5 areas where VCs can play an outsized role in addressing climate change

While global tech and finance leaders have suggested that the world’s first trillionaire will be someone tackling climate change and that many climate unicorns are on the way, current VC levels are dwarfed by the mind-boggling funding amounts that are needed to give humanity a fighting chance.

As of October, climate-tech startups had raised over $32 billion in 2021 and, according to Dealroom and London & Co., U.S. VCs invested nearly $50 billion in climate-tech companies between 2020 and 2021. However, depending on whom you talk to, the climate finance gap currently sits at $2.5 trillion to 4.8 trillion.

To put this gap into perspective, total global VC funding (across all sectors, including climate) in 2021 was at an estimated $643 billion, and most countries in the world, aside from a handful, have a GDP under $4 trillion. Additionally, a sharp uptick in the number of climate funds and startups has some experts worrying about the potential of a bubble, and doubters may argue that traditional VC investment strategies are too risky to make a meaningful contribution to addressing climate change.

So where precisely do VCs factor into global efforts to address climate change? Indeed, a vast portion of the investments will be allocated toward infrastructure investments, as well as emergency funding, which will not yield venture-like returns. By the same token, new policies and national programs will be spearheaded by governments, and as conditions worsen in certain countries, foreign aid agencies will be crucial players.

Accordingly, we won’t be looking to VCs to write billion-dollar checks, create new policy incentives, or provide shelter and food to populations in need. However, VC funds and their investment strategies and networks have unique features that give them an important position in these global efforts.

Below we outline five key areas where we believe VCs can play a role in addressing climate change:

Image Credits: Jamil Wyne and Abrar Chaudhury

Backing and de-risking proven climate technologies

Venture capital has a vital role to play in de-risking climate technologies, which can help bring costs down, accelerate adoption rates and transform markets to enable a decarbonized future. Any hope of addressing the climate crisis requires helping entrepreneurs to mitigate technology risks and scale their innovations quickly and cost-effectively.

Metalenz PolarEyes upgrades digital sensing with polarized light

Tech sees differently, and can fuse multiple types of data we can’t even perceive: lidar, IR, ultrasonic, and so on. Metalenz, maker of highly compact “2D” cameras for advanced sensing, hopes to bring polarized light into the mix for security and safety with its PolarEyes tech.

Polarization isn’t a quality of light that’s often paid much attention. It has to do with the orientation of the photon’s movement as it waves its way through the air, and generally you can get the info you need from light without checking its polarization. But that doesn’t mean it’s useless.

“Polarization generally gets thrown out, but it really can tell you something about what the objects you’re looking at are made out of. And it can find contrast that normal cameras can’t see,” said Metalenz co-founder and CEO Rob Devlin. “In healthcare, it’s been used historically to tell whether a cell is cancerous or not — the color and intensity don’t change in the visible light, but looking at polarization it works.”

But polarized light cameras are pretty much only found in medical or industrial settings where their specific qualities are needed, and therefore the devices that do it are fantastically expensive and rather large. Not the kind of thing you would want clipped to the top of your laptop screen, even if you could afford the six figure price.

The advance Metalenz made when I wrote about them last year was reliably and inexpensively manufacturing the complex micro-scale 3D optical features to make a tiny but effective camera on a chip. These devices, Devlin said, are currently coming to market as part of an industrial 3D sensing module, partly in partnership with STMicroelectronics. But the polarization thing has more consumer-relevant applications.

“Polarization in facial recognition tells you whether you’re looking at real human skin, or a silicone mask, or a high quality photo or something. In automotive settings, you can detect black ice, it’s really difficult with normal cameras but it jumps out with polarization,” said Devlin.

In the case of facial recognition, the unit could be small enough to sit alongside a normal camera in a front-facing array, like the lidar unit in iPhones that currently scans the face using tiny lasers. A polarized light sensor would instead (in this example) split the image into four, presumably corresponding to four different axes of polarization, each of which shows a slightly different version of the image. These differences can be evaluated the way the differences between images taken a small distance or time apart can, allowing the geometry and details of the face to be observed.

Polarized light is split into 4 streams, showing different details of a face.

Image Credits: Metalenz

Polarized light has the advantage of also being able to tell the difference between materials: skin reflects light differently than a realistic mask or photo. Perhaps this isn’t a common threat in your everyday life, but if a phone manufacturer could get the same “Face ID” type feature, with added anti-spoofing security, and use something less exotic than a tiny lidar unit, they’d probably jump on the opportunity. (And Metalenz is talking to the right people here.)

The automotive and industrial side is also useful, as telling what a given pixel you’re looking at is made of is a surprisingly complex question that usually involves identifying the object it’s part of. But using polarization data you can tell the difference between lots of materials instantly — and in fact this is part of the value proposition of Voyant’s new lidar. You don’t even need a lot of resolution – one polarized pixel for every hundred normal ones would still offer huge insight on a given scene.

Demo of PolarID, a facial recognition system using polarized light instead of 3D sensing.

Image Credits: Metalenz

All this depends on the ability of Metalenz to make the polarized camera units small and sensitive enough to use in these situations. They’ve reduced the breadbox-scale units used industrially to a cracker-sized one they’ve been testing with, and are working on a Skittle-sized camera stack that could be added or swapped in for other camera units in robots, cars, laptops, perhaps even phones. It’s firmly in the “development” phase of research and development.

Metalenz is currently working off last year’s A round from 3M, Applied Ventures, Intel, TDK and others, the type of crowd you expect to invest in a potentially lucrative new component type. If interest in PolarEyes is anything like what the company had for its first sensor, we can expect another raise to cover the scaling costs soon.

First EV mass transit bus by Swedish-Kenyan startup Opibus begins operation amidst plans for regional launch by 2023

The first electric bus by Swedish-Kenyan EV startup, Opibus, has hit Kenya’s roads marking the beginning of the company’s venture into the mass transit industry. Opibus first announced plans to roll out electric public transport buses last year when it raised $7.5 million in a pre-Series A round.

The startup is now running a pilot in readiness for the commercial launch of EV buses in Kenya later this year, and across Africa by the end of 2023.

Opibus has over the last five years been in the business of future-proofing existing gasoline and diesel vehicles by converting them to electric. EVs come with a range of benefits including a reduced cost of transport and no carbon emissions. The startup, which was founded in 2017 by Gardler, Filip Lövström and Mikael Gånge, has so far converted over 170 vehicles for different clients including mining companies and tour firms.

The company is now slowly pivoting to the building of EVs and supportive infrastructure like public charging stations. Brand new Opibus electric buses will cost $100,000 and $60,000 for conversions (which the startup is using in the pilot program).

“This first year, we will be testing 10 buses commercially in Nairobi to ensure that the product fits and is optimized for the usage patterns. Once we get this valuable feedback, we will make the required changes and get all our production partners lined up to scale the roll out as rapidly as possible,” Opibus chief strategy and marketing officer, Albin Wilson, told TechCrunch.

Opibus specializes in making electric buses and motorcycles.  Image Credits: Opibus

Opibus says its vehicles are designed and built locally, giving them a competitive advantage in terms of a lower price by the time they reach the market. Additionally, local production means that the output can be tailored for local market needs.

“Our strategy is to design and develop a bus that is viable in price, durable and accessible for this region…We are building a product that allows for a rapid scale up, that can leverage global and local manufacturers. Meaning our design is easily implemented across the African continent, as it is a product tailored for the use case, and very cost effective,” said Wilson.

The startup is now eyeing the rest of Africa through partnerships that will drive the adoption of EVs across the continent..

Uber’s partnership with Opibus, which was announced last month, for example, will see the deployment of up to 3,000 electric motorcycles, manufactured by the startup, across Africa by 2022. Motorcycles under Uber are used as taxis and for deliveries in its different markets.

The EV sector in Kenya is budding and has over the recent years attracted new players including BasiGo, which made its debut in Kenya in November last year. BasiGO, which recently imported two EV mass transport buses for its pilot, plans to sell locally-assembled electric buses using parts from China’s EV maker BYD Automotive. The BasiGo buses come in 25 and 36-seater capacities, with a range of about 250 kilometers while those by Opibus come in 51-seater capacity with a range of 120 kilometers.