Putting Southeast Asia on the Climate Tech Map
by Marie Cheong, Founding Partner at Wavemaker Impact
Southeast Asia isn’t a region that we hear a lot about when it comes to climate innovation. Consisting of 11 countries, including Indonesia, Thailand, Vietnam, Philippines, and Singapore, the region is one of the most culturally diverse in the world and home to 680 million people, 8% of the global population. It is one of the fastest growing and is predicted to be the fourth-largest economy in the world by 2030.
As with everywhere, climate change has the potential to significantly impact the region, and the human cost is staggering. If we don’t hit our 2050 climate targets, three of Southeast Asia’s largest cities - Jakarta, Bangkok, and Ho Chi Minh City - could be underwater by 2050. Not to mention, 77% of the region’s population lives and relies on coastal areas for their livelihoods.
Despite this existential threat, existing climate tech solutions have struggled to drive adoption and change behavior. Renewable penetration, for example, still sits at between 5-11% of capacity in the region. It's crucial now more than ever to build innovative business models that are highly scalable, profitable, and can drive decarbonization at scale. The opportunity is massive: Southeast Asia needs US$2 trillion in investments to decarbonize and remain competitive.
What’s the same? What’s different?
There’s a growing momentum for climate tech investment in Southeast Asia, consistent with the trend in other parts of the world. For the first time in 2022, climate tech startups in Southeast Asia raised more than US$1 billion, an 80% increase compared to 2021. This, however, represents less than 3% of global climate funding. There’s also a mismatch between where the funding goes and the drivers for emissions in the region: for example, over 60% of climate funding goes into mobility solutions, which is only 12% of emissions in Southeast Asia.
Here are three ways that the climate tech landscape in Southeast Asia is different from the developed world:
1. Growth tailwinds
Southeast Asia’s middle class is expected to double by 2050. Economic growth and rise in purchasing power create increased demand for energy, goods, transportation, and other services. Energy demand in Southeast Asia has grown faster than any other region in the last 10 years. Less than 10% of households in Indonesia have air-conditioners, compared to nearly 100% of households in more developed countries in the region. Similarly, on a per capita basis, Singaporeans consume more than 10 times more electricity than the average Filipino. These growth tailwinds create unique opportunities to build high-growth climate tech companies that accelerate the adoption of renewables, energy efficiency, and new green technology.
2. Land use change and agriculture are huge drivers of emissions and a significant opportunity
In Southeast Asia, non-energy emissions are more significant than in the rest of the world. Close to 50% of the emissions in the region come from land-use change and agriculture. Southeast Asia is home to 25% of investible forest carbon and 97% of all tropical peatland sinks, and the biggest driver of deforestation is agricultural expansion. There are also significant yield gaps in major agricultural commodities like rice and palm oil. Companies that enable nature-based solutions and improvements in agriculture practice in everything from project development solutions, MRV (Measurement, Reporting, Verification) technology, soil testing, and fertilizer optimization have a significant market potential both from a dollar and carbon perspective.
3. The need for highly scalable, decentralized solutions
The average farm size in Southeast Asian countries is around 1 hectare compared to over 400 hectares in the US. There are 120 million motorbikes in Indonesia and only 16 million cars. Large-scale solutions in developed markets in areas like precision agriculture, remote sensing, renewables, and transportation that require an upfront investment in data and technology don’t work on a smaller scale. Conversely, new business models that aggregate investment opportunities and enable smaller-scale decentralized solutions at lower price points are exciting.
Creating high-growth climate tech companies for Southeast Asia
There are plenty of opportunities in the region that don’t require new technology or long research and development cycles, and more importantly, address market inefficiencies and real customer pain points.
We launched Wavemaker Impact to partner with experienced founders to go after opportunities that connect large drivers of carbon emissions to increasing revenue or decreasing costs for customers. Every company we launch has the potential to abate 100 megatons of carbon dioxide equivalent and achieve a US$100 million in revenue at scale on an annual basis.
As an example, Agros, one of our portfolio companies, is decarbonizing smallholder farmers in the region, starting with replacing diesel irrigation pumps with a solar alternative. For every farmer Agros serves, they abate 4 tons of CO2e and increase farmer income by up to 60% annually. Because of the trust-based relationship Agros is building with farmers, it’s now expanding to go after a larger share of both the carbon and value wallet.
Climate tech companies that focus on business model innovation and accelerate the adoption of commercial-ready technology have tremendous potential for high growth in typical VC investment horizons. These opportunities are also highly accessible for founders transitioning into climate from other industries because they don’t require a science or research background. This mix of opportunity, capital, and talent makes it a great time to build climate tech companies in Southeast Asia.
We’re always on the lookout for experienced founders to build startups with or other regions where our approach to climate tech venture building will work and would love to hear from the MCJ community - please reach out!
✍️ The Draw-down
Weekly climate art by our MCJ Artist-in-Residence, Nicole Kelner.
🍿 The Lean Back
Learn about Clean Crop Technologies in the latest Pique Action film.
🎙My Climate Journey Podcast
🔋 Cody talked to Ajay Kochhar, President/CEO/co-founder of Li-Cycle, and Jigar Shah, Director of the Loan Programs Office at the U.S. Department of Energy, about the application process for working with the LPO and Li-Cycle’s $375 million loan to scale of their battery recycling efforts with the new production facility.
♨️ Carlos Araque, CEO/co-founder of Quaise Energy, walks us through how geothermal energy is harnessed today, what has held it back from a scale perspective, Quaise's tech solution and business model.
👩💻 Climate Jobs
For more open positions, check out the #j-climatejobs channel in MCJ Slack as well as our job board featuring 78 MCJ portfolio companies and over 500 open positions.
Policy Associate and Senior Associate at The Ad Hoc Group (Remote)
Director, R&D at Air Company (Brooklyn, NY)
Senior Manager, Energy Market Reports at LevelTen Energy (Remote)
Technical Sales and Support Engineer at Odyssey Energy Solutions (Remote)
Senior Geospatial Data Engineer and Principal Data Scientist at Overstory (Remote)
Lead/Manager - Corporate GHG Accounting and Decarbonization at Planet FWD (Remote)
Product Marketing Manager at Running Tide (Remote)
Content Manager, Consumer at Sense (Remote)
Diligence Lead and Program Manager at Frontier (Remote)
Process Technician at Solugen (Houston, TX)
Mechanical Engineer at Sublime Systems (Hybrid/Somerville, MA)
Head of Operations at Thermulon (London, England, UK)
Director - Utility Business Development at WeaveGrid (Remote)
🗓 March Events
Click the event title for details & RSVP info. For more climate events, check out the #c-events channel in MCJ Slack.
📚 MCJ Book Club: We'll discuss the ideas presented in the book Speed and Scale by John Doerr (3/01)
🤝 Minneapolis/St. Paul Meetup: Hosted by Laurie McGinley. Casual meetup to build local community. (3/03)
👩💻 Career Transitions Meetup: If you’re thinking about transitioning to work in climate, join us for an hour of learning and networking. Already working in climate and want to give back to the community? Join and lend your experience. (3/08)
👋 Community Welcome Call: Connect, share and learn with the MCJ team and community members. (3/09)
🎓 College to Climate Monthly: For college students or recent grads wondering how to get a job solving climate change. Each month we hear from a speaker who's forged this path and host breakout rooms for you to meet likeminded folks. This month our speaker is Jessica Harrington from Redwood Climate Communications. (3/09)
🍻 DC Climate: March Meet Up: Hosted by Vid Micevic. Whether you're a climate veteran or looking to make the transition, join us to chat about all things sustainability and climate tech. (3/09)
🍺 San Francisco Happy Hour: Keep the good vibes growing in the Bay Area Community. (3/09)
📈 Take your climate tech startup from brand to scale | AMA with Bettina Grab: ClimateRaise has teamed up with Alder & Co., a woman- and minority-owned growth marketing agency focused on climate tech, for a webinar and ‘ask me anything’ event. (3/16)
⚡️ MCJ Monthly Idea Jam: Energy. These sessions provide a chance for MCJ members to get help with roadblocks, meet co-founders or future employees, connect with investors, or people working on similar topics. For people just listening in, these sessions may spark your own ideas, and enable you to meet others in the process! (3/17)
MCJ Climate Voices is a free weekly email curating news, jobs, My Climate Journey podcast episodes, and other noteworthy happenings in the MCJ member community.
💭 If you have feedback or items you’d like to include, feel free to reach out.
🤝 If you’d like to become an MCJ community member, apply today.
💡 Have a climate-related event or content topic that you'd like to see in the MCJ newsletter? Email us at firstname.lastname@example.org