A surge in interest and investment in deep tech companies in Europe is powering advancements in transformative technologies that hold the potential to address global challenges and revolutionize industries. However, alongside this boom, a concerning trend known as “deepwashing” has emerged, jeopardizing the progress in climate-focused deep tech investing.
The rise of deepwashing poses a threat to the progress of European climate tech investing. It diverts crucial funding away from genuine deep tech companies capable of driving decarbonization efforts and delivering transformative solutions. As the need for innovation in the climate tech sector intensifies, it is essential to differentiate between truly groundbreaking technologies and those merely masquerading as such.
The Rise of Deepwashing
Deepwashing refers to the misleading practice of companies marketing themselves as deep tech innovators without substantial evidence of meaningful research and development (R&D) or scientific breakthroughs. These companies pitch their products as transformative despite lacking the necessary technological innovation.
This phenomenon is particularly prevalent in the climate-focused deep tech sector, where startups position themselves as more advanced than they truly are. As a result, vital funding is directed towards startups that fail to make a significant impact in decarbonizing the global economy.
The Importance of Genuine Climate Deep Tech
Genuine climate deep tech companies are crucial to achieving emissions reduction goals and transitioning to a decarbonized economy. According to the International Energy Agency (IEA), nearly half of the necessary emissions reduction solutions in 2050 will come from technologies that are still in the demonstration or prototype phase. Therefore, significant innovation efforts are needed within this decade to bring these technologies to market in time.
Europe is at the forefront of climate tech investment, with 42% of all climate tech dollars raised in 2022 originating from the continent. Investment into the European climate tech sector is also growing at a rate 26% faster than in the United States.
Addressing the Issue
Specialist European climate tech investors are increasingly receiving pitches from startups engaging in deepwashing practices. These pitches often include elaborate descriptions of technology, but upon closer examination, the products lack genuine technological innovation. Instead, they may only offer minor improvements on existing market technologies or a combination of incremental changes that do not create a significant shift in impact.
In conclusion, as Europe experiences a surge in deep tech investment, it is vital to ensure that genuine climate-focused deep tech companies receive the support they need. By identifying and avoiding deepwashing practices, investors can prioritize funding solutions that have the potential to make a significant impact in mitigating climate change and creating a sustainable future.