EMERGING TECH RESEARCH Carbon & Emissions Tech Report VC trends and emerging opportunities Q1 2023 REPORT PREVIEW The full report is available through the PitchBook Platform. Contents Vertical overview 3 Institutional Research Group Q1 2023 timeline 4 Analysis Carbon & emissions tech landscape 5 Carbon & emissions tech VC ecosystem market map 6 VC activity 8 Data Emerging opportunities 15 Alyssa Williams Data Analyst Green construction 16 Publishing Carbon accounting and measurement 18 Report designed by Julia Midkiff and Jenna O’Malley 19 Published on May 12, 2023 Select company highlights Gropyus 20 Airex Energy 22 Agreena 24 Q1 2023 Carbon & Emissions Tech Report John MacDonagh Senior Analyst, Emerging Technology john.macdonagh@pitchbook.com pbinstitutionalresearch@pitchbook.com CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 2 Q1 2023 timeline February 1 March 10 Sustainable infrastructure developer Generate raises $880.6 million in venture-growth funding; Generate finances, builds, owns, and operates a broad range of sustainable infrastructure projects. The European Commission presents the Green Deal Industrial Plan, aiming to increase the competitiveness of the EU’s low-carbon industry, partially in response to the Inflation Reduction Act passed in the US in August 2022. Silicon Valley Bank (SVB) collapses, causing short-term panic for climate tech startups engaged with SVB and long-term challenges in securing funding—particularly venture debt. News January 6 News VC deal Q1 VC deal count summary 212 total deals -13.8% QoQ growth 32.5% Mar 31 Mar 1 February 2 March 15 Environmental commodity trading platform Xpansiv raises $125.0 million in late-stage VC funding as part of a $525.0 million combined deal, the first tranche of which closed in July 2022. Peak Power, developer of distributed energy products and energyoptimization software for the built environment, raises $200.0 million in late-stage VC funding. In response to the IRA, the UK plans a “Green Day” to announce a broad range of environmental policies and initiatives to protect British industries, though ultimately the value of the subsidies falls short of the IRA and the Green Deal Industrial Plan. News January 11 VC deal VC deal Feb 1 Jan 1 YoY growth Q1 VC deal value summary $3.6B total deal value -12.9% QoQ growth 35.4% YoY growth Q1 2023 Carbon & Emissions Tech Report CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 4 Carbon & emissions tech landscape 1 Carbon tech 2 Industry 3 Built environment 4 Land use Q1 2023 Carbon & Emissions Tech Report 1 2 3 4 CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 5 VC activity Q1 2023 had a similar total VC deal value to quarters in 2022, with $3.6 billion in deal value compared with an average of $3.5 billion per quarter in 2022. However, on a quarter-over-quarter basis, Carbon & emissions tech VC deal activity VC deal value fell slightly from $4.2 billion in Q4 2022. Deal count also fell from 246 to 212 but still represents the third-highest quarterly deal count on record—behind Q3 2022 and Q4 2022. 846 Carbon tech was the largest segment within the carbon & emissions tech vertical in Q1 2023 by a significant margin, with $1.8 billion in VC deal value compared with $0.9 billion for the industry 751 segment, the next-largest segment by VC deal value. Q1 2023 was particularly strong for the carbon tech segment, which had its third-highest quarter by deal value, behind Q3 2021 and Q2 2022. The built environment segment saw its second-highest quarter by deal value, having grown steadily each quarter in the previous 12 months. The land use segment continued to be the smallest in 488 terms of both deal count and deal value, reflecting its somewhat narrow focus compared with the other segments. Carbon fintech & consumer was the largest category in terms of deal value in Q1 2023, due in part to 386 300 sustainable infrastructure developer and financer Generate’s $880.6 million venture-growth round, 212 though the category still saw sizable investment even without this deal. In the carbon tech segment, VC investment in carbon capture and utilization technologies slowed in Q1, with $152.8 million between biological carbon removal, direct air capture, point-source carbon capture, and carbon utilization, though point-source carbon capture technology developer Svante’s $318.0 million Series E closed soon after the end of the quarter. The gre