How B2B SaaS companies are accelerating the battle against climate change
Many investors naturally think of core renewable energy businesses such as wind and solar when we talk about climate change investments. But the reality is that every sector of the economy is becoming involved in tackling climate change, from energy markets and transport solutions through to sustainable consumer propositions. However, perhaps one overlooked area are the B2B SaaS technology-driven companies that are battling climate change behind the scenes.
SaaS has been the darling of many VC funds for a couple of decades now. Its attraction is clear – a strong SaaS business can provide hyper growth whilst limiting risk - as many SaaS businesses are driven by B2B sales without the risk of investing into B2C marketing and brand building. SaaS businesses usually scale well, once the software platform is in place a sales team builds out the product and scale is achieved on relatively fixed costs. The compelling ‘sell’ to the client is usually a significant cost and labour-saving solution.
We are seeing many more SaaS based businesses in climate tech across a multitude of sectors. In the area of corporate carbon measurement, we have literally assessed over ten companies this year as large corporations race to understand the true picture of emissions across their business and supply chain – a wave of tech start ups are building SaaS platforms which allow clients to accurately track carbon output across internal operations and external supply chains.
One of the biggest challenges in climate tech is the adoption and deployment of new technologies such as solar. The great irony is that we have the solutions to the climate crisis in our hands – but the speed and cost of deployment is a critical problem.
It is here that SaaS businesses can play an important role. A great example of this is a company like Powermarket (powermarket.ai) in the solar market. They have developed a great SaaS platform for accelerating the deployment of solar installations.. Instead of 1000s of man hours spent surveying for optimised solar sites – a single SaaS tool uses AI to find optimised sites at a fraction of the cost and in a fraction of the time.
One of the companies we are looking at in our future portfolio is Diode (diode.energy/). They have built a SaaS implementation to accelerate the adoption of electric vehicles by allowing fleet managers and end users to quickly evaluate whether an EV can work for their company or their usage. This is a surprisingly complex issue and by taking the pain and man hours out of this strategic decision Diode have a potentially massive global market via global leasing players, banks, and car associations.
In the carbon offsetting space, Earthly (one of our existing portfolio companies) specialises in nature based solutions for climate change (NbS) – here you have a great business which combines elements of SaaS in its model with the transactional aspects of buying NbS offsets. Almost every corporation is moving towards NbS in some capacity, and most major banks and consumer Fintechs will also offer NbS to end users as an add on. Again, the scale of the market (the estimated TAM for NbS is $500bn) creates enormous growth opportunities moving forwards.
The adoption potential of SaaS businesses in the climate tech space is staggering – and we expect some very strong performance from some of our portfolio companies here. In climate tech you have a fusion of government regulation, corporate net zero targets and rapidly changing customer demand creating massive demand for climate tech solutions. When you fuse these factors together with the natural scalability of a good SaaS business model the sky's the limit. From an impact point of view any business that accelerates the adoption of the climate solutions we have has to be a good thing.
OnePlanetCapital is closing tranche 3 of the OnePlanetCapital Climate Change EIS fund on 14th October. For more information on the 5 companies lined up in this tranche please contact Declan@oneplanet.capital
