Green startups – the new focus of investors' attention

Startups focused on green technology are beginning to attract capital despite the current scenario of declining risk investments.

In Latin America, fintechs are still attracting the most venture capital money, accounting for 43% of total investments, according to global multi-fund manager Mountain Partners. Nevertheless, green startups focused on reducing carbon footprints are gaining traction and capital.

 "In the carbon tech sector, companies dedicated to carbon capture and storage, as well as the use of clean technologies in the industry and the promotion of sustainable practices in production and consumption, are attracting the attention of investors," Mountain Partners' managing partner for Latin America, Santiago Caniggia Bengolea, tells BNamericas.    

“This trend is largely due to the fact that existing technologies can only address 25% of the CO2 reduction needed to achieve the net zero targets proposed in the Paris Agreement.” 

In May, clean technology represented 5% of capital investments in Latin America, according to a report from Sling Hub, a data intelligence platform for the Latin American startup ecosystem. That percentage was boosted by the US$11mn raised by Argentine firm Waterplan, an AI-driven water conservation platform.

In May, Brazilian power company Copel said it aims to invest 150mn reais (US$31mn) by 2030 in startups that provide solutions in renewable energy, energy as a service, smart cities, innovative internal processes and asset management.

Another big area of interest for investors is renewable energy and electromobility and is reflected in the emergence of new green investment funds. At the end of 2022, over 1,200 such funds were registered globally, up from fewer than 100 at the end of 2021, the executive added.

MOUNTAIN PARTNERS

In 2021, Mountain Partners launched Mountain Green Fund, a venture capital fund oriented to Latin America and the United States, focusing on investments aimed at directly or indirectly reducing carbon footprints. The goal is to invest US$100mn in the region.

“We have identified several promising startups that meet our investment criteria,” says Caniggia.

The main verticals the fund focuses on are carbon abatement technology (carbon-tech), sustainable agriculture (ag-tech) and sustainable mining technology.

The fundraising process for the Mountain Green Fund has raised US$30mn of the US$100mn forecast.

Mountain Partners Switzerland recently committed to investing 100% of the profits generated in its First Fund Portfolio in Chile – formed by the firms Políglota, Zapping, Capitalizarme and Destácame, among other companies – in the Mountain Green Fund, which would speed up the fundraising process.

Mountain Partners' objective is to close investments with a total of 10 startups from Latin America and the United States focused on green technology next year.

The company expects to announce its first investments in the green portfolio before the end of this year.

In addition to the green fund, Mountain Partners actively participates in two other funds in Latin America: Nazca VC México and EWA Fund.

Last year, Mountain Partners partnered with Draper Startup House to invest in startups. Draper works with early-stage entrepreneurs and has offices in Argentina, Chile, Uruguay and Miami, and plans to open new offices in the region. 

"There is a very optimistic expectation of growth in the remainder of the year," adds Caniggia.