VC Funding Trends in Nature Tech — Report 2024
Insights into Nature Tech VC Funding Trends — From 2020 to 2023
The VC Funding in Nature Tech report follows the Nature Tech Report 2023, the flagship study established by Nature4Climate in which we participated, providing an overview of major trends related to nature-based solutions. The VC Funding in Nature Tech report focuses on the evolution of VC investments in this sector between 2020 and 2023.
VC Funding in Nature Tech Report abstract: Despite the overall slowdown in venture capital in 2023, the nature tech market has seen strong momentum throughout 2023, with higher invested amounts (+18%), more deals (+27%), a very active early-stage segment (+35%), and a better balance between verticals as well as geographies.
Nature Tech Definition
Nature tech encompasses any technology and innovative solution that enables the deployment and scaling of nature-based projects or aims to protect, restore, and sustainably manage natural and semi-natural ecosystems.
While climate tech focuses primarily on reducing greenhouse gas emissions and mitigating the impacts of climate change, nature tech is more comprehensive, addressing a wider range of environmental challenges, including habitat destruction, deforestation, soil degradation, water pollution, and species loss.
Nature tech startups can be classified into 7 verticals:
- Food and agriculture: regenerative agriculture, precision farming, nutrient management and biofertilizers, soil health monitoring, integrated pest management, sustainable livestock management, plant biotechnology.
- Land and forest: agroforestry, sustainable forest management, precision forestry, bio-geoengineering.
- Ocean: sustainable blue economy (fisheries, aquaculture…), algae production.
- Water conservation and management: smart irrigation systems, wastewater treatment, and water purification technologies.
- Biodiversity and nature restoration: protection and restoration of wildlife, forests, grasslands, peatlands, oceans, coastal zones — mangroves, wetlands, seagrasses, coral reefs.
- MRV and biodiversity credits: biodiversity data collection and monitoring, digital MRV for carbon and biodiversity, biodiversity credit exchange.
- Green supply chain: supply chain traceability, land titling management.
The Nature Tech Report
In 2023, Serena teamed up with the organization Nature4Climate, which brings together about twenty environmental organizations from around the world. All of these organizations are dedicated to promoting nature as a solution for a more sustainable, equitable, and nature-friendly future.
Within this framework, Xavier Lorphelin, founder and Managing Partner of Serena, was the first VC to contribute to the Nature Tech Report 2023, the flagship study established annually by Nature4Climate, providing an overview of major trends in nature-based solutions. Serena’s contribution highlighted the investment dynamics within the sector. The report, published in October 2023, offered a comprehensive outlook on the Nature Tech market and venture capital investments from 2018 to 2022.
In March 2024, Serena established a new report offering an updated analysis of venture capital funding and trends in nature tech for 2023.
VC Investments in Nature Tech
- Key Figures
2023 investment: VC funding in nature tech startups increased by 18%, from $1.56bn in 2022 to $1.85bn in 2023.
Number of deals: The number of nature tech deals increased by 27%, from 162 in 2022 to 205 in 2023, a positive sign of the growing maturity of the nature tech market.
Early-stage: Early-stage VC investments (from pre-seed to series A) increased by 35%, from $488m in 2022 to $656m in 2023, and drove most of the growth in nature tech funding.
Late-stage: Late-stage VC investments grew by 10% despite the overall VC downturn.
Verticals: Even though “Food and Agriculture” remained the largest category, VC funding in 2023 was more well spread around the different nature tech verticals, such as “Water Conservation and Management”, “Ocean” and “Land and Forest” which significantly increased their funding amounts in 2023. In terms of early-stage investments (pre-seed to series A), the “MRV and Biodiversity credits” was the top category with $204m in 2023.
Geography: Europe and Asia have been catching up with the United States regarding VC funding in nature tech. In 2023, Europe even surpassed the United States for early-stage funding.
Cumulative nature tech funding: Since 2018, nature tech companies have raised $9.31bn of venture capital funding across 910 deals.
2. Analysis
2023 investment: VC funding in nature tech startups increased by 18%, from $1.56bn in 2022 to $1.85bn in 2023.
Number of deals: The number of nature tech deals increased by 27%, from 162 in 2022 to 205 in 2023, a positive sign of the growing maturity of the nature tech market.
As a comparison, climate tech funding amounted to $32bn in 2023, down 30% from 2022 (source: CTVC). Deal activity decreased in 2023 for the first time since 2020, with deal count down 3% compared to 2022.
Early-stage: Early-stage VC investments (from pre-seed to series A) increased by 35%, from $488m in 2022 to $656m in 2023, and drove most of the growth in nature tech funding.
The growth in early-stage VC funding was driven by the number of deals (176 early-stage deals in 2023 versus 129 in 2022) whereas the average investment size for seed and series A rounds remained relatively flat between 2022 and 2023 ($2.74m for seed and $9.47m for series A).
Late-stage: Late-stage VC investments still grew by 10% despite the overall VC downturn.
Late-stage VC funding in nature tech (series B and beyond) increased from $1.072bn in 2022 to $1.189 bn in 2023.
Verticals: VC funding was more well spread around several nature tech verticals, such as “Water Conservation and Management”, “Ocean” and “Land and Forest” which significantly increased their funding amounts in 2023. In terms of early-stage investments (pre-seed to series A), the “MRV and Biodiversity credits” was the top category with $204m in 2023.
In 2023, the “Food and Agriculture” category remained the largest in terms of funding amounts ($523m). However, its share declined from 63% of nature tech VC funding in 2022 to 28% in 2023.
Several categories significantly increased their funding amounts in 2023: “Water Conservation and Management” from $48m in 2022 to $367m in 2023, “Ocean” from $68m to $290m, “Land and Forest” from $37m to $164m.
The “Biodiversity and Nature restoration” was boosted in 2023 by two late-stage deals, but overall remained under-invested.
In terms of early-stage investments (pre-seed to series A), the “MRV and Biodiversity credits” was the top category with $204m in 2023, representing 31% of early-stage VC funding in nature tech.
Geography: Europe and Asia have been catching up with the United States regarding VC funding in nature tech. In 2023, Europe even surpassed the United States for early-stage funding.
The United States remains in 2023 the first geography in terms of venture capital funding in nature tech startups with $799m invested, but it accounts for “only” 43% of funding compared to an average of 78% for the 5 years 2018–2022. Europe and Asia, with $457m (25%) and $345m (15%) respectively, are catching up.
In terms of number of deals, the United States has been overtaken by Europe which recorded 70 deals in 2023 versus 69 in the United States.
Europe was the most active geography for early-stage VC funding with $273m invested, accounting for 42% of funding compared to 37% for the United States. Such dynamism might be explained by more ambitious European policies and regulations, such as the EU Nature Restoration Law, to align with the objectives of COP15, held in Montreal in 2022, to protect and restore 30% of the world’s degraded ecosystems by 2030.
3. Methodology
The objective of this report is to quantify and analyze venture capital (VC) funding in nature tech startups since 2018. A database of 910 venture capital transactions in nature tech startups (excluding grant and debt financing) was extracted from Crunchbase using keywords specific to the 7 nature tech categories. These deals represent a total amount of VC funding equal to 9.31 B$ for the 6 years 2018–2023.
Each transaction includes the following information:
- Name, location, and description of the company
- Transaction date and amount
- Stage of investment (pre-seed, seed, series A, series B, series C…)
- Nature tech category
It should be noted that the current database does not take into account impact-related criteria related to biodiversity, climate change or societal, because these criteria still need to be explicitly measured, assessed, and reported by nature tech startups or investors.
About Xavier Lorphelin, Managing Partner and co-founder at Serena, author of the report:
● Xavier Lorphelin was the first VC in France to launch a specialized fund in AI, Data, and Deep Tech, in 2016, backing the likes of Dataiku.
● He started investing in decarbonization in 2019 with Accenta; he also backs Electra, and Descartes Underwriting (these companies are featured in Sifted’s list of future unicorns).
● He is the co-author of the Nature Tech Report with Nature4Climate and MRV Collective. This flagship report was published in 2023 and provides an overview of major trends related to nature-based solutions. He’s the first VC ever to contribute to such a report.
About Serena
Serena is one of Europe’s leading venture capital funds, with $750m under management.
Founded in 2008, Serena invests at early stages, from seed to series A, and supports the success of innovative and ambitious entrepreneurs to service a better world. Born of the profound conviction that a venture capital fund should be at the service of its portfolio companies, Serena has set up the largest operational support team in Europe and the most active startup community, the Serena Squad, with more than 550 active C-levels.
Serena has a strong focus on AI, SaaS, Climate Tech, Digital Transformation, and Impact. Serena has invested in more than 100 startups with several international success stories such as Dataiku, Malt, The Fork, Electra, Descartes Underwriting, Accenta, Lifen, and AramisAuto. Combating climate change, protecting biodiversity, promoting sustainability, diversity, and inclusion are at the heart of Serena’s DNA.
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