Start-ups in the environmental technology sector

Both green technologies and the start-up scene are currently experiencing an unprecedented level of public attention. However, environmental technology start-ups in particular face special challenges. A guest article by Bruno Rudnik, Managing Director SusTech Consult.

The “Green Startup Monitor 2020” lists about 6,000 green start-ups in Germany, which—in addition to the classic start-up criteria (less than ten years old, high degree of innovation, increase in employees/sales)—are distinguished by the fact that “their products, technologies and/or services contribute to the ecological goals of a green economy”. The majority of these green start-ups are however found in the fields of information and communication technology, food and nutrition, and consumer goods—only then followed by more technology-intensive sectors such as energy and electricity, automobiles and mobility, and agriculture and farming. Hardly represented are classic environmental technologies such as water and sewage, waste management and circular economy, or air purification. Likewise, young companies in the environmental technology sector are rarely found in overviews of start-ups with the fastest growth or the highest financial ratings.

Environmental industry often consumes much time and capital

The reasons? On the one hand, the environmental technology scene itself is remarkably diverse and combines a wide range of technologies and business models, both in the field of digital solutions (“software”) and plant engineering (“hardware”). On the other hand, the development and commercialization of innovative process technologies is a venture that generally consumes much time and capital. The time from research and prototypes to pilot plants and market maturity often takes five to ten years, requiring high funding. While early-stage financingis well established in Europe, including through public funding programs, many start-ups struggle with growth financing to scale up their technologies.

An opportunity: cooperation between start-ups and industrial companies

The European Commission’s new €10-billion Innovation Fund addresses this challenge: its aim is to implement demonstration projects for a low-carbon and circular economy. Cooperation between start-ups and industrial companies also offers great opportunities along the way to the market launch of innovative technologies. Apart from a few exceptions, the environmental technology sector is strongly characterized by medium-sized companies that are often “hidden champions” with a global presence in their respective markets. Such cooperation could go beyond pilot projects and initial use cases and cover the entire corporate value chain, e. g. the use of production capacities or sales and service networks for faster and targeted market access.

Important issue for the future: artificial intelligence

Another trending topic in the green start-up scene is the use of artificial intelligence (AI) in environmental technology. Young companies such as adiutaByte (optimized route planning, e. g. for the waste disposal industry) or angsa robotics (autonomously driving cleaning robots for meadows and grasslands) combine the megatrends of digitalization and sustainability with ecological and economic benefits by offering concrete technological innovations. In addition to the collection and sorting of recyclable materials, promising applications for AI in the environmental technology sector include the control of water distribution and sewer networks as well as prognosis models in environmental monitoring.

About the author

Bruno Rudnik, Managing Director SusTech Consult