Momentum to tackle the climate crisis has been building across the world, with progress being made at every front. Bold new emissions-reduction targets, more stringent regulations and a shift to ESG in the private sector have spurred massive investments. Climate tech is only just starting to heat up and we want to support that growth.
The global climate tech market size is estimated to be at US$16.9 bn and is expected to reach US$147.5 bn by 2032, growing at a CAGR of 24.2%. The lion share of funding has flowed to startups in energy, mobility, food, agriculture, land use and water and industry/manufacturing sectors.
As our environment reaches a tipping point, climate tech is set to play an increasingly important role in enabling and accelerating transformation at the speed and scale required to address the climate crisis.
We have advised on over 30 transactions within the climate sector.
Bringing together science and engineering, deep tech has the potential to create significant impact on industries and businesses, providing solutions to complex problems that were once unimaginable. From healthcare to finance, the use of advanced technologies such as artificial intelligence, blockchain, and robotics have transformed traditional methods of operation, allowing for greater efficiency and sustainability.
In finance, deep tech is facilitating faster and more secure financial transactions, while in agriculture it is enabling precision farming techniques using drones and satellite imagery to optimise crop yields.
According to Dealrooms 2023 Deep Tech report, European deep tech start-ups raised $17.7B in 2022, 22% less than 2021 total, but still +60% on 2020 and was the 2nd best performing segment behind only energy year on year.
Deep tech has shown resilience in recent market turmoil suggesting that investment in deep tech is likely to continue in the coming years, as businesses and investors recognise the potential for transformative innovations and significant returns on investment.
The following are just a few of the deals we have advised on within this sector:
As Africa’s economy continues to recover from the pandemic, there are positive indications to suggest a robust M&A market is on its way. Economic sentiment is healthy, capital is flowing in, and companies are maturing and looking to expand.
In the last few years, we have seen significant changes; funding is pouring in at an unprecedented rate, and large funding rounds are becoming increasingly common. Last year alone we saw nearly $300m invested, an impressive figure considering this was the approximate total amount of funding recorded in the five years from 2015 to 2019. Africa has been described as the fastest-growing continent for foreign direct investment, ideal for investors.
Beyond deals involving large private companies and big multinationals, we’re likely to see the continued rise of locally led M&As as a growing number of African entrepreneurs are launching fast-growing companies and looking for ways to scale.
In the last few years, we have been on the frontlines facilitating deals and monitoring new developments as these markets continue to transform.
We have advised on over 10 transactions within these markets, where our landmark deals include:
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Founders of leading tech banks
*Deals by founders and partner at DAI Magister and prior
While drones have been around for a relatively long time, their transformative potential within the commercial realm is only now being realised. In the United Kingdom alone, the deployment of almost 1 million drones is expected to contribute an estimated £45bn to the economy by 2030, with potential net cost savings estimated at £22bn. This will result in a reduction of 2.4 million tons of carbon emissions.
Fintech investment surged to over $1.5bn in 2021 and 2022, with 85% of it flowing to companies in the B2C fintech segment, according to our estimates. This means that less than 15% of total investment went to traditional banks undergoing digital transformation and the start-ups building the infrastructure needed to sustain such widespread digitalisation.
Despite this disparity, the ongoing adoption of digital financial services and the increasing commitment of banks to embrace digital transformation presents a compelling opportunity for Africa’s overlooked banking infrastructure start-ups to emulate the success achieved by the B2C fintech segment.
With the shift towards renewables and net zero becoming ever more urgent, the solar manufacturing industry presents an invaluable opportunity for governments and private investors to participate in the energy transition and positively impact local economies by creating jobs and fostering climate tech hubs – all while realising attractive returns.
Our latest blog highlights that despite certain obstacles climate fintech has the potential to revolutionise the entire climate tech industry and accelerate the growth of climate tech initiatives by providing the necessary financial support, data analytics, and risk assessment tools.
The Gulf States are in a favorable position to capitalise on climate tech opportunities due to their increasing oil revenues and emphasis on diversification. Four of the world’s top ten Sovereign Funds are based in these countries, and they have been actively participating in private markets, establishing themselves as a top investment and commercial hub.
While the next-gen hydrogen (H2) economy is still in its infancy, it is attracting abundant interest from strategic and financial investors alike. The current H2 investment pipeline exceeds $240bn through 2030, an investment increase of 50% since November 2021.
Investors are exercising greater caution when it comes to committing significant amounts of capital to Africa, despite the existence of numerous African companies with considerable growth potential that require additional funding to expand. This has resulted in nearly all significant African growth companies compelled to consider potential M&A mergers or exits alongside their fundraising plans
Climate tech investment fell by 56% in Europe, similar to the global decline, with almost every sector attracting less capital and the number of funding rounds also decreased significantly in Q1 2023 compared to the same period last year.
Investing in Nigeria has become harder due to economic uncertainty, inflation, managed exchange rate concerns, and political uncertainty. However, our recent blog post explains that some macro factors are expected to improve gradually in 2023, offering hope for Nigeria’s tech businesses. We anticipate that the next $1bn of capital will fuel growth and expansion in certain key tech sectors.
The electric vehicle (EV) revolution is rapidly gaining momentum, with the number of EVs on the roads expected to skyrocket over the next 15 years. According to a joint report from Eurelectric and Ernst & Young, 130 million EVs will hit Europe’s roads by 2035
We expect the potential in commercial and industrial solar in Africa to be significant, with the World Bank estimating a required cumulative investment of $90bn by 2030 for solar mini grids for Africa, making it a significant opportunity for investors to support the development of renewable energy while generating attractive returns.
We can see Space Tech investment surpassing $7.5bn this year, despite the downturn across many other sectors in the market and the global space industry is expected to reach $1.4tn by 2030, and these current levels of investment will have to persist and accelerate to reach that goal.
Concrete is the second most used material in the world after water, and it is responsible for producing around 8% of global greenhouse gas emissions, making it the world’s third-largest carbon dioxide emitter. This has led to an urgent need to decarbonize the concrete industry in order to meet the UN’s net zero. Our latest blog explains why we think the race towards a greener $300bn concrete market is already underway, with investment in the industry expected to grow at double-digit rates.
Investment returns can suffer due to currency devaluations and inflation, but some sectors can still generate value. In Egypt, we evaluated key factors that drive resilience in this macro environment and identified non-bank lending and payment sectors as key winners that could see $500m in transaction value in 2023.