Sequoia-Backed Watershed Opens EU HQ As US Investors Back Climate Startups

  • Europe has a reputation as a hub for climate tech with legislation and consumer pressure forcing companies to go green.
  • US investing giants Sequoia and Coatue are backing two different horses in the race to net zero. 
  • Carbon management firm Watershed has opened a dual-HQ in London while Sweep has raised $73 million.

Europe’s position at the center of the burgeoning climate tech sector has been further confirmed by decisions at Sequoia and Coatue to back two startups in the region accelerating the race to net zero.

Watershed, a Californian carbon management startup that counts Sequoia among its investors, just announced a dual headquarters in London as it plans to “invest deeply” in Europe. It comes a day after Coatue, best known for backing the likes of Snap, Spotify, and DoorDash, led a $73 million round into French carbon management startup Sweep.

The moves by two of America’s most prominent tech investors add to the growing momentum in the European climate tech sector, where VCs have pumped record levels of cash into the industry’s startups. Investors wrote checks totaling over $670 million to businesses in the sector in 2021, more than treble the $201 million invested in 2020, according to data from PitchBook.

Europe’s rapid growth has been underpinned by strict legislation that aims to reduce greenhouse emissions across the bloc to 55% below 1990 levels by 2030. Lawmakers in Brussels plan to make the region reach net zero by 2050, which has spurred interest in trends like carbon credit trading and carbon accounting.

San Francisco-based Watershed, which is used by the likes of challenger bank Monzo,


streaming

platform Spotify, and buy now, pay later firm Klarna, raised $70 million earlier this year at a unicorn valuation.

Ellen Moeller, the startup’s new European head, said Watershed had supported European companies since the “very early days.”

“We’ve seen a lot of interest coming from European customers, who are in some ways, some of our most sophisticated and advanced customers as they think about climate,” she told Insider. “There was a natural shift for Watershed to really invest deeply in the European market.”

Moeller said Watershed was laser-focused on legislation and that it informed its product development. The former Stripe exec added its early European customers meant the business had been built in a European-first way, despite being originally headquartered in the US.

Michael Moritz, a partner at Sequoia Capital who led investments in the likes of PayPal and Google and sits on the board at Stripe, said Watershed was “hell-bent” on helping companies manage their contributions to avoid “climate armageddon.”

“Companies throughout Europe and the United Kingdom can demonstrate to the world what is possible,” he told Insider. “Hence Watershed’s deep commitment to the region.”

The startup, which also touts UN climate envoy and former governor of the Bank of England Mark Carney and former United Nations Framework Convention on Climate Change executive secretary Christiana Figueres as advisors, believes there is still a lot of education needed around climate tech and companies contributing to global warming.

Elsewhere, Sweep cofounder and CEO Rachel Delacour said the fresh funds from Coatue indicate that the red hot climate tech industry is here to stay.

The Sweep team

The Sweep team.

Benjamin Schmuck


“I’m optimistic that this kind of huge American-based fund is able to deploy that amount of money for this topic. It’s great,” she told Insider.

“It’s a great sign for the market, it’s a great sign for the technology we are bringing to the table. For me, it’s important that my financial partners are global because what is at stake – climate change – is global.”

Sweep aims to “cascade down the whole value chain” starting with the biggest companies on the stock exchanges across Europe and the US, according to Delacour. She said she wants to get all companies counting and reducing emissions by opening a “carbon dialogue” between suppliers. Sweep is used by the likes of French multi national Saint-Gobain and advertising giant JCDecaux.

“It’s a collective action, and hopefully we are giving them the right tools to make it seamless,” she said.

Balderton Capital, New Wave, La Famiglia, and 2050, which were all existing investors, backed Sweep’s $73 million round. Tony Fadell, the inventor of iPhone, iPod and Nest Labs, also backed the startup. Delacour said Sweep’s French roots were a pull for investors as it is the “land of carbon knowledge.”

Coatue’s investment was not the first time a US heavyweight invested in the European climate tech market. Chris Sacca’s Lowercarbon Capital recently handed a check to Pledge, a nine-month-old play from three former Revolut engineers.

Unlike many SaaS carbon management tools, which rely on automation and leave customers to interpret data themselves, Watershed and Sweep both loop in advisors to craft the carbon reduction plans with customers. 

https://www.businessinsider.com/sequoia-coatue-carbon-management-companies-to-win-europe-net-zero-2022-4

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