When it comes to building software for climate tech, it might make sense at first to work on something in the general vicinity of carbon accounting, given that the hottest software companies in the space have something to do with either accounting, offsets, removals, or regulatory disclosure. A glance at the startups in the space makes it clear where investors are interested: New York’s Persefoni (accounting) has raised $164.2 million to date; Plan A (accounting/monitoring) in Berlin has raised $43 million; Supercritical (removals) raised $15.8 million, and CUR8 (removals) raised $6.7 million.
But there’s one niche in this sector that had a brief dawn before it was gobbled up in a spree of M&A: Assessing the climate risk of physical assets. To mine that rich seam once again, U.K. startup Climate X is now coming out of stealth with a cool $18 million Series A round led by GV (Google Ventures). The startup aims to help financial organizations price the impact of climate change across their physical asset portfolios and will use the new funding to expand in Europe, North America and APAC.
Existing investor Pale Blue Dot also participated in the round, alongside CommerzVentures, A/O, Blue Wire Capital, PT1, Unconventional Ventures and Western Technology Investment (WTI).
The startup claims its platform can assess the climate risk of both residential and commercial properties, as well as road, rail and power infrastructure. Its clients so far include Legal & General, CBRE and Virgin Money.
Founded by corporate risk veterans Lukky Ahmed (CEO) and Kamil Kluza (COO), Climate X is on a path well-trodden by startups. Four Twenty Seven, for example, made strides in assessing the impact of climate change on cities and infrastructure before it was bought by Moody’s, while the Climate Service helped companies factor climate risk into their decisions, eventually getting purchased by S&P Global.
Still, the climate adaptation market is said to be worth around $2 trillion, per the World Economic Forum, so Climate X clearly has a decently large space to play in.
Realizing that the financial services sector needed more scalable climate risk modeling, Ahmed and Kluza have built a digital twin of 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 interface, Climate X’s platform lets clients look at the effects of weather conditions, like extreme heat and flooding, over a 100-year time horizon on properties — they can even narrow it down to individual properties. The platform now assesses climate risk for financial services clients with over $6.5 trillion in combined AUM, Ahmed said.
But 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 hired some people,” Ahmed told TechCrunch. “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, Ahmed says, he has taken “a lot of lessons around fundraising.”
Ahmed previously led stress-testing and risk transformation programs for HSBC Bank and Lloyds Banking Group, but he says tech entrepreneurship didn’t come easily or soon. “I didn’t go to university; I didn’t know what I wanted to do. I ended up in various retail and call center jobs,” he said. “After I joined HSBC, I found myself getting involved in M&A and eventually moving to Hong Kong, building the stress-testing function, where the bank was taking macroeconomic shocks and applying it to the balance sheet and P&L across different regions.”
But Ahmed felt the world was bigger than just working for a bank, so he came back to London in 2017, eventually working for Accenture and meeting his co-founder Kluza, who had modeled risk for organizations such as Barclays, MUFG and Accenture. Ahmed 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?’”
Ahmed said Climate X raised the Series A with GV in the lead, “because the team is exceptional.”
“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,” Robert Bernard, chief sustainability officer at CBRE, said in a statement.
