 2006-
2011, more than 50% was lost by 2015
• Starting in 2006, growing consumer Total Capital Invested across Seed, Series A and
awareness, rising fossil fuel prices, Series B Climate Tech startups globally ($m)1
and new legislation led to Silicon
Valley VC firms going all in on climate 6000
tech, with a heavy focus on energy

and renewables 5000
• By 2011, almost all of the renewable

start-ups founded in the previous 4000
decade were shut down or about to
be, driven to bankruptcy by a
combination of falling natural gas 3000
prices, inconsistent government

policies, and the credit crunch of the 2000
2008 financial crisis
1000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Cleantech companies developing new materials, hardware, chemicals,

or processes tend to be poorly suited to VC investment due to the
significant capital requirements, long development timelines, and
unclear exit opportunities
Technologies take a significant amount of time to reach maturity, beyond typical VC funds’
return requirements
SVB Climate Tech Innovation Hype Curve
Expectations
Source: Pitchbook (2023), SVB (2022) Time

Notes: 1) Includes NA, Europe and SEA
6
Yet we believe that the conditions are right for a

new sustainable global economy, funded by VC
The market and macro conditions today are ripe for outsized climate
investing returns and impact
1 - Policies and regulations: Governments and regulatory bodies

worldwide are increasingly prioritising climate action and implementing policies
and incentives to accelerate the transition to a low-carbon economy
2 - Corporate or consumer demand: Businesses and consumers are

increasingly seeking to be “greener”. Sustainable solutions have become central
to consumers and thus to corporates. This creates a substantially more positive
market environment
3 - Capital alignment: The rise of impact investing and Environmental,

Social, and Governance (ESG) considerations in investment decision-making is a
massive boost to the sustainable global economy. In addition, governments
around the world are pledging trillions of dollars to reach net zero by 2050
4 - Tech maturity: The previous climate tech boom and bust resulted in
economies of scale, particularly in solar where prices decreased by 89% in the
last 10 years. Many climate tech companies are building on established
technologies and have demonstrated commercial viability
5 - Talent interest: The climate issue and the desire to have a career with
impact is top of mind for younger generations. These aspirations in new
generations will create a formidable pool of talent ready to innovate
6 - Urgency of the crisis: If some on the conservative side of the political

spectrum are still reluctant to recognise the issue, there is a consensus over the
urgency of the matter. Only a 5°C change in temperature was necessary to move
from the glaciation age to our current climate. With a projected 3°C change in
the next 30 years the issue will become more pressing as time passes
In keeping with WSC’s investment guidelines, it is still possible to

invest in Climate Tech if companies are able to:
Deliver solutions Innovate on

Leverage
at price parity business models
with existing to reduce sales regulatory
ones cycle environments
Leverage Ramp up
Hedge against
established revenues with
macro events technologies capital raises

7
We’ve created a WSC VC Investability Index to

assess sectors and subsectors of interest
The purpose of this report will be to help shed light on this burgeoning
ecosystem, looking at every single industry and identifying
opportunities for investment as a generalist venture capital fund
Scoring: Yes = 1 / No = 0
Business Model
Is this a recurring business model?
Technology Readiness
Is the existing technology ready to scale?
Margins
Are there software-like margins?
Stage
Are there revenue-generating businesses raising at Series A?
Market Size
Does the potential market size at scale correspond to our criteria ($5bn+)?
Exit Environment
Have we seen large exits in this sector ($1bn+)?
Capital Efficiency
Can these businesses achieve scale without overly diluting early shareholders?
Market Readiness
Are we seeing pull from the market and supportive regulatory regimes?
Barriers to Entry
Are there barriers to entry?
Internationalisation
Is this an internationally scalable model?
Legend
Out of Scope Work to be done Within WSC Scope

Score 0-3 Score 4-6 Score 7-9

8
And broken down the Sustainable Global

Economy into 8 sectors and 34 subsectors
Green FinTech
• Payments • Insurance / Risk Management

• Lending • Crypto
Circular Economy
• Sharing Economy • Sustainable Materials

• Product Lifecycle Management • Waste Management
Carbon Management, Trading & Capture

• Carbon Trading & Carbon Markets • Direct Air Capture (DAC)
• Carbon Accounting & ESG Reporting • Carbon Capture from Industrial
• Carbon Utilisation Processes (CCI)
Electric Infrastructure
• Smart Grid Technology
• Energy Storage
• EV Charging Infrastructure
Construction
• Smart Buildings & Automation
• Sustainable Materials
• Prefabricated Buildings
AgriTech & FoodTech

• Picks & Shovels • Food Waste Reduction
• Precision Agriculture • Vertical Farming
• Alternative Proteins
Packaging & New Materials

• Packaging Software & Infrastructure • Waste to Value
• Biodegradable & Compostable • Bio-Materials
Clean Energy
• Solar Power • Hydropower
• Wind Power • Waste-to-energy
• Nuclear • Hydrogen

9
Our thematic approach to investing leads

us to focus on specific subsectors
WSC focuses on these key sectors undergoing rapid structural change
Climate SaaS Climate Finance

Industrial processes are increasingly reliant on Financial innovation will be needed to fund
software to report, capture, or reduce emissions society’s climate adaptation and mitigation, while
and become more sustainable improved data, hardware, and models will
pioneer broad-based spectrum insurance
Circular Economy RegTech

Reengineering of value changes will play a key Increasingly heavy regulatory burdens globally
role in the transition to net-zero emissions, can only be addressed through software
leading to structural changes to markets that
accompany the technological transition
Based on our scoring, we have identified the following subsectors as

the most investable for generalist VCs and thus WSC
Climate Climate Circular
Regtech
SaaS Finance Economy
Green Fintech
Payments ✓ ✓
Lending ✓
Insurance / Risk management ✓ ✓ ✓
Circular Economy
Sharing Economy ✓ ✓
Product Lifecycle Management ✓ ✓

Carbon Trading & Carbon Markets ✓ ✓
Carbon Accounting & ESG Reporting ✓ ✓
Smart Grid Technology ✓ ✓
Construction
Smart Buildings & Automation ✓ ✓
Agritech & Foodtech

Picks & Shovels ✓ ✓
Precision Agriculture ✓

Packaging Software & Infrastructure ✓ ✓
Source: WSC Analysis (2023)

10
Our 10-year horizon predictions for the

Sustainable Global Economy
As we look to invest in the top startups from across the globe, we
believe the following key trends will result in a growing number of
opportunities within the Sustainable Global Economy
Racing to reach Consumer pressure

Net Zero on corporates
There is a significant amount of work to be Companies can no longer afford to ignore
done to reach net zero by both reducing and consumer demands when it comes to where
removing carbon from the atmosphere. goods come from, how they are made,
packaged, and distributed and where they end
As a result, we will see the proliferation of
up.
technologies surrounding carbon emissions
and carbon measurements, from deep tech to The circular economy will no longer be on the
software, across both B2B and B2C. fringes but will make its way into business
models across food and agriculture,
Certain technologies may finally reach enough manufacturing, packaging, logistics, and
scale to make substantial impacts on carbon
energy.
emissions, although this remains far away for
now. We will see both deep tech and SaaS
companies that recycle and repurpose
1.5ºC 45% 98% materials, reduce waste, and recirculate
Limit to Reduction in Of electricity will
goods.
temperature rises emissions by 2030 need to be carbon-
free by 2050
Changing climate Decreasing reliance

and ecosystems on fossil fuels
Nature is not the only loser in a changing Renewable energy and EVs are increasingly
climate – our built environment is not ready to overtaking oil and petrol cars, coal plants are
sustain harsher storms, colder winters, and being shut down, biodegradable and
hotter summers. biomaterials are slowly overtaking plastics.
We will see plenty of new infrastructures and Yet there is so much work to be done to fully
technologies to improve cities’ resilience to replace fossil fuels, in terms of price parity,
these changes as well as financial and infrastructure, and distribution.
insurance companies that help people who
have been directly affected. We will see more and more businesses that
tackle grid and EV management, address
methane gas emissions, or reduce reliance on
non-recyclables.

11
The sustainable global economy is picking up

speed thanks to new policies and regulations
Governments around the world have taken significant legislative and
regulatory action to support their climate and energy priorities
including mandates, subsidies and market design
The EU
The Green Deal (2019), Fit for 55 (2021) and RePowerEU (2022) programs have progressively
raised the target for emission reductions by member states.
The EU has also broadened its Emission Trading System (ETS) to include new sectors such as
the maritime and aviation sectors. In 2023, the European Commission introduced the Green
Deal Industrial Plan, offering incentives for domestic production and CleanTech.
The EU Taxonomy Regulation symbolises governments’ commitment to promoting
sustainable finance and achieving environmental and climate goals by directing private
capital toward sustainable investments. Under the SFDR, all EU financial market participants
are required to disclose their ESG activities, with funds and banks classified under articles 6, 8
or 9 based on their investments. Since its adoption in 2000 the financial industry has seen a
considerable increase in “green” practices.
The US
The Inflation Reduction Act stands as the most extensive piece of federal legislation ever
addressing climate change, with an investment of $783bn in provisions centered on energy
security and climate change.
Some of the levers include tax credits like the Investment Tax Credit (ITC) and Production Tax
Credit (PTC), allowing taxpayers to deduct a portion of renewable energy systems costs from
their federal taxes.
The largest allocation areas are $128bn for renewable energy and grid energy storage, $30bn
for nuclear power, $13bn for electric vehicle incentives, $14bn for home energy efficiency
upgrades, $22bn for home energy supply improvements and $37bn for advanced
manufacturing.
Canada
Canada has announced $60bn in clean energy tax credits and $20bn in sustainable
infrastructure investments as part of its 2023 budget.
The largest portion of the Canadian budget’s energy transition-focused investments,
representing more than $25bn through 2035, is made through the Clean Energy Investment
Tax Credit.
The budget proposes a 15% refundable tax credit for investments including non-emitting
electricity generation systems.
Japan
On December 22, 2022 the Japanese government unveiled the Green Transformation (GX)
Basic Policy. It outlines regulatory, financing, and technology development priorities for the
green transformation of various industrial sectors. A key pillar of the GX Basic Policy is the
support for energy transition.

1
Sustainable Global Economy:
An Overview
Sustainable Global Economy: An Overview
13
Ecosystem Highlights
$181bn $35bn
Raised by climate tech Raised by climate tech
startups in the last 3 startups in 2023 YTD
years (Jan-Aug)
685 14.8%
Mega rounds1 Share of VC funding over
the last 3 years
$7.4bn 43
Share of seed funding in VC-backed climate tech
the last 3 years unicorns2
140 +163%
Climate tech exits in Share price performance
2022 of the top 30 public
climate tech companies
since 20173
Source: PwC (2023), Pitchbook (2023), CTVC (2023)

Notes: 1) Rounds >$100m, 2) As of 2022, 3) Using the EIP Index, performance data of the overall index between 2017-2023
14
Deal activity has increased significantly

over the last couple years
Deal volumes have almost doubled in Europe and North America
Climate Tech Deal Count across Seed, Series A and Series B by Region
1,538 1,501
628
640
978
842
758
381
615 305
543
262
195
162 859 792 284
498 558
408 473
368
2016 2017 2018 2019 2020 2021 2022 2023YTD 1
North America Europe Southeast Asia
While deal values are almost 3x vs. 3 years ago

Total Capital Invested in Climate Tech across Seed, Series A and Series B by Region
($m)
640
217
3,525 5,214
53 93 310
665 1,037 10,299
1,766 9,279
12 8 2,861
274 616 5,079 4,733
3,825
2,755 2,316
2016 2017 2018 2019 2020 2021 2022 2023YTD 1
North America Europe Southeast Asia
Source: Pitchbook (2023)

Notes: 1) As of August 2023
15
Despite worsening market conditions,

climate tech VCs continue to raise funds
Climate Tech VCs are raising more funds that ever
Number of Climate Tech funds raised by Climate Tech VCs globally1
66
60
54
25
20 21
13
9
2
2016 2017 2018 2019 2020 2021 2022 2023YTD
LPs have increased appetite to invest into to Climate Tech Funds

Value of funds raised by Climate Tech VCs globally ($m)
11,864 11,556
7,954
7,001
3,579
813 870 813
2
2016 2017 2018 2019 2020 2021 2022 2023YTD

Notes: 1) Includes NA, EU and SEA, 2) As of August 2023
16
VC funds fall within 4 broad categories

when looking at Sustainability
Classification of VC Investors: here we will use Sustainability and
Climate Tech interchangeably
Climate Specialists: climate general thesis across 7 climate verticals (e.g.

energy, mobility, food & agriculture, construction, carbon)
Vertical Specialists: single vertical focus within climate (e.g. energy, mobility
etc.)
Deeptech: frontier, hard science technologies to address climate
Generalist: predominantly enterprise or consumer software, with opportunistic

climate investments
Climate Generalist
Vertical Specialist DeepTech
Source: CTVC (2023), WSC Analysis (2023)

17
Active early-stage Climate Tech funds have

raised over $13bn in AUM
Select Top Climate Specialist VC funds in order of AUM
Deal
Investor Founded HQ AUM ($) Stage Top Deals
Count
2015 5.0bn Seed / Series A 190
2015 2.0bn Series A / B 180
1994 1.5bn Seed 2,466
20181 1.1bn Seed – Growth 50+
2010 500m Seed / Series A 389
2021 €350m Seed 13
2013 €300m Series A / B / C 4
2020 312m Series A 16
2017 €130m Seed / Series A 61
2020 €110.8m Seed / Series A 22

Notes: 1) Includes the CleanTech Fund I, ClimateTech Fund II and the Sustainability Venture Fund
18
So far ClimateTech has proven resilient to

the downturn
Early-stage valuations remain resilient amid market downturns
% Change in Median Post-Money Valuation by Series Globally 2021 – 2023YTD1
Climate Tech Other Tech

61%
44% 44%
36%
17%
13%
5%
-29%
-42% -45%
Median Post- Seed Series A Series B Series C Series D
Money $12m $45m $125m $240m $1,209m
Valuation
2023YTD
$13m $45m $81m $270m $492m
Most sub-sectors saw boosted valuations from 2022 to H1-2023

Median Post-Money Valuation per Sub-Sector
Sub-sector 2022 H1-2023 % Change
Carbon Capture &

23.4 22.3 -4.5%
Management
Electric 24.1
21.0 +44.0%
Infrastructure
AgriTech &
20.8 24.1 +15.9%
FoodTech
Packaging &
22 32.0 -10.9%
New Materials
Clean Energy 30.8 44.3 +17.1%
Construction 18.3 19.8 +8.3%
Circular Economy 14.2 22.0 +45.2%
Financing & Fintech 14.5 18.0 +27.4%
Source: Pitchbook (2023), SVB (2023)

Notes: 1) As of August 2023
19
Most of the funding is going to Clean Energy,

where there are the most exit opportunities
Clean Energy, AgriTech & FoodTech, and Electric Infrastructure led
overall funding
H1-23 Funding per Subsector
$3.1bn
$3.9bn Circular Economy
AgriTech & FoodTech
Financing
$0.3 & Fintech
bn
Carbon
$0.3 Capture &
bn Management
$2.3bn
$6.0bn $3.2bn Packaging & New $0.2 Construction
Clean Energy Electric Infrastructure Materials bn
Packaging & New Materials and Clean Energy led count of exits
Count of climate exits across M&A and IPO since 2020 by sub-sector
913
869
596
391
2020 2021 2022 2023 H1

Packaging & New Materials Clean Energy
Circular Economy AgriTech & Foodtech
Electric infras tructure Ca rbon Capture & Management
Co nstruction Financing & Fintech

20
The exit environment is picking up, which is key

to the long-term viability of the ecosystem
Climate tech exit activity has increased 70% YoY in the last two years,
led by large energy companies and private equity firms
57% 63%
Of exits from 2020 to Of climate tech
February 2023 were M&A acquisitions since 2020
transactions were driven by corporate
buyers
289 $400bn
Climate tech companies In total EV from the last
have exited via M&A, three years’ disclosed
SPAC, and IPO since 2020 exits
Large climate tech exits across key climate verticals since 2020
IPO 2023 M&A 2022 M&A 2020
[NASDAQ: NXT] Acquired by BP (LON: Acquired by Waste

$638m raised at $4.9bn BP) for $4.1bn Management for $4bn
M&A 2023 M&A 2022 M&A 2022
Acquired by Jera for Acquired by EDP Acquired by Cargill for

€1.6bn Renováveis for €600m £775m
Source: Climate Tech VC (2023), Pitchbook (2023)

21
Corporate M&A from energy companies is

driving overall exit count
Corporates are the most active acquirers of climate tech companies
Count of acquisitions by acquirer type
105
27 26
Corporate Private Equity Startup Developer
The most active acquirers are energy companies, followed by financial

institutions
Most active acquirers of Climate Tech companies by count since 2020
Shell 7
Ara Partners 6
BP 5
Xpansiv 4
Schneider Electric 4
Blackrock 4
Brookfield Renewable Partners 3
BorgWarner 3
Nasdaq 3
Source: CTVC (2023)

22
Select Top ClimateTech Unicorns
$11.8bn Valuation
High-quality lithium-ion batteries for electric
vehicles and energy storage systems
$5.0bn Valuation
Renewable energy supplier, offering affordable
and sustainable energy solutions to customers
$4.0bn Valuation
Farmer-to-farmer agronomic information
network to help farmers in the management of
their data and gain insights from each other
$3.8bn Valuation
Simplify the solar design and sales process
through the development of their cutting-edge
cloud-based platform
$1.0bn Valuation
Developing modular, vertical farming systems
that can be installed in supermarkets,
restaurants, and warehouses

2
Sector Focus
Sector Focus: Green FinTech
24
Green FinTech
Green FinTechs can deliver the innovative power that financial institutions
lack by leveraging big data and AI, and reducing costs and friction
$1.7bn 75%
Raised by Green FinTechs in Of banking CEOs believe their
H1-23 future growth is determined
by their ability to shift to a
low carbon economy
$2.4tn $53tn
Raised for green bonds In AUM for global ESG assets
globally as of Jan-23 to by 2025
support sustainable projects
ESG and sustainability have become increasingly important to financial

institutions. From carbon offsetting through payments, lending and investing into
sustainable projects, to trading carbon, to risk analysis management and
insurance, we are seeing increasingly innovative financial engineering to address
environmental and sustainability challenges.
This is an area of sustainable technology that lends itself well to VC investments,
given the asset light nature of these businesses. That said, VCs should be aware of
the growing regulatory burdens these businesses face, especially against
greenwashing.
Technology WSC Score Notes

Payments 7 Easy to build
Lending & Green Investing 7 Consumer demand
Insurance / Risk Management 7 Software play
Crypto 5
Source: KPMG (2023), Worldbank (2023), Barclays (2023), WSC Analysis (2023)

25
Technologies & Subsectors
Score: 7
Payments
Consumers and companies need tools and infrastructure that enable them to make sustainable
spending decisions. The next wave of innovation for payments companies are tying transactions
to carbon offsetting.
Tailwinds Challenges
+ Consumer demand + Growing transaction costs
+ Ease of implementation + Lack of transparency from off-setting initiatives
+ Already competitive market
Score: 7
Lending & Green Investing
Debt plays a major role in the green economy. The majority of heavy sustainability projects, such
as solar panels or wind turbine installations are financed with debt. Sustainability-linked lending
skyrocketed from $5bn in 2017 to $120bn in 2020.
+ Many new policies and incentives are put in place + Green bonds may have lower yields
to encourage green investments, including the + WSC VC Investability
”Greenwashing” concerns Index: 7
issuance of green bonds
+ Institutional investors, including pension funds
and asset managers, are increasingly interested in
sustainable and responsible investment options
Score: 7
Insurance and Risk Management
Climate change affects insurance underwriting due to the prevalence of natural disasters in some
regions. Innovations include climate projections; artificial intelligence and satellite monitoring;
and insurance products, helping businesses assess climate-related risks and minimise losses.
+ The rising frequency and severity of climate- + Difficulty of risk assessments
related events, such as hurricanes, wildfires, and + Lack predictability for pricing
floods, are driving demand for insurance and risk + Increasing loss ratios as prevalence of natural
mitigation solutions disasters grow

26
Score: 5
Crypto and Blockchain
Most serious crypto companies in the climate space are centered around carbon credits, like
Switzerland’s Toucan, which tokenises credits on blockchain. Blockchain can be a useful
technology to prevent fraud and provide more transparency in carbon trading.
+ Transparency and traceability of transactions is + Some blockchain networks, particularly proof-of-
facilitated by blockchain technology work networks are criticised for their high energy
consumption
+ Blockchain networks often face scalability issues

Sector Focus: Circular Economy
27
Circular Economy
Software can solve for the 3 Rs: reducing, reusing, recycling, which are
key aspects of sustainability and reducing overall emissions
2.1bn $4.3tn
Tonnes of waste dumped in Additional economic output
landfills every year created by the circular
economy by 2030
1 Truckload 9.3bn
Of textile waste is discarded Tonnes of CO2 emission that
each second can be avoided by 2050 by
implementing circular
economy strategies
Our economy operates under a 'take-make-waste' system. In a circular economy, a

fundamental requirement is that the materials re-enter the economy at the end of
their use. The shift from a linear to a circular system is at the heart of the circular
economy concept.
The sharing economy and second-hand market represent the most advanced
sectors of the circular economy, largely thanks to major platform shifts (e.g.
mobile, e-commerce, logistics), with some focusing on the optimization of goods’
usage and promoting the idea of access over ownership.

Sharing Economy 7 Proven success
Product Lifecycle Management 7 WSC experience1
Sustainable Materials 5
Waste Management 2
Source: Ellen MacArthur Foundation (2022), WSC Analysis (2023)

Notes: 1) WSC portfolio includes 900.care offering refillable hygiene products
28
Score: 7
Sharing Economy
The sharing economy, exemplified by services like Uber and Airbnb, and the growth of
secondhand market platforms such as eBay and Vinted, play a vital role by efficiently utilising
resources and promoting product reuse.
+ The sharing economy encourages the idea of + Market saturation
access over ownership + Low margins
+ Maturity and proven economic viability of these + Limited barriers to entry
business models
Score: 7
Product Lifecycle Management
Technologies that improve product design and lifecycle management, or products that are easier
to disassemble and recycle and using data analytics to optimise the use of resources.
+ Commercial value of imbedding recyclability in + Disrupts existing supply chain and infrastructure
product manufacturing WSC VC Investability Index: 7
+ Can lead to cost optimization in manufacturing
process
Score: 5
Sustainable Materials
Startups are developing new materials that are more sustainable and have a lower
environmental impact, such as bioplastics, biomaterials, and recycled materials.
+ Increasing awareness of environmental issues and + Disrupts existing supply chain and infrastructure
resource depletion is driving demand for materials
that have a lower environmental footprint

29
Score: 2
Waste Management
Startups are working on advanced recycling technologies to reduce waste, recover valuable
materials, and create a circular economy from waste streams.
+ Regulations and standards are being implemented + Supply chain and infrastructure complexity
to promote responsible waste management, + Achieving profitability
recycling, and waste reduction

Sector Focus: Carbon Management, Trading & Capture
30

Carbon capture and management are intertwined, with a growing demand
for direct carbon capture as companies seek to reduce emissions
14% $2.7tn
Potential reduction in Global carbon credit market
greenhouse gas emissions by 2028
from carbon capture by 2050
$250bn $6.1bn
Growth expected by the Raised by carbon capture &
carbon-offset market by 2025 management startups in the
last 3 years
Carbon capture and management technologies are crucial in combating climate

change. To prevent a 5°C global temperature increase by 2050, we must reduce
emissions and remove 220 gigatons of CO2 from the atmosphere.
While technologies within Direct Air Capture are still in their infancy and require
significant investments to scale, carbon trading and offsetting technologies are
mature and ready to scale.

Carbon Trading & Carbon Markets 8 Market that can be improved
Carbon Accounting & ESG Reporting 7 Attractive SaaS models
Carbon Utilisation 6
Direct Air Capture 3
Direct Capture from Industrial Processes 3
Source: C2ES (2023), Globe News Wire (2023), WSC Analysis (2023)

31
Score: 8
Carbon Trading & Carbon Markets
Carbon markets, established in the 90s following the Kyoto protocol have matured significantly.
Polluters can purchase credits to offset their emissions, tradable on open markets. Each credit
equals one ton of CO2 equivalent.
+ Emissions and carbon trading has become an + Oversaturated market
established practice
+ Governments are reducing caps and demanding
more transparency on emission levels
Score: 7
Carbon Accounting & ESG Reporting
Software enabling companies to generate carbon emissions and ESG compliance reports.
+ Carbon reporting mandatory in the EU for specific + Oversaturated market
companies WSC VC Investability Index: 7
+ New regulations coming into place including the
SECR policy where carbon emissions reporting is
mandatory
Score: 6
Carbon Utilisation
Exploring ways of utilising captured carbon such as converting it into useful products including
fuels, chemicals, and building materials.
+ Government support + Capital intensive projects primarily financed by
governments or oil and gas companies

32
Score: 3
Direct Air Capture (DAC)
DAC technologies extract CO2 directly from the atmosphere through various chemical approaches
which include solid DAC and liquid DAC. Solid DAC captures CO2 on the surface of a filter, while
liquid DACs systems involve passing air through a chemical solution.
+ Government support + Must demonstrate efficiency at scale
+ Can be deployed around the world + Massive industrial projects requiring large
investments (e.g., Climeworks have raised over
$700m but remains unprofitable)
+ Most expensive application of carbon capture
Score: 3
Carbon Capture from Industrial Processes (CCI)
Capturing carbon emissions from industrial processes, such as cement and steel manufacturing,
power plants or oil and gas production.
+ Strong interest from oil and gas companies to + Requires significant capital to deploy
finance such projects + WSC
Must VC Investability
demonstrate Index: 7
efficiency at scale
+ Criticised for providing a “free pass” for oil and gas
companies to continue drilling

Sector Focus: Electric Infrastructure
33
The pressing need for better grids, better storage, and better electricity
management systems can be solved with software
50% 70x
Of cars will be electric by Will be needed in a net zero
2035 world than we currently have
today
90% $40bn
Decrease in the price of Went to investments in
Lithium-ion battery in the last battery storage in 2023
10 years
The coming years will require a substantial increase in electricity supply, driven
primarily by booming EV sales. As renewable energy and EVs gain momentum,
the auto battery and energy storage markets are expected to grow at a 25%+
CAGR over the next decade. The widespread adoption of EV charging could lead to
a 15% – 50% increase in peak electricity demand on local grids, requiring costly
grid updates.
We believe software can address many of these issues. Energy creation and
storage now goes hand in hand with software to help optimise loads at peak
times, redistribute to the grid, and automatically rebalance how energy flows
through our grids.
Smart Grid Technology 9 Interesting SaaS companies
Energy Storage 6
EV Charging Infrastructure 6
Source: IEA (2023), Goldman Sachs Research (2023), US Department of Energy (2022), Reuters (2023), WSC Analysis (2023)

Sector Focus: Electric Infrastructure
34
Score: 9
Smart Grid Technology
As the energy system decentralizes and becomes more intermittent, startups are developing
software platforms and services to optimize energy use, reduce costs and improve grid reliability.
Emerging spaces are Virtual Power Plants (VPPs) and Distributed Energy Resources (DERs).
+ Ageing grid infrastructure requires renovation + Renovating grid infrastructure requires public
+ Reduction in cost of installation and increase in authority intervention
energy cost incentivizing individual homeowners + Complexity around interconnection with the grid
to become energy producers by energy systems “behind the meter”
+ Slow sales cycles
Score: 6
Energy Storage
Energy storage spans various sizes, from small vehicle batteries to large grid systems like the
Tesla Megapack. While Lithium-ion batteries dominate, promising alternatives include the use of
rust in new iron batteries, sodium-ion batteries and liquid metal batteries.
+ Considerable reduction of cost (price per Kwt of + Highly competitive market
energy stored with lithium ion battery has dropped + WSC VC
China’s Investability
raw material dominanceIndex: 7
in lithium,
by 97% since 1991) graphite and battery anode materials
+ US and EU legislation is cutting red tape, providing
tax credits and public subsidies
Score: 6
EV Charging Infrastructure
With the rising popularity of EVs, the need to improve EV batteries and charging infrastructure is
growing. A promising new market is emerging, focusing on building charging networks and
charging solutions.
+ Many regulations are put in place to subsidize the + EV battery space is dominated by incumbents
sale of EV by consumers + EV charging networks requires contracting with
+ In 2022 the Zero Emission Government Fleet public authorities
Declaration, requires governments to reach 100% + Low margins
zero emission vehicles in public procurement

Sector Focus: Construction
35
Construction
Despite the physical nature of the built environment, the sector
leverages software to reduce emissions and improve energy efficiency
40% 30bn
Of annual world CO2 Tonnes of concrete made
emissions every year
$300bn 1 NYC
Market size of the global Built every month for the
green construction market next 40 years
The sustainable construction sector has experienced rapid growth in response to

the demand for eco-friendly construction materials. Among various construction
materials, concrete is the most crucial due to its significant global consumption,
second only to water. Concrete accounts for 8% of human-made CO2 emissions,
highlighting the urgent need for more sustainable alternatives.
Other emerging technologies include enhancing building energy efficiency
through software and connected devices, which can tap into consumer markets.

Smart Buildings & Automation 8 Software + Consumer play
Sustainable Materials 4
Prefabricated Buildings 1
Source: Globe News Wire (2023), WSC Analysis (2023)

Sector Focus: Construction
36
Score: 8
Smart Buildings & Automation
Building automation systems can help reduce energy consumption by controlling heating,
cooling, and lighting systems.
+ Consumer demand for IoT and smart homes + Competitive market
+ Growing energy costs + High upfront costs
+ Government regulations and standards pushing + Integrating various components and systems (e.g.,
for more efficient energy systems HVAC, lighting, security)
+ Compatibility issues and the need for skilled
technicians
Score: 4
Sustainable Materials
Companies are developing sustainable building materials that have a lower environmental
impact than the highly CO2 emitting cement and concrete. These new materials could be new
biomaterials or reused materials. Organic materials, like hemp, are now being used for isolation.
+ Governments and municipalities are + Sustainable materials may have a higher upfront
implementing regulations and standards that cost
WSC compared to traditional materials
VC Investability Index: 7
encourage or require the use of sustainable + Supply chain issues and raw material availability
construction materials, such as energy efficiency + Competition from traditional materials
requirements, green building certifications, and
building codes
Score: 1
Prefabricated Buildings
Prefabricated construction involves building sections of a building off-site and then assembling
them on-site. This is an area where 3D printing is playing an interesting new role. This reduces
construction waste and can speed up the building process.
+ Speed and efficiency + High upfront costs (green premium)
+ Design flexibility

Sector Focus: AgriTech & FoodTech
37
AgriTech & FoodTech

Food production remains a key focus for VC funds given its close ties
to climate issues and the need to feed a growing global population
70% 26%
Increase in food production Of annual world CO2
needed to feed the world emissions come from the
population by 2050 food industry
$260bn 1/3
Estimated global FoodTech Of all food produced is lost or
market size in 2022 wasted, costing the global
economy close to $940bn
each year
A transition toward greener practices in agriculture and food manufacturing is

critical, given that the current food system contributes to a third of CO2 emissions
worldwide, consumes 70% of freshwater usage, drives 80% of global
deforestation, and results in approximately one third of global food production
going to waste.
Technological advancements combined to consumer demand for sustainable,
healthy, affordable, and safe food options have led to the emergence of large
unicorns in this space. Some solutions are more capital intensive than others,
especially within alternative proteins, which saw substantial investment but has
not reached global scale.
Picks & Shovels 9 Many asset light businesses
Precision Agriculture 7 Interesting AI and software play
Alternative Proteins 5
Food Waste Reduction 4
Vertical Farming 4
Source: Eurostat (2023), Agfunder (2023), Statista (2023), Our world in data (2019), WSC Analysis (2023)

38
Score: 9
Picks & Shovels
The infrastructure and software supporting AgriTech companies as they expand throughout the
the value chain.
+ Market maturity and readiness in adopting new + Competitive and saturated market
software + Slow sales cycles
Score: 7
Precision Agriculture
New technologies are being developed to improve the efficiency and sustainability of farming
practices, such as using drones, sensors, and AI to monitor crops and optimize inputs.
+ Reduces the need for excessive water, fertilizers, + Significant initial investment in hardware,
pesticides, and other resources software,
WSC VC andInvestability
equipment Index: 7
+ Optimise crop yields and productivity + Farmers may exhibit resistance to adopting new
technologies
Score: 5
Alternative Proteins
There is a growing trend towards alternative proteins, such as plant-based and lab-grown meat,
as consumers become more interested in sustainable and ethical food choices.
+ As the global population continues to grow, + Tough to scale
alternative proteins offer a potential solution to + Low margins
food security + Distribution challenges
+ Increasing awareness of environmental and
ethical concerns related to traditional livestock
farming has led to a growing demand

39
Score: 4
Food Waste Reduction
Startups tackling food waste through new uses for products that would otherwise be discarded,
such as turning 'ugly' produce into snacks or converting food waste into biofuels.
+ Some governments and regions are implementing + Supply chain and infrastructure complexity
regulations and initiatives to encourage food + Low margins
waste reduction
+ Growing consumer demand
Score: 4
Vertical Farming
With the rise of urbanization and the need to produce more food with less land and water,
vertical farming is becoming increasingly popular. Most of these companies are using LED
lighting and hydroponics to grow crops in stacked layers in urban environments.
+ Resource efficient using significantly less land and + Reliance on artificial lighting and climate control
water than traditional farming methods systems that are energy-intensive and sensitive to
+ Enables year-round production energy price fluctuations
+ High upfront costs
+ Tough to scale

Sector Focus: Packaging & New Materials
40

Sustainable packaging innovation is on the rise, with software firms
playing a key role in advancing manufacturing and packaging design
380m $917bn
Tonnes of plastic produced Global packaging market size
annually, 50% of which are in 2019, reaching $1tn by
for single-use items 2024
9% $57.9bn
Of global plastic waste is Market size of the global e-
currently recycled commerce packaging
industry
In 2019, global plastic packaging production exceeded 360m metric tons, making
up a $917bn industry. By 2050, plastic production is projected to triple and will
account for one-fifth of global oil consumption. This poses significant
environmental challenges and calls for a major shift in packaging practices, while
the large market size also makes it an attractive sector for investors.
Emerging packaging startups are actively developing sustainable, efficient, and
consumer-friendly solutions using advanced materials and technologies to foster a
circular economy.

Packaging Software & Infrastructure 8 Pick and shovels play
Biodegradable & Compostable 5
Waste to Value 5
Bio-Materials 5
Source: Plastics Ocean International (2023), OECD (2023), Smithers (2020), WSC Analysis (2023)

41
Score: 8
Packaging Software & Infrastructure
The manufacturing of new materials requires infrastructure to scale up research but also to help
consumers navigate this new packaging market.
+ Market maturity and readiness in adopting new + Already competitive and saturated market
software
Score: 5
Biodegradable & Compostable
Several startups are focused on developing packaging materials that are biodegradable and
compostable. These bio-materials generally produces flexible packaging made from plant-based
materials (for example mushroom or seaweed).
+ Regulation are favoring sustainable materials vs. + Technologies are in the early stages of scaling
single-use plastics + WSC VC remains
Distribution Investability
an issue Index: 7
+ Consumers are increasingly seeking products + Low margins
made from sustainable materials
Score: 5
Waste to Value
Startups are also developing packaging materials made from waste materials, such as
compostable plant-based materials, and biodegradable plastics from food waste.
+ Commercial value of imbedding recyclability in + Technologies are just beginning to scale
product manufacturing + Distribution remains an issue
+ Can lead to cost optimisation in manufacturing + Low margins
process

42
Score: 5
Bio-Materials
Rapidly growing sector focused on developing and commercialising innovative materials as

alternatives to traditional materials derived from fossil fuels. The main areas of research are
Bioplastics, Bio-based Textiles, Biomimetic Materials, Bio-based Composites.
+ Increasing awareness of environmental issues and + Technologies are in the early stages of scaling
resource depletion is driving demand for materials + Distribution remains an issue
that have a lower environmental footprint + Low margins

Sector Focus: Clean Energy
43
Clean Energy
Clean energy is achievable but will require hefty investments in new
technologies and infrastructure, beyond the traditional VC scope
73% $2tn
Of emissions are created by Investment required to get
energy use carbon free electricity for the
US grid by 2035
89% 80%
Decrease in the price of solar Surge in capacity for solar
energy in the last 10 years and wind power by 2026
The renewable energy market is growing significantly thanks to cost

competitiveness, supportive policies and rising demand. Renewables are finally
more cost-effective to produce than fossil fuels. In 2022, wind and solar power
generated 22% of the EU's electricity, overtaking gas for the first time. In the EU,
renewables now account for nearly 40% of total electricity generation.
Direct energy production lends itself more to infrastructure-type investments due

to the long-term nature and capital intensity of these projects. That said, investors
are monitoring Software as a Service (SaaS) offerings in these sectors for
designing solar field infrastructure and optimising engineer deployments.

Solar Power 5 Potential SaaS opportunities
Wind Power 5
Nuclear 5
Hydropower 5
Waste-to-Energy 5
Hydrogen 4
Source: S&P Global (2021), Lightsourcebp (2023), McKinsey (2022), WSC Analysis (2023)

44
Score: 5
Solar Power
The solar industry has considerably matured in the last decade, with innovative technologies
making solar energy more affordable and accessible, while software is coming in to reduce
inefficiencies, help design infrastructure, monitor plants, and support engineers.
+ Price has decreased by 89% in the last decade + Market is dominated by large industrials
+ Capacity is growing steadily
+ US and EU legislation is cutting red tape, providing
tax credits and public subsidies
Score: 5
Wind Power
Wind turbines technologies have advanced significantly, primarily by increasing turbine size for
greater energy generation. Innovations are also improving the efficiency and reliability of wind
turbines, including vertical axis wind turbines, bladeless turbines, and offshore wind farm models.
+ US and EU legislation is cutting red tape, providing + Criticised for their visual impact on land
tax credits and public subsidies + WSC VC
Offshore wind Investability
farms that requireIndex: 7
shallow seabeds
+ Governments are investing in offshore wind farms
Score: 4
Nuclear
Nuclear energy has progressed slowly, with most technologies relying on fission. Despite major
investments like ITER, progress in fusion has been limited and attention is turning to Modular
Reactors (SMRs), Molten Salt Reactors (MSRs) and new Fusion Energy approaches.
+ Proven and reliable technology + Lack of significant breakthrough in fusion
+ US and EU legislation is cutting red tape, providing + European governments have reduced research due
tax credits and public subsidies to public pressure
+ Capital intensive projects

45
Score: 5
Hydro Power
This category includes dams and tidal turbines. Hydro energy stands out as the most predictable
source of energy, being the only renewable option capable of consistently providing reliable
energy.
+ Proven and reliable technology + Capital intensive projects
+ Constant + Requires specific land available
Score: 5
Waste-to-Energy
Waste-to-Energy technologies cover various methods for converting waste materials into energy,
including incineration, gasification, pyrolysis, and anaerobic digestion.
+ Proven and reliable technology + Not entirely clean
+ WSC VC
Limited Investability Index: 7
profitability
Score: 4
Hydrogen
Hydrogen, abundant in the universe, is a superior clean energy alternative for energy generation
and storage, used in a variety of applications including transportation, heating and power
generation and serves as an energy storage medium.
+ Ability to use existing fossil fuel infrastructure + Limited natural hydrogen availability
+ Versatility in energy applications + Green hydrogen production is challenging and
+ Supported by new government regulations costly
+ Storage and production involve significant energy
loss

46
Climate Tech – a Timeline

There is a large gap between awareness of climate change and action,
and after a first attempt, we are entering a new era of climate tech VC
1938 – First proof that global temperatures are rising
1954 – The birth of the solar cell
1958 – First proof that CO2 levels are rising and fossil fuels are to blame
1967 – Earth’s changing climate modelled for the first time
1985 – Lithium-ion battery is invented
1988 – The intergovernmental Panel on Climate Change is established
1994 – First climate change legislation comes into force
1997 - Kyoto Protocol - First climate treaty to reduce carbon emissions
2000 - Clean Tech 1.0 as Silicon Valley VCs march into the sector
2008 - Great Financial Crisis and climate tech crash
2015 – Landmark international Paris agreement reached to cut carbon
2021 – Scientists predict world will reach 1.5°C of warming by 2040
2022 – Clean Tech 2.0


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Sustainable Global

$370bn $9tn - $12tn

Looking at the Sustainable Global Economy from a VC perspective

Sector Lead Authors

WSC 2023 Sustainable Global Economy Report

Section 1 Sustainable Global Economy: An Overview 12-22

Section 2 Sector Focus 23-45

Green FinTech 24-26

Circular Economy 27-29

Carbon Management, Trading & Capture 30-32

Electric Infrastructure 33-34

AgriTech & FoodTech 37-39

Packaging & New Materials 40-42

Clean Energy 43-45

WSC 2023 Sustainable Global Economy Report

The Sustainable Global Economy: a new

Monthly Mean Global Surface Temperature – Land & Ocean

What does this mean for WSC?

WSC 2023 Sustainable Global Economy Report

Climate Tech VC has had a chequered past

tech, with a heavy focus on energy

• By 2011, almost all of the renewable

prices, inconsistent government

Cleantech companies developing new materials, hardware, chemicals,

Source: Pitchbook (2023), SVB (2022) Time

Yet we believe that the conditions are right for a

1 - Policies and regulations: Governments and regulatory bodies

2 - Corporate or consumer demand: Businesses and consumers are

3 - Capital alignment: The rise of impact investing and Environmental,

6 - Urgency of the crisis: If some on the conservative side of the political

In keeping with WSC’s investment guidelines, it is still possible to

Deliver solutions Innovate on

WSC 2023 Sustainable Global Economy Report

We’ve created a WSC VC Investability Index to

Out of Scope Work to be done Within WSC Scope

WSC 2023 Sustainable Global Economy Report

And broken down the Sustainable Global

• Payments • Insurance / Risk Management

• Sharing Economy • Sustainable Materials

Carbon Management, Trading & Capture

AgriTech & FoodTech

Packaging & New Materials

WSC 2023 Sustainable Global Economy Report

Our thematic approach to investing leads

Climate SaaS Climate Finance

Circular Economy RegTech

Based on our scoring, we have identified the following subsectors as

Carbon Management, Trading & Capture

Agritech & Foodtech

Packaging & New Materials

Source: WSC Analysis (2023)

WSC 2023 Sustainable Global Economy Report

Our 10-year horizon predictions for the

Racing to reach Consumer pressure

Changing climate Decreasing reliance

Source: WSC Analysis (2023)

WSC 2023 Sustainable Global Economy Report

The sustainable global economy is picking up

Source: WSC Analysis (2023)

Source: PwC (2023), Pitchbook (2023), CTVC (2023)