When it comes to building software for climate tech, you probably want to build something in the general vicinity of carbon accounting, given that the hottest software platforms in the space have something to do with either accounting, offsets, removals, or regulatory disclosure. For instance, New York’s Persefoni (accounting) raised $164.2 million to date, Plan A (accounting/monitoring) in Berlin raised $43 million and at the lower end, Supercritical (removals) raised $15.8 million while CUR8 (removals) raised 6.7 million. As you can see the space is broad and varied.
But one area of the sector that had a brief dawn (before it was gobbled up in a spree of M&A) was assessing climate risk of physical assets. To mine that rich seam once again, U.K. climate risk intelligence startup Climate X is now coming out of stealth with a cool $18 million Series A round led by GV (Google Ventures). The idea is to help financial organizations price the impact of climate change across their physical asset portfolios.
Also participating in the round were early backers Pale Blue Dot, alongside CommerzVentures, A/O, Blue Wire Capital, PT1, Unconventional Ventures and Western Technology Investment (WTI).
Given that the climate adaptation market is said by WEF and others to be worth around $2 trillion, there’s clearly a decent space to play in.
And Climate X claims its platform can come up with risk assessments for both residential and commercial properties, as well as road, rail, and power infrastructure. Its clients so far include Legal & General, CBRE, and Virgin Money.
It’s treading a path previously trod by other startups which got acquired. Moody’s acquired Four Twenty Seven. The Climate Service was acquired by S&P Global.
Co-founded by CEO Lukky Ahmed and COO Kamil Kluza, who both previously worked in corporate risk management, Climate X almost didn’t happen.
“We had a house in Birmingham we re-mortgaged because we didn’t really know how to raise venture capital, and we’d we hired some people. We were like, ‘We have to pay them!’ So that’s what we did. And then luckily, after saying no three or four times, eventually Pale Blue Dot said yes. They put in a small check and that check suddenly grew into another conversation to leading the seed round.”
Since then, co-founder Lukky Ahmed, CEO “took a lot of lessons around fundraising.”
Lukky had previously led stress testing and risk transformation programs for organizations like HSBC Bank and Lloyds Banking Group.
But he had a long path to tech entrepreneurship, he told me: “I didn’t go to university. I didn’t know what I wanted to do. I ended up in various retail jobs, call center jobs. After I joined HSBC I found myself getting involved in M&A eventually moving to Hong Kong, building the stress testing function, where the bank was taking macroeconomic shocks and applying it to the balance sheet P&L across different regions.”
Knowing the world was bigger than just working for a bank, he came back to London in 2017, eventually working for Accenture and meeting Kluza, who had modeled risk for organizations such as Barclays, MUFG and Accenture. Lukky recalled, “I basically said to him, ‘Let’s go and do this for ourselves because, you know, Accenture is taking 60% of our work, and what are we doing?’”
By this time it was 2020 and the start of the pandemic: “I signed up to Clubhouse, and because I heard all these people in Clubhouse talking about Twitter, and how much they love to tweet about things outside of there, we met pale blue dot’s Hampus Jakobsson because he was on one of these clubhouse rooms. So I tweeted him and got into his DMS and things spiraled from there.”
Realizing there needed to be more scalable climate risk modeling in financial services, the pair built a Digital Twin of the Earth, using more than 500 trillion data points, as well as a proprietary library of 1.5 billion individual assets and 44 million miles of infrastructure.
With a Google Maps-like experience, the Climate X platform lets clients look at the effects of things like extreme heat and flooding over a 100-year time horizon, down to a single house. It now assesses climate rick for financial services clients with over $6.5 trillion in combined AUM.
The team raised the Series A with GV in the lead “because the team is exceptional” said Lukky.
In a statement, Robert Bernard from CBRE, said: “After a year of assessment of many many tools and services, we are … working with Climate X to help our clients understand and prepare for the risks associated with climate change.”
Climate X will use the new funding to accelerate its expansion in Europe, North America, and APAC.