Australian climate tech founders aim to raise $1.5 billion in 12 months

This ambition is almost triple the $553 million raised in 2022 by the 228 climate tech companies that took part in the survey, which collectively recorded an annual revenue of $385 million last year and on average are forecasting 88 per cent revenue growth in 2023.

The circular economy was the standout in terms of participation, accounting for one in five respondents and $81 million raised last year. It is also the market segment that recorded the highest proportion of companies with at least one female founder at 75 per cent, versus 44 per cent for the sector overall.

Agrifood companies brought in the most funding at $182 million, followed by data and finance startups at $133 million, and renewables which raised $90 million.

These numbers are higher still when considering other types of capital, at $262 million for agrifood, $249 million for renewables, $101 million for the circular economy. 

In terms of growth, the biosphere segment rose from 1.2 per cent of respondents in the prior report to 4.4 per cent this year, while the share of carbon markets companies was up by more than three percentage points to 10.7 per cent.

To illustrate the burgeoning nature of the sector, nearly half the companies have been founded since 2020 and 18 per cent have been established since 2022. A third of the respondents are at traction and only 9 per cent are at scale, although close to half already have a presence in at least one market outside of Australia.

Climate Salad reports 29 per cent of companies are pre-revenue because they are in the prototype or research stage, and of those that do have revenue only 14 per cent have annual recurring revenue (ARR) of less than $100,000; this compares to 53 per cent with ARR below that level in the previous report.

Of all the respondents, only 2 per cent have ARR of more than $10 million, and 14 per cent have ARR between $1-10 million.

"Overall, research-stage, prototype-stage and launched companies with less than 20 staff are looking to recruit for 63 per cent of new jobs in the next 12 months," the authors wrote.

"This seemingly high number is due to the fact more companies in these stages completed the 2023 founders survey.

"Only 7.5 per cent of companies aren't intending to hire in the next 12 months, indicating strong expansion of the industry and optimistic economic growth."

Climate Salad's ecosystem director Charlotte Connell said in the past year climate tech had evolved beyond building literacy around the sector to building an ecosystem, and one that is really thriving.

"Unlike other tech movements, this wave is not just a passing trend, but a revolutionary force. It tackles not only consumer problems, but the greatest challenge of our time. What started as ripples has now become a tsunami of optimism, opportunity, hope, and solutions that impact us all," she said.

Climate Salad's director of impact, Audrey Jean-Baptiste, said consumers, businesses, and governments worldwide were recognising the urgent need to invest in climate solutions to achieve a sustainable future.

"With the scale and complexity of the challenge, the next 12 months are critical for the Australian climate tech sector," she said.

"We need industry, government and investors to collaborate with climate tech companies. We must strengthen our ecosystem, attract diverse talent, expand markets, and foster favourable regulatory environments.

"This can support the 228 Australian climate tech companies in this report to reach their 12-month goals of collectively raising $1.5 billion in capital, creating 2,400 additional jobs, and expanding internationally."