‘Deepwashing’ risks dampening progress in European climate tech investing
Today, deep tech venture capital companies – companies that create cutting-edge, transformative technologies based on scientific breakthroughs and R&D, and bring them to market – are finally attracting more attention from the venture capital community. From synthetic biology to quantum computing and battery recycling technology, today’s most innovative deep tech companies are creating solutions that have the potential to transform entire industries and address pressing global challenges.
Thousands of these exciting deep tech startups are based in Europe, and their founders are finally finding capital more readily available on home turf. European investments in deep technologies remain strong, despite a larger drop in the level of financing. The latest from Dealroom European Deep Technology Report indicates 60% increase funding levels over the past 24 months, compared to 2020. This boom is also reflected in patents pending and R&D spending on Moonshot technologies.
This is what we mean by “deepwashing”: companies without much evidence of meaningful R&D or real science presenting their product as transformative.
European climate-focused deep tech companies are a crucial part of this growing sector, and growing investor interest is a huge plus. However, the arrival of deep tech into the zeitgeist has been accompanied by a worrying increase in the number of climate-focused startups positioning themselves as more “deep tech” than they actually are. This is what we mean by “deepwashing”: companies without much evidence of meaningful R&D or real science presenting their product as transformative. This is a problem because it leads to vital funding being directed towards startups that will never fundamentally change the game.
In contrast, true deep climate technologies are raising funds to enable them to deliver technologies that can decarbonize the global economy. And they are necessary. As noted in a recent Report from the International Energy Agency (IEA), nearly half of emissions reduction solutions in 2050 will come from technologies that are currently in the demonstration or prototype phase – and major innovation efforts must take place this decade in order to commercialize these new technologies in time. This is a mammoth task, but Europe is ready to take it on: in 2022, 42% of all climate technology dollars have been raised on the continent, with investment in the sector growing 26% faster than in the United States.
Founders must stop deepwashing
As European investors specializing in climate technologies, we are receiving deepwashing proposals from some solar, heat pump and micromobility startups, as well as some food technology companies.
We regularly see teams using a lot of words about their technology, but when you actually look at their company’s product, there is no fundamental technological innovation. The product may be a slightly better application of technology already on the market today, or a series of tiny changes that may seem impressive, but in reality the company isn’t changing the dial.
