A new report shows the nature tech market emerging as its own investment category, with $7.5 billion invested in startups over the last five years to safeguard biodiversity.
- Nature tech is seeing increasing investment focus as recognition of its role in addressing the climate and biodiversity crises goes mainstream.
- Venture capital investment in nature tech is up 130% over the last couple of years, with average deal size on the increase demonstrating increasing maturity of the sector as it emerges as an investment category.
- With the Global Biodiversity Framework requiring 30% of land and ocean to be protected by 30% by 2030, the sector will create risk for corporate operations and investment opportunity for many.
Nature4Climate, along with venture capital investment firm Serena and nature tech membership body, MRV Collective, have released a new market analysis report, The State of Nature Tech: Building confidence in a growing market, that is intended to raise the profile of and increase finance to this growing sector.
The report provides unprecedented detail on the growth and projected impact that Nature Tech is expected to have on biodiversity, natural carbon sinks and how it will serve as an indispensable tool within a broader ecosystem to protect and preserve our planet’s diverse and fragile ecosystems.
One of the goals set by COP 15 is to protect 30% of global terrestrial and marine habitats by 2030. Technology can play a direct role by assessing the impacts of human activities on natural ecosystems. Of course, in the same way that climate tech alone can’t comprehensively address the climate crisis, nature tech can’t singlehandedly resolve the biodiversity crisis. Instead, it serves as a vital tool within a broader ecosystem to protect and preserve our planet’s diverse and fragile ecosystems.
One of the most important indicators of this is the interest that investors have been taking in the sector. Venture capital investments in nature tech startups have been developing fast over the past three years: early-stage deals rose by 130% between 2020 and 2022 and average deal sizes for seed to series B funding increased by 70%, demonstrating the growing maturity of the nature tech industry.
Harnessing nature tech for biodiversity preservation
The climate crisis and the biodiversity crisis are closely intertwined, and nature emerges as a powerful ally in approaches to tackling climate change and building resilience.
Specifically, nature-based solutions (NbS) have become the cornerstone of this endeavour. NbS encompasses a range of actions designed to protect, sustainably manage and restore natural or altered ecosystems, providing effective and adaptable solutions that simultaneously enhance human well-being and support biodiversity.
The nature tech market plays a vital role in strengthening NbS, focusing on the protection, restoration, and sustainable management of natural and semi-natural ecosystems. Nature tech strengthens NbS development in numerous ways, including biodiversity credit exchange, biodiversity footprint, impact modelling, and regenerative solutions.
Dr Manuel Pinuela, chief executive of Cultivo, said: “Nature Tech is crucial to tackling the climate and biodiversity crises; Cultivo’s platform is a successful example of Nature Tech in action on a global scale. Cultivo is radically transforming how nature-based projects are originated through digitization and the use of artificial intelligence. This report demonstrates how Nature Tech has come of age, and should move out of the shadows of Climate Tech and be seen as an important and impactful sector in its own right.”
Venture capital funding fuels nature tech growth
Venture capital funding in nature tech startups is surging. Similar to climate tech’s role in addressing the climate crisis, nature tech cannot be the sole solution for the biodiversity crisis. However, it serves as a powerful enabler, particularly in quantifying, qualifying, and reporting the impacts of human activities on natural ecosystems. And is is expected to rapidly grow and reach the same level of maturity and scale as climate tech, which has grown from $413 million in VC investments in 2013 to more than $41 billion in 2022.
Xavier Lorphelin, Managing Partner at Serena said: “VC investments in nature tech startups have been developing fast over the past 3 years: early-stage deals rose by 130% between 2020 and 2022 and average deal sizes for seed to series B funding increased by 70%, demonstrating the growing maturity of the nature tech industry. At Serena, we are convinced that nature tech is the new frontier and will rapidly grow and reach the same level of maturity and scale as climate tech.”
Nature tech: An investment category beyond climate tech
Nature tech has often been considered a vertical sub-sector within the climate tech VC market, now valued at more than $40 billion. However, nature tech extends beyond climate tech and is emerging as an investment category of its own. In the past five years, over $7.5 billion in VC investments have poured into Nature Tech startups.
Innovation, market research, and the application of nature tech are generating high levels of investor interest and inspiring confidence in the market, making nature-based solutions an increasingly attractive investment option. New products, new companies, new ideas, and new markets are emerging and pose a disruptive challenge to incumbents and offer the prospect of positive change in building a decarbonized and nature-positive global economy.
Nature tech: opportunities and challenges
The global shift toward nature-positive economic activities provides major opportunities for providers of diagnostic, analytical, and data-rich tools and techniques. Measurement, reporting, and verification (MRV) play a fundamental role in ensuring the confidence of project developers, investors, and financial institutions. The report also highlights key trends in the market while addressing the challenges of scaling promising solutions for maximum environmental, social, and financial benefits.
While a wide range of opportunities exists in the nature tech market, it’s essential to establish safeguards to manage risks and ensure the fair distribution of environmental and social benefits, especially among Indigenous peoples and local communities. Accessibility and affordability of technology are key components of broader community and social goals.
Connecting communities through nature tech
Worldwide, nature tech not only offers the possibility of protecting and enhancing our natural environment but also has the potential to connect people within and across communities.
“This report highlights the diversity and breadth of the initiatives that are underway around the world, with much of the innovation being tailored to local and regional challenges. It also highlights dozens of examples and case studies of innovations, products, and concepts that have been and continue to be developed by emerging companies, eager to contribute to addressing the interconnected crises of nature loss and climate change,” said Lucy Almond, Chair, Nature4Climate.