The Net Zero Future50 report – CEE Edition

The International Energy Agency highlights in its net zero scenarios that building new, low-emitting assets and technologies is one of four key broad sets of measures to achieve emissions reductions. Climate tech is showing strong growth as an emerging asset class globally, but the Central and Eastern Europe (CEE) region has only attracted less than one percent of global investments. 

The CEE edition of PwC’s Net Zero Future50 report, produced in partnership with Wolves Summit, presents a first look of its kind at the state of climate tech investment in 27 countries and 8 sectors across the CEE region and features a selection of 50 climate tech start-ups.

The climate tech investment landscape in CEE

Climate tech investments in CEE are showing steady growth, with more than US$1.76 bn invested between 2013 and the first half of 2021. Investments have risen from US$10.6m in 2013 to US$398m in 2020, and to over US$502m in the first half of 2021 alone. 

This rapid growth is mainly driven by the rise of megadeals (deals valued at more than USD $100m) in sectors such as Mobility and Transportation, and Industry, Manufacturing and Resource Management.

CEE Climate tech start-up funding by deal size

The CEE region as a whole only contributes approximately 3.73% of global GHG emissions. At the same time, the region’s share of global climate tech investment is just 0.79% of the total. Given that many countries in CEE are showing positive economic growth, it is crucial to ensure more funding flows to scaling up decarbonisation technologies in the region. 

Comparing climate impact against climate investments in CEE

Climate tech investments in CEE are heavily concentrated in the Mobility and Transport sector (59.8%). Most notably, between 2013 and first half of 2021 CEE start-ups in the Food, Agriculture and Land Use sector attracted just 2.26% of total funding, and those in the Energy sector a mere 1.29%.

Breakdown of investment by sector

Estonia and Lithuania-based start-ups have raised 74.8% of total CEE climate tech funding. Tallinn (Estonia), Vilnius (Lithuania), and Sveta Nedelja (Croatia) are the top three most active climate tech investment hubs in the region. Although Poland has the largest economy in the region, and it serves as a strategic hub for some industries, start-ups in Poland only raised 4.65% of total CEE climate tech funding.

Breakdown of investment by country

CEE Net Zero Future50 start-ups

Leveraging the Wolves Summit community of 8,000+ start-ups and 3,700+ investors across Europe, PwC and Wolves Summit identified over 170+ start-ups and invited them to present an application for potential inclusion in the report.

PwC ESG professionals in Warsaw then assessed the applicants against a range of indicators across three categories (maturity stage, scalability, climate impact), and shortlisted 50 climate innovators as an indicative illustration of the state of climate tech start-ups in the region.

Looking at the average start-up profile, it is clear that most start-ups are in the early stages of their journey. Only 20% of start-ups have secured Series A/B funding. The remaining 80% are either bootstrapped or operating off of seed funding or grants. Interestingly, 40% of the CEE Future50 start-ups report to have limited understanding of their technologies’ emission reduction potential.

The new report’s analysis suggests that the climate tech ecosystem in CEE is in its early days, especially when compared with more developed climate tech hubs – or other start-up hubs in general. The findings suggest that currently the right class of investor for the overall climate tech ecosystem in CEE are early-stage venture capitalists who are actively seeking to invest in pre-seed, seed, growth, and early stage companies.