2022 has seen venture funding in various industries slow down, but there is one sector that has heated up and that is climate tech. Climate change startups that are developing technologies that address climate change are highly sought after by investors.
To help cut global greenhouse gas emissions, tech companies around the world are leveraging transferrable skills that are solving problems in other verticals like machine learning and supply chain management. Many of these tech companies are highly valued and have become unicorns.
Unicorns are companies that have a valuation of $1B or more and have not been listed on the stock market yet. Climate tech startups that can prove that their technology works on a large scale receive very high valuations because the problems that they are solving are very real and really huge. In fact, studies have shown that by 2030, the world needs to step up its game and have a war chest of $5 trillion a year to fight climate change.
As of September 2022, there are a total of 49 climate tech unicorns around the world. Collectively, their valuations have crossed the $130 billion mark. In this guide, I ranked and reviewed the top 5 climate tech unicorns in 2022.
- Northvolt – Highest valuation
- Octopus Energy – Diversified operations
- OLA Electric – EVs for the masses
- Commonwealth Fusion Systems – Breakthrough technology
- Redwood Materials – Takes care of the EV industry’s mess
Unsurprisingly, most of the climate tech unicorns focus on renewable energy and energy storage. This is totally expected because sustainable energy is the most direct path to net zero and solving climate change. However, this is not to discount other climate tech unicorns doing other things like material recycling, sustainable agriculture and fixing pollution. They are all doing their part for the good of the planet.
There is not a future where we can successfully reverse climate change by just focusing on one subsector in climate tech. We need to explore as many avenues as possible and make sure they all can scale. For example, by recycling lithium-ion batteries, we are drastically reducing greenhouse gas emissions because the process of mining the materials for the batteries is currently not 100% carbon-free.
Interestingly, 2 founders from this list were Tesla executives. Are we seeing the rise of Tesla Mafia, just like the PayPal Mafia (a group of ultra-successful Internet entrepreneurs who worked at PayPal and eventually went out to build famous tech companies)?
What are the Top 5 Climate Tech Unicorns in 2022?
My top picks are Northvolt, Octopus Energy, OLA Electric, Commonwealth Fusion Systems and Redwood Materials.
1. Northvolt
Highest valuation.
Based in Sweden, Northvolt is a tech startup that aims to reduce global carbon footprint by improving our energy storage systems. The company develops and manufactures lithium-ion batteries for electric vehicles. It is founded by Peter Carlsson in 2015 and became a unicorn in 2019. The company counts a few legacy automakers as its investors who want to challenge the dominance of Tesla in the electric vehicle industry.
Based in:
Sweden
Valuation:
$11.8 billion (as of September 2022)
Focus:
- Battery
Visit their website for more information.
2. Octopus Energy
Diversified operations.
Octopus Energy is founded in 2015 and became a unicorn in 2020. It is a renewable energy group headquartered in London. Its other products and services include gas and electricity supply, electricity generation, electric vehicle charging and software development.
Based in:
United Kingdom
Valuation:
$5 billion (as of September 2022)
Focus:
- Sustainable Energy
Visit their website for more information.
3. OLA Electric
EV for the masses.
OLA Electric is founded in 2017 and became a unicorn in 2021. Based in Bengaluru, India, the company specializes in manufacturing electric two-wheelers. With its fully-automated factory named the Ola Futurefactory, the company wants to be the largest two wheeler factory in the world with an annual production capacity of 10 million units.
Based in:
India
Valuation:
$5 billion (as of September 2022)
Focus:
- Electric vehicles
Visit their website for more information.
4. Commonwealth Fusion Systems
Breakthrough technology.
Commonwealth Fusion Systems spun off from the Massachusetts Institute of Technology (MIT). Founded in 2018, it achieved the unicorn status in 2021. Their aim is to build a compact fusion power plant based on the ARC tokamak power plant concept. If CFS succeeds in commercializing and scaling nuclear fusion, we will have a virtually limitless source of energy that is totally carbon-free.
Based in:
USA
Valuation:
$4 billion (as of September 2022)
Focus:
- Nuclear energy
Visit their website for more information.
5. Redwood Materials
Takes care of EV industry’s mess.
Redwood Materials is founded by J.B. Straubel, who was a co-founder and the CTO at Tesla. The company essentially takes care of the EV industry’s mess, recycling lithium-ion batteries. This is extremely important because as the world transitions to EVs, old discarded lithium-ion batteries will need somewhere to go to.
Based in:
USA
Valuation:
$3.7 billion (as of September 2022)
Focus:
- Recycling batteries
- Produce battery materials
Visit their website for more information.
Summary
As we are seeing more extreme weathers happening more frequently, climate change is an undeniable fact and we need more brilliant minds who can come up with great ideas to reduce our global carbon footprint. As more startups and investors enter the game, more climate tech unicorns will be minted. The next richest man in the world might just emerge from one of these unicorns which can effectively fix climate change on a massive scale.
