How Europe’s green tech ‘scale-ups’ can help tackle climate change

_von der Leyen

Ursula von der Leyen, President of the European Commission. Co-operators:
Photographer: Etienne Ansotte
European Union, 2020
Source: EC – Audiovisual Service

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Johnny Wood, Senior Writer, Formative Content


  • The pandemic has disrupted the growing momentum of Europe’s tech innovators in tackling climate change.
  • Europe lags behind the United States in getting green innovations to scale.
  • Emissions-busting technologies are key to achieving ambitious climate targets.
  • We must remove barriers to finance to maximize sustainable technologies.

The seeds of innovation have long flourished in Europe and its start-ups were set to enjoy unprecedented growth, supported by plentiful seed funding and a political backdrop that prioritized both a digital and green agenda. Then came coronavirus.

Innovators seeking investment in their “scale-ups” – start-ups seeing accelerated growth after demonstrating a product-market fit – which often require complex and long-term investment were suddenly faced with new challenges.

The current uncertainty has left Europe’s economy facing difficult times, and this is particularly true for start-ups. But while the previous funding glut may have dried up, at least in part, the continent’s strong innovation ecosystem is ready for the recovery.

 

A new World Economic Forum report, Bridging the Gap in European Scale-up Funding, explores the challenges facing technology innovators seeking to regain lost momentum.

Stalled momentum

Europe’s start-ups generated around 2 million new jobs in 2019, more than any other sector, according to European Commission-backed platform EuropeanStartups.co, and new tech sector positions increased by 10% each year to the end of the first quarter of 2020.

The Forum report looks at how recovery from the crisis can realign governments, start-up founders and investors to develop innovations that address climate change and digitalization.

Europe has strong fundamentals for innovation, growth and economic prosperity, ranging from a strong education sector to firm regulatory systems. Forward-thinking policies like the Green New Deal aim to decarbonize the continent’s economy by 2050, for example, and the European Commission’s Sustainable Finance Action Plan looks set to transform the region’s financial sector.

Six objectives of the EU
Six objectives of the European Union.
Image: World Economic Forum Bridging the Gap in European Scale-up Funding

Climate scale-ups, and green-tech companies specifically, are a vital part of achieving Europe’s green transition. These companies contribute sustainable products, services or programmes across a range of sectors, including power generation, raw materials, transport, agriculture and pharmaceuticals, among others, helping to meet the European Commission’s six environmental objectives, shown in the diagram above.

Mind the gap

Yet Europe’s start-ups lag behind their US counterparts in their ability to scale up, especially with new technologies needed to realize the continent’s ambitious climate goals. US investment in start-ups remains 3.4 times greater than in Europe, with a quarter of companies reaching scale, compared to just one in eight European companies reaching scale, the report shows.

Since 2015, the US has seen 2.8 times more billion-dollar tech IPOs than in Europe, partly due to the liquidity offered by US stock markets, the abundance of US venture capitalists and the high investment appetite of asset-rich US pension funds.

What’s the World Economic Forum doing about climate change?

Climate change poses an urgent threat demanding decisive action. Communities around the world are already experiencing increased climate impacts, from droughts to floods to rising seas. The World Economic Forum’s Global Risks Report continues to rank these environmental threats at the top of the list.

To limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policy-makers, and civil society advance comprehensive near- and long-term climate actions in line with the goals of the Paris Agreement on climate change.

The World Economic Forum’s Climate Initiative supports the scaling and acceleration of global climate action through public and private-sector collaboration. The Initiative works across several workstreams to develop and implement inclusive and ambitious solutions.

This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions to transitioning to a low-carbon, climate-resilient economy. CEOs use their position and influence with policy-makers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.

Contact us to get involved.

Here are 4 key areas in which investors, entrepreneurs and policy-makers need to come together to help close the investment gap for tech scale-ups.

1. Streamlining access to public funding for innovative start-ups

While public money offers a way for governments to attract top entrepreneurial talent, securing public funding can involve start-up owners navigating a minefield of bureaucracy and different national requirements. Obtaining public funding must be made more efficient and accessible to entrepreneurs.

2. Applying blended finance models

Developing cutting-edge technology often involves lengthy research and development commitments, both in time and capital expenditure, which require long-term funding. Europe’s venture capital funds may not be prepared to finance long development phases, so a blended approach is needed which combines both public and private funding.

3. Making it easier for new companies to partake in public-private procurement

Young companies often have difficulty competing with established corporations to sell new products and services, especially during uncertain economic times. Integrating new products into COVID-19 support packages, for example, can increase procurement opportunities for both private and public buyers, and promote closer collaboration between start-up companies in the support package.

4. Improving the voice of European growth companies in policy-making and standardization

European tech scale-ups need closer involvement in shaping the political and regulatory framework that will impact their growth and direction. Investing in industry associations can help companies treading a similar path to collaborate and help policy-makers to understand new concepts and realize their potential.

Eliminating the funding challenges facing the next generation of innovators will help foster an environment where sustainable technologies can scale up and prosper, which is vital to meet the continent’s drive to decarbonize by 2050.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year


Re-thinking citizenship education: bringing young people back to the ballot box

Where do Americans stand on immigration? They’re not as divided as you might think

From underestimation to valorization: how mobile technology is transforming global health

EU and U.S. castigate Facebook on Cambridge Analytica scandal as citizens’ data privacy goes down the drain again

The 27 EU leaders did nothing to help May unlock the Brexit talks

Yemen: Security Council backs new mission in support of key port city truce

South Sudan: €48.5 million in additional EU humanitarian aid

FROM THE FIELD: What do you want to be when you grow up? One day I will…

Denouncing attacks against Baghdad protesters, UN warns ‘violence risks placing Iraq on dangerous trajectory’

European Parliament marks EU accession prospects for Serbia and Kosovo

South Sudan: UN rights experts see little headway on peace deal amid spike in local-level violence

Nicaragua ‘crisis’ still cause for concern amid murder, torture allegations: Bachelet

Women lose most from the climate crisis. How can we empower them?

New Consumer Agenda: European Commission to empower consumers to become the driver of transition

These are the most desirable cities for overseas workers

Is Universal Health Coverage really available for all in the European Union?

Force used against protestors in Gaza ‘wholly disproportionate’ says UN human rights chief

The European reaction to the neo-fascist wind

Greece @ MWC14: Greek-born mobile champions at MWC 2014

UN rights chief denounces Burundi for ‘belligerent and defamatory’ attack on inquiry team

Coronavirus: a Disease that spreads as fastly as its fake news

European Youth Forum and youngest MEPs call on President Juncker to keep his promise to Europe’s youth

Haitian President at General Assembly calls for essential development aid as UN mission shifts away from peacekeeping

The European Green Deal sets out how to make Europe the first climate-neutral continent by 2050, boosting the economy, improving people’s health and quality of life, caring for nature, and leaving no one behind

There is huge talent in the world’s refugee camps. We must realize this overlooked potential

How do we really feel about women leaders?

Innovations for Content Professionals at the DCX exhibition 2018 in Berlin, in association with The European Sting

Coronavirus is creating retirement insecurity. These 10 steps can diffuse the timebomb of an ageing population

The EU wants to create 10 million smart lampposts

Circular Plastics Alliance: 100+ signatories commit to use 10 million tons of recycled plastic in new products by 2025

Green Deal: measures to step up the fight against global deforestation

How youth and technology can drive Africa’s COVID-19 response

The community and a decent working conditions for the young health workforce

Trailing the US-EU economic confrontation

FROM THE FIELD: Niger supporting the most vulnerable, as crises mount

These 5 charts show our shifting behaviour around coronavirus

What’s really driving corporate climate action?

Climate change hits the poor hardest. Mozambique’s cyclones prove it

From Israel’s ‘start-up nation’, 4 lessons in innovation

Monday’s Daily Brief: the cost of maternal healthcare, Sudan and Chad updates, sustainability in focus

OECD tells Eurozone to prepare its banks for a tsunami coming from developing countries

Here’s how to rebut the climate doom-mongers

Drones are saving lives in Tanzania’s remote communities

Trade: First year of the EU-Japan Economic Partnership Agreement shows growth in EU exports

UN chief urges restraint following reported Saudi-led assault in Yemen

5 steps businesses can take to protect air quality after COVID-19

The EU Parliament slams Commission on economic governance

How the tech sector can power the shift to a sustainable economy

Trash bin at the top of the world: can we prevent Arctic plastic pollution?

Eurozone cannot endure any longer youth marginalisation

European Union and African Union sign partnership to scale up preparedness for health emergencies

Turning challenge into opportunity on the course to becoming the first climate-neutral continent

‘Reef cubes’: could these plastic-free blocks help save the ocean?

Eurozone: Negative statistics bring deflation and recession closer

UN food aid to Yemen will fully resume after two-month break, as Houthis ‘guarantee’ delivery

What happens when you toss your water bottle in the trash?

Safe drinking water, sanitation, are ‘basic human rights’: new UN Water Development report

Parliament to ask for the suspension of EU-US deal on bank data

Dutch voters reject EU-Ukraine partnership and open a new pandora’s box for the EU

Progress made in UN talks to end Yemen war, Envoy lauds ‘positive and serious spirit’

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s