Angel investor Mick Liubinskas is one of those on a mission to help Australia’s climate tech start-ups cultivate their global aspirations.
The founder of Climate Salad is hoping that the country’s climate tech founders can raise almost A$1.5 billion ($1 billion) in the 2023-24 financial year.
He started Climate Salad two years ago as a blog and monthly newsletter. Today, it is a community of 400 companies, 100 mentors, 60 investors and 35 partners to bring what is a new industry to scale.
“Climate tech is considered to be quite a new industry and investment typically increases after a lot of success. We saw this happen with the e-commerce and fintech sectors,” Sydney-based Liubinskas told FinanceAsia.
Liubinskas has almost two decades of working with early-stage technology companies in Australia and the US. He co-founded the Silicon Valley-style incubator Pollenizer and start-up accelerator programme muru-D.
The capital-raising environment globally has been challenged in 2023 and this has hurt the ability of founders to raise funds. However, according to PitchBook’s Carbon & Emissions Tech Report, VC interest in carbon and emissions tech is showing more resiliency than others, even in a challenging environment.
Globally, the third quarter saw $7.6 billion on VC deal value across 219 deals, making it the highest quarter on record for VC investment into the sector. Year-to-date, there have been 735 deals totalling $15 billion in value.
In Australia, there have been 29 deals so far this year, amounting to around $229.3 million, according to PitchBook’s latest data.
Within Australia and New Zealand, the leading deals include Australian agtech start-up Loam closing its Series B at $73.5 million and New Zealand e-waste recycling start-up Mint Innovation raising $37.8 million in its Series C.
Positive climate of change
According to Liubinskas, there are several positives that are driving momentum in the space.
Firstly, the increase in government funding for large scale projects in hydrogen, solar, desalination, wave-based energies and circular economy technology. Australian-based investors including Tenacious Ventures, Investible and Main Sequencehave been raising funds to invest in climate technology.
“The other big area we see is family offices. As a result of the generational change influence where the wealth of Australia has been passed down to younger generations and they understand the imperative to invest in climate tech,” added Liubinskas.
Across the Tasman Sea, Ben Scales is a part of a new generation of entrepreneurs that is hoping to revive New Zealand’s thriving harakeke industry in a way that is sustainable. He is the co-founder and CEO of KiwiFibre, which is developing a natural-fibre replacement for synthetic composite materials like carbon fibre and fibreglass, using the harakeke or the plant most commonly known as the New Zealand Flax.
Scales highlighted that synthetic materials are widely used in industries such as marine, automotive, sport & recreation products, construction and aerospace. Syntheticmaterials have a large carbon footprint.
According to the United Nations Environment Programme's 2022 Global Status Report for Buildings and Construction, synthetic materials used in construction globally sawCO2 emissions hit a record in 2021 of 10 GtCO2. The report concluded that the industry it is not on track to achieve decarbonisation by 2050.
Scales’ recognised the harakeke plant’s potential to be much more sustainable than other natural fibre crops. After incorporating the company in 2021, Scales and his co-founder spent the past 18 months kickstarting and subsequently, expanding the business.
The publicity and cash from a Facebook competition gave them a start. KiwiFibre raised NZ$1.5 million ($932,000) in a pre-seed round at the end of last year.
In 2024, Scales says that KiwiFibre aims to raise between NZ$5-10 million for its seed round.
“From farming the plants to developing the product, we know that the fundamentals work. Our next step is to strengthen that to scale through the farms, the manufacturing and to accelerate that go to market,” said Scales in an interview from Canterbury.
Salad’s Liubinskas points to other examples of climate start-ups. For example, Australian meat alternative start-ups, including Fable Food and V2food, have not only done well in their home markets but have started to replicate that success globally.
Australia’s corporate giants have also contributed to the positive momentum.
The country’s national carrier, Qantas, announced in May that it would establish a A$400 million climate fund to invest in sustainability projects and technologies.
W23, which is backed by Woolworths Group, Australia’s largest grocery retailer, is investing in start-ups that are transforming retail. Within that, climate tech is one of the three verticals they’re focussed on. Examples of their investments include Great Wrap, a packaging technology with stretch wrap material made from potato waste, and recycling start-up Samsara Eco.
International investors are also increasingly turning their focus to Australia and New Zealand. Singapore-based venture capital firm, TRIREC, a climate investor, in May closed its second fund at close to $80 million and is looking to start fundraising efforts for its third fund this year.
Singapore-based solar power producer, Sunseap, is one of TRIREC’s investments to have hit unicorn status. Other Southeast Asian (SEA) start-ups that TRIREC have invested include voluntary carbon exchange, Air Carbon Exchange, electric vehicle battery start-up, Oyika and lithium-ion battery recycling company, Green Li-ion.
In May, TRIREC, signed a Memorandum of Understanding with New Zealand’s Pacific Channel to establish a strategic partnership.
“Pacific Channel invests in various stages of deep tech start-ups although they typically invest in the seed and pre-A stage, where the technology is still under development. For us at TRIREC, our investment sweet spot is from pre-A and series A onwards. This is where we see synergies to collaborate as we have been looking to expand our expertise and reach in the sector,” said Mike Lim, partner at TRIREC in Singapore.
Pacific Channel is among the top VC investors in New Zealand, with a deal count of five investments so far this year. Overall, there were nine deals this year at $65.3 million, according to PitchBook data that tracked deal flow until December 12.
There are no plans at this stage to jointly start a fund looking into climate tech investments, but Lim said that the first milestone will be for both firmsto co-invest in a New Zealand start-up. He expects that to happen within the next 12 months.
TRIREC hopes to replicate this collaboration with other VCs in other parts of the world, as Lim believes that it is through such collaborations and exchange of ideas that are critical to solving a problem as big as climate change.
“The question is a race between two tipping points. Do we tip over in terms of actually embracing these solutions? Or does the environment tip over negatively first? I hope it's the former but there's a lot of challenges and uncertainty in a world where populations are still not getting their basic needs met,” said Liubinskas.