It was certainly a year of change for green technology.
Sustainability Tech – including technology related to energy, climate, ESG, renewables, and carbon reduction – moved from a “nice to have” industry into a pillar in the overall tech scene.
What drove that change? In short, regulation, legislation, and business sentiment.
On the national level, the Inflation Reduction Act of 2022 included a $369 billion investment into combating climate change. The Political Economy Research Institute (PERI) estimates the bill will create over 9 million “climate tech” jobs by 2032, bringing with it new innovation opportunities for startups in the space.
The regulation landscape was also transformed over the last year. Public companies are now beholden to new compliance measures by the SEC (The U.S. Securities and Exchange Commission) and its ESG reporting rules. That has put a new spotlight on the role B2B, sustainability-focused startups can play in the overall corporate space. .
Venture capital dollars are following.
While VC funding has been rather sluggish over the second half of 2022, climate-related funding grew and represented one-quarter of all VC invested globally over the last twelve months, according to a recent PwC report.
Consumer and business sentiment has also changed.
“It’s been extremely intense the way people’s mindsets have changed. While it may seem like people don’t want to talk about sustainability, it doesn’t matter. Regulations are not coming, they’re already in place,” said cove.tool’s Sandeep Ahuja.
That has been good news for cove.tool, a B2B software tool for designing greener buildings. Cove.tool – backed by Footprint Coalition, Knoll Ventures, and Mucker Capital – is one of the fast-growing climate startups in the Southeast.
We caught up with Ahuja and others in the Southeast sustainability space to better understand how 2022 unfolded for the industry. The general consensus is that while macroeconomic indicators paint an uncertain picture, those in the sustainability tech space are ready to grow.
WHO MADE MOVES THIS YEAR
Cove.tool ended 2021 with the news of a $30 billion Series B funding round. This year, the Atlanta-based startup has been busy integrating its technology into projects ranging from giant research university buildings to tiny houses.
That broad scope of projects using cove.tool showcases just how big of an opportunity is presented when industries like construction get serious about “greening up” their act.
“2022 was all about building and putting all the right pieces in place so that we can sprint in 2023.” Ahuja told Hypepotamus.
A lot of the 2022 growth she mentioned came in the form of hiring. As a sign of its growing influence in the Atlanta startup scene, cove.tool was able to attract talent from other well known local startups this year, including Krystl Black (new VP of Marketing who previously worked at RoadSync) and VP of Customer Success Jon Smith (who was instrumental in building up Calendly and Mailchimp).
Cove.tool wasn’t the only Southeast sustainability startup turning heads this year. This year, Atlanta-based JTEC Energy raised a $30 million venture round and Durham-based FlexGen raised a $100 Series C as the quest for more sustainable energy sources continues.
Other startups looked to shake up the legislative scene.
Currently, the Georgia legislature is reviewing policy changes to better position the state for electrification. Aaron Luque, founder and CEO of the Atlanta-based EV charging startup EnviroSpark, spoke last month in front of the Georgia Joint Study Committee on the Electrification of Transportation to explain what changes could help move the state forward as a true EV hub.
On top of advocating for new laws, EnviroSpark penned some major successes of its own this year. The team will soon be part of rolling out a plan to electrify all of the federal buildings in the Southeast, Luque told Hypepotamus.
A LOOK AHEAD
Largely, those we talked to in the industry are optimistic that the sustainability tech space will grow in 2023. Most of that optimism stems from increased funding into the space and the region’s overall investment into renewable energy innovation.
“Atlanta has to play to its strengths…in the near term, that’s focusing on enterprise software,” Miguel Granier told Hypepotamus.
On top of cove.tool, B2B startups like Joulea, 4Earth, Quest Renewables, and a dozen other solar-focused startups are transforming the Southeast scene by working directly with other companies and industries looking to go green.
Still, the general industry has room to grow, says Jennifer Singh, co-founder of sustainability startup community The Understory.
“While climate and sustainability tech is seeing record funding, many segments have been overlooked. I see potential for areas like the circular economy, water tech and adaptation tech gaining in popularity next year. In Atlanta, we have many early-stage companies that are gaining traction in these areas that will likely grow and scale in the year ahead,” she told Hypepotamus.