London emerges as “world leader” in building low-carbon technologies

As the world looks to reduce its reliance on carbon, London has emerged as the “world leader” in building the technologies and innovations needed to enable this “pivotal” transition.

Between 2017 and 2022, a report from venture capital firm A/O Proptech shows that more than half of the deals made into low-carbon technologies and startups, took place in Europe, with London topping the list.

The UK capital soared ahead of tech hub “behemoth” San Francisco in terms of deal count, and it was one of five European cities to dominate this space during this time period. Meanwhile, the greatest amount of investment into low-carbon technologies was concentrated in North American startups (80 per cent).

Between January and November 2022, venture capital funding into green building design, building materials procurement and lower carbon construction methods hit $2.2bn. It is a sector that has been steadily increasing over the past five years and which has seen a combined annual growth rate of 84 per cent.

This growth has been fuelled largely by investors looking to address the growing carbon problem, improved and increased legislation, as well as the need to swap traditional materials for low carbon, bio-based or recycled alternatives becoming ever more urgent.

More than $4.5bn of early-stage capital was invested in companies directly focusing on decarbonising the architecture, engineering and construction sectors between 2017 and 2022, involving more than 452 deals, according to the report from A/O.

As total investment reached a new record in 2022, there has also been a shift to slightly later stages of investment with more deals being done at Series A and B, than at Pre-Seed to Seed. This suggests that parts of the low carbon construction segments are maturing.

Close to 40 per cent of deals in 2022 were estimated to be Pre-Seed and Seed, compared to over 80 per cent in 2017. The proportion of Series A and B deals, which “invariably involve bigger sums”, has increased to nearly 50 per cent in 2022, from 10 per cent in 2017.

Gregory Dewerpe, founder and chief investment officer of A/O Proptech, commented: “The built environment is one of the biggest contributors to carbon emissions and there is a growing recognition that we need to tackle this problem urgently.

“New technologies that can lower emissions during the construction process are vital from design software, to more sustainable building materials to technologies that speed up and accelerate construction. All of these new technologies can play a part in reducing the overall impact of the built environment.”

By Matthew Neville – Correspondent, Bdaily