Australia’s climate tech industry is booming, but it could bust without funds

Australia is a land of natural wonders, from the Great Barrier Reef and Daintree Rainforest to Kakadu National Park and the Blue Mountains. But because of the country’s naturally dry and biodiverse climate, it’s particularly vulnerable to extreme weather events that have been exacerbated by climate change. All of those wonders have been affected in recent years by bushfires, extreme heat waves, rising temperatures and floods. 

Queensland is dealing with the worst flooding in history in the aftermath of Cyclone Ilsa. That’s on top of the aftermath of La Niña last year, which brought severe flooding and record-breaking rainfall to Eastern Australia. And before that, during the Black Summer of 2019 and 2020, the country lived through its most catastrophic bushfire that burned over 30,000 square kilometers of land and killed 3 billion animals. Add to this, around 90% of the Great Barrier Reef’s coral has been bleached white from rising sea temperatures.

Australia has experienced its fair share of a climate catastrophes, which has only fueled its climate tech startups into action. 

The island continent is sparsely populated throughout most of its flat, dry, sunny center — referred to as the Red Centre — and has the perfect conditions to collect solar and wind energy. Large-scale solar and wind farms have spread across the country in recent years, causing renewable energy generation to increase from 16% in 2011 to 32% in 2022. Australia’s government has set a target of getting its grid to 82% renewable by 2030.

“Now there’s this perfect confluence of environmental issues, policy support and technological readiness that makes climate tech, particularly coming out of Australia, well positioned to really hit the next level of scale over the next five years,” said Jack Curtis, chief commercial officer at Neara.

But lack of capital needed to get startups to a scale-up phase could block access to Aussie innovation — an issue that is making itself known across the startup sector.

Neara works with utilities companies worldwide. It recently raised another USD$24 million to help its customers — like Southern California Edison — future-proof their infrastructure by creating 3D models to reflect and simulate how utility assets behave in the real-world environment in scenarios like drought or flooding.  

The hype for climate tech in Australia is real, as long as it can be sustained. Local VCs are most excited about the sector this year, with climate and cleantech dominating in funding and deal count in Q3 2023. Startups in that sector raised $116 million in the third quarter, an increase from the $60 million invested in the segment in Q2 and $40 million in Q1, according to Cut Through Venture data. [Note: Numbers are in AUD unless otherwise stated.]

It’s been an upward trend for the past couple of years. In 2022, climate tech in Australia raised $553 million in capital, compared to $338 million in 2021, according to a report from Climate Salad, a community of Australian climate tech stakeholders. The goal was to raise another $1.5 billion this year, but the sector has fallen short due to delayed and unsuccessful capital raises, according to company co-founder Mick Liubinskas. 

“We have a large number of companies that are looking at a Q1 2024 raise and more capital from international investors,” he said. 

Startup founders say securing big checks is their biggest hurdle, but it’s the most important one to mount if they want to scale and survive.