remove and the Sustainability in Business Lab (sus.lab) at ETH Zurich have published a new report providing carbon removal startups with insights on navigating venture capital fundraising.
This report builds on remove’s vast experience and communication with over 150 carbon dioxide removal (CDR) startups in Europe and India, looking to address the critical challenge of securing CDR funding for solutions that are working towards commercialization.
Together with ETH Zurich’s sus.lab, remove conducted exploratory interviews with 15 investors who are already involved in CDR and 5 startups that have successfully secured funding. These interactions were summarized in a report that offers 8 key takeaways.
The first thing pointed out in the report is that startups must keep in mind the diversity and niche preferences of CDR investors, tailoring the fundraising efforts to match these needs.
According to the report, investors are driven by scientific and social CDR needs, prioritizing them over any policy-driven moves, which is why startups need to have a viable business model that won’t rely on a policy intervention.
Another feature favored by investors is the ability of startups to show scalable, B2B-like business models that extend beyond the voluntary carbon market.
In the absence of a validated business model strategy or recurring revenue, the report states that CDR developers should work on building deep customer engagement and strategic relationships, highlighting these efforts to prove signs of traction.
Investors also tend to look for a solid techno-economic assessment (TEA), especially if presented by startups that are in the early to mid-development stages.
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With these preferences in mind, startups can further fortify their credibility in the CDR market by presenting objective, realistic, and justifiable bottom-up assumptions in their strategies and forecasts.
CDR companies run by teams that combine expertise in technical, commercial, and strategic operations are likely to be considered by investors as fit to navigate the complex CDR market.
Lastly, to be able to attract funding, CDR startups need to focus on establishing effective communication and relationship building with investors, prioritizing these interactions over those with other sectors.
Read more: DOE Considering Funding Cuts For The Two Largest DAC Projects In The US
