Paris— Awareness of the climate emergency has increased in recent years. 85% of SBF 120 companies have communicated commitments to reduce their carbon footprint in their strategic plan1. To achieve this objective, they are focusing both on their internal transformation and on the creation of alliances with external innovative partners. Environmental impact startups (greentechs) can play a key role in this strategy and represent a growing share of their investments, directly or via their Corporate Venture Capital (CVC) funds. What concrete impacts do these investments have? How can companies maximize their engagement with these startups for lasting impact?
This is the subject of the third edition of the BCG, RaiseLab and RAISE Sherpas study, entitled “Investments by large companies in greentech: a lasting commitment?. This work is based in particular on a survey carried out among 120 representatives of greentechs, CVC and innovation or M&A teams of large companies as well as key players in the ecosystem.
A thriving greentech ecosystem, looking for funding:
The greentech ecosystem in France is booming , with around 2,750 startups developing innovative technologies to respond to environmental challenges. These are divided into several categories, led by the protection of ecosystems and environmental transition (30%), new energies (20%) and green industry (18%).
These greentechs today face a crucial challenge: that of their financing. For more than 90% of them, securing funds is an absolute priority in order to finance their scaling up. A particularly pronounced challenge for industrial greentechs, whose development model requires more capital. Acquiring new customers comes in second place (84%).
French greentechs attracted more investments than ever in 2023, capturing a third of fundraising, despite an overall decrease in investment flows in startups in France, Europe and around the world. France has thus become the second country in terms of funds raised by greentechs in Europe, with 3.1 billion dollars, behind the United Kingdom (6 billion dollars). Proof of this interest, the number of greentech acquisitions by large companies has increased, representing 16% of startup acquisitions in 2023 (+7 percentage points compared to 2022).
“ Large companies have set themselves targets for reducing their footprint, covering not only their core business but also the upstream and downstream parts of their value chain. Greentechs have a key role to play in supporting them in the transformation of the ecosystem ” observes Olivier Sampieri , senior associate director at BCG.
Opening capital to a large company: an accelerator for greentechs
Beyond financing, the study highlights that greentechs benefit from a stake taken by a large company in many ways: acceleration of scaling up (80%), increase in turnover (78%), access to valuable expertise (78%) and the acquisition of new customers (73% and even 83% for industrial greentechs). Conversely, the main risks identified are a loss of agility in operations for more than 50% of startups and the risk of cutting themselves off from part of their market (37%). Other concerns include the risk of loss of attractiveness to investors (19%), talent (16%) and a deterioration in brand image (17%).
“For greentechs, these mergers with large companies are essential: they guarantee much more frequent product and commercial iterations thanks to the proximity to the issues on the ground. This can also give these startups a better understanding of the challenges and functioning of corporates” adds Anne-Sophie Gervais Co-Head of RAISE Sherpas.
Greentech: a lever to accelerate the environmental agenda of large companies
Large companies are increasing their investments in greentech to accelerate their environmental agenda. Most rely on their CVC structures, although they also take direct majority stakes or invest through impact funds and funds of funds managed by third parties. Today, greentechs are at the heart of the investment theses of 90% of CVCs. Furthermore, 45% of CVCs have more than 30% greentechs in their portfolio in 2024.
“Recently, we have seen a significant increase in the number of greentechs in CVC dealflow. This is a good thing. However, this is not yet accompanied by a significant increase in the number of investments in greentech, but this should happen. Then, the main challenge will be based on the creation of operational and business value between the portfolio of startups and large corporate shareholders ,” underlines Paul Jeannest, Co-founder and CEO of RaiseLab.
Large companies seek to achieve several objectives by investing in greentech: acceleration of innovation and R&D (88%), development of more sustainable products (83%), reduction of direct (72%) and indirect (61%) emissions. %), reduction in resource consumption (67%) and protection of biodiversity (55%).
Within five years, they expect a sharp increase in the environmental impacts of their investments in greentech, with 82% of CVCs predicting a large or very large impact, compared to 44% today.
How can we increase the environmental impact of investments by large companies in greentech?
To maximize the environmental impact of investments in greentech, the authors of the study propose a series of good practices:
- Align the investment strategy with the company’s environmental strategy: prioritize high-impact environmental technologies and adapt according to feedback…
- Adapt internal operations: strengthen links between investment and ESG teams, establish stronger sponsorship to realize collaboration opportunities, etc.
- Working in an ecosystem: building industrial coalitions and consortia to invest together, rely on and contribute to the work of other actors (academics, public or private actors, impact investment funds.)
“It sometimes takes time to align the respective interests of large companies and greentechs, but we are seeing great successes. Sustainable transformation does not take place in silos, but within collaborative ecosystems where each actor plays a role in accelerating decarbonization” concludes Olivier Sampieri, senior associate director at BCG.
