“I am increasingly becoming irrelevant in the public conversation,” a leading climate scientist told Heatmap’s Robinson Meyer last month, “science is no longer even a dominant part of the climate story anymore, and I think that’s great.”
It’s impossible to overstate the transformation of the conversation about climate change. Just to zoom in on venture capital: there were 47 other recorded climate technology transactions in 2007, when we made our first investment in the aptly-named Climate Corporation. And I didn’t even know that “grant” was a deal type in Pitchbook. Last year, climate technology was a $20 billion private markets vertical, 25% of all 2022 venture deals, and climate-focused venture firms now manage roughly $100 billion in funds. Within financial institutions, climate change has meanwhile shifted from a possible CSR focus area to a key risk management component and a thematic element of most if not all business lines.
In that same provocative Heatmap piece on “the end of climate science,” Meyer eventually arrives at a sensible but exciting conclusion. Science is never over, but “gradually, then suddenly, a field once defined by urgent questions and dire warnings has become practical and specialized.”
In this shift, we see a critical need for financial systems change and an enormous opportunity for Embedded Finance: we now know what needs to be done. We have the tools and technologies required to implement the transformation that the climate crisis demands. The missing piece in so many cases is finance — accessible, specialized, and responsive financial services that can empower transformation in large, often idiosyncratic industries.
Regenerative agriculture is a perfect encapsulation of this trajectory. Some regenerative practices like composting and crop rotation date back to the Romans, and others have been central to indigenous farming cultures for hundreds of years. In the past decade, regenerative agriculture has become vastly more salient in the popular and industry consciousness. Mass media has played an important role here — we think narrative tools are vastly underrated drivers of systems change — as has the internet’s democratization of technical knowledge. But the real tipping point was the scientific literature on the carbon sequestration capacity of healthy soil. Agricultural land is 38 percent of the land on earth and, in Europe alone, agriculture soils (in the top 20cm) store an estimated 11 GT of CO2. Healthy soil isn’t only a carbon sink either. It’s more biodiverse, more resistant to erosion, retains water better, and ultimately produces more nutrient-rich food.
Popular salience, accessible tools, a robust evidence base — we now know what needs to be done. That’s where Agreena, our latest portfolio company, comes into the picture. Everyone benefits when farms adopt regenerative agriculture practices, but that transition requires capital expenditure that most farmers simply cannot afford. Agreena fills in the gaps.
Agreena is backed and built by industry experts. Simon, Julie, and Ida, have created a soil-up, end-to-end infrastructure that supports every stage of a farm’s transition to regenerative practices. They provide cutting-edge tools for implementation and monitoring, and also empower farms to create a sustainable revenue stream from the environmental benefits they generate. Agreena embeds with farmers from recruiting and technical assistance through to soil analytics and, importantly, financing via carbon credit sales. Agreena manages the verification, certification, and issuance of high-quality carbon certificates and facilitates the certificate sales to corporations and other institutions seeking to offset or inset carbon emissions.
Since its founding in Copenhagen in 2018, Agreena has grown its presence to 16 European countries, with over 1.5 million acres under management. In 2022 alone, the company grew 10x and developed a robust multi-channel go-to-market, including via its partnerships with institutions such as IPSO Agriculture, Danish Agro, and Balam Agriculture.
The Agreena platform is generating more healthy soil, building more financially healthy farmers, and promoting more rigorous and transparent global carbon markets. We think this is just the first stage of the useful financial tools that they can deliver to strengthen farms and empower regenerative agriculture. Anthemis is honored to contribute to this important work.
We’ve always believed that finance has a pivotal role to play in mitigating climate change. It has never been easier to express that viewpoint practically and we’re excited to engage with entrepreneurs harnessing financial systems to arrest the degradation of the earth.
Our investment in Agreena’s €46m Series B alongside lead investment HV Capital, AENU, and others is another kind of milestone for Anthemis. In addition to continuing to grow our robust early-stage investment infrastructure, we have been developing our later-stage investment team, track record, and portfolio, with over $170m invested in later-stage companies to date. Agreena is the latest investment made by our Growth team, directly following our fall 2022 investment into Grover, a technology subscription company powering a new dimension of the circular economy.
We actually believe that there has never been a better time to invest in growth-stage financial services companies, and we look forward to sharing more of our views on the opportunity in growth markets over the next few months.