Tech Digest ~ let's talk climate! 🌳

#2 ~ oh, maybe a few other things too...

May 09, 2023

Hello hello everyone and welcome to the second edition of Tech Digest! I introduced myself in the last edition, but for those who are new, my name is Isabela, but you can call me Bela. As a venture capitalist with a passion for tech, sports, art, film, and science, I'm excited to share and digest a few of my latest reads. So expect a lot of tech here and a tad of culture by the end. So let's dive in and see what's in store for this week's edition! ⚡

Before we jump into this week's edition, I want to take a moment to express my gratitude to all of you who have supported Tech Digest since its first edition last week. I also want to encourage you to share Tech Digest with your friends who share your interest in technology & culture. 🙃

Share Tech Digest

Well, let's get started and let's digest a few reads of this last week 🙃

~ Time to start digesting… 🍩

🌳 I've been spending a significant amount of time reading about climate tech lately, and it's clear that the industry in Latin America is poised for growth. This isn't just true in the region, as venture capital investment in climate tech reached a record $70.1 billion worldwide in 2022 (although, it is not fully immune, but more on that later). Climate tech startups in Latin America are attracting significant investment, with many promising companies developing innovative solutions in renewable energy, energy storage, carbon capture and storage, and sustainable agriculture. While there are challenges to overcome, such as high development costs, complex regulatory environments, and competition from established players, the potential rewards for successful climate tech startups are significant. In this newsletter, we'll be digesting some of the latest articles and reports on the theme. 🌞

vista aérea de árvores verdes e rio durante o dia

// How the world is spending $1.1 trillion on climate technology

This Bloomberg article offers a comprehensive overview of the climate tech startup industry, discussing both its opportunities and challenges. It highlights the growing interest and investment in climate tech startups, citing that global VC and private equity investment in the industry in 2022. Moreover, the article features some of the most promising startups in various fields such as sustainable agriculture, renewable energy, carbon capture and storage, and energy storage.

The continued growth and innovation of the climate tech industry demonstrate the potential for innovative startups to make a significant impact in addressing climate change. The fact that venture capital investment is moving beyond just solar power and expanding to other areas like mobility, agriculture, and food highlights the broader scope of climate issues. It's also worth mentioning that many startups in this sector are now combining private and public funding, indicating that the industry has broad support for its mission.

While government funding is critical for creating new markets in the climate tech industry, development institutions and the private sector offer a larger pool of finance. Battery technology in the US is growing significantly, with investments from both public and private sectors in companies such as Form Energy and Redwood Materials. Form Energy is building a $760 million factory in West Virginia for low-cost batteries, while Redwood Materials received a $2 billion government loan and private investment to expand its battery-recycling facility in Nevada. Government influence remains crucial, through regulations, tax credits, or funding for multilateral development banks that finance climate projects. A combination of public and private funding, along with smart government policies and regulations, will be necessary to create a sustainable and thriving climate tech industry. Despite challenges like competition and regulatory hurdles, the industry's continued growth and innovation demonstrate its resilience and determination.

Ok, so we all know the world's focus is increasingly on climate tech solutions, and Latin America's position in the global picture is worth considering - oh, and I'm not saying that because I have a clear bias... The region's large carbon reserves due to the Amazon, its agricultural vertical, its photovoltaic potential and its significant water reserve provide the LatAm with a competitive advantage in climate tech. So let's move to our second article below. ⚡

// Mexico Could Lead the World On Solar Energy — And Why it Needs To

Before delving into a report on climate tech in Brazil, let's take a moment to explore an article on the potential of Mexico in the Latin American region. 🙃 This article provides insights into how Mexico is leading the way in climate technology in Latin America, highlighting its potential in photovoltaic power. Additionally, it discusses how Mexico has become an appealing destination for manufacturing investment from China through a process called "reshoring" or "nearshoring". This involves Chinese companies or those with Chinese ownership establishing manufacturing facilities in Mexico to serve the North American market. The country has positioned itself as a significant manufacturing hub in the region, attracting investment from both local and foreign firms. Factors contributing to the growth of manufacturing in Mexico include its strategic location, skilled and cost-effective labor, free trade agreements, and diversified supply chain. These advantages are expected to continue to drive the country's growth and support in the region. It is definitely worth the read. ⚡

// Brazil Climate Report 2022

This report is a (very - and worth it) comprehensive analysis of Brazil's potential as a catalyst for the global transition to Net-Zero. But I'll leave the key points to keep in mind regarding Brazil's potential in sustainability and climate tech (afterall, this is called Tech Digest):
i. Brazil already has a renewable power matrix, with 85% of its power coming from renewable sources;
ii. The majority of Brazil's car fleet uses biofuels, with 75% adhering to this type of fuel;
iii. Brazil's cement industry has a lower greenhouse gas footprint compared to the global average, with up to 10% reduction;
iv. Brazil's agricultural potential and national programs, such as RenovaBio, make it a biomass powerhouse (more on that later);
v. Brazil has the natural resources and regenerative agriculture practices to produce sustainable food at scale;
vi. Brazil's warm weather, high adoption of technology, and productivity (such as two harvests per year) explain the country's high productivity and potential.

// Taking one step further…

I have a deep belief in the potential of the region to create scalable solutions, especially now that international investors are eyeing this vertical. Take solar power, for instance. The region is constructing over four times the amount of solar capacity being built across Europe and nearly seven times more than in India, which is the world's third-largest solar producer. However, it's not just solar that Latin America is focusing on. For example, the region is also actively building other verticals. Currently, Latin America accounts for 16% of total global food and agricultural exports, which shows that the potential is there. Not to mention how the power matrix in countries, such as Brazil, is already above 80% compared to 26% worldwide.

In my view, Latin America holds great potential for agtech solutions, particularly in the areas of agfintech, digitalization, and surplus food. Agfintech solutions can leverage data science and aerial imagery to certify and issue debt for farmers with sustainable practices, offering incentives in the form of low interest rates. Digitalization can optimize resource use and increase productivity per hectare, without the need for expanding agricultural land frontiers, which can help reduce greenhouse gas impacts. Precision agriculture and biotech can optimize input and water use, which can lead to a reduction in carbon footprint. Additionally, building infrastructure to scale carbon markets can help fund farmers' transition to a lower-carbon agriculture. Not to mention the use of AI to possibly improve techniques like rainwater management, variable rate fertilization, and no-till farming. This will increase productivity, control yields, and promote climate-friendly farming when guided with accurate information. Overall, these solutions present an exciting opportunity to promote sustainable and scalable agriculture practices in the region.

Despite a recent decrease of 12.8% in venture capital and private equity investments in the climate tech industry during the first quarter of 2023 compared to the rolling four-quarter average, there is still growing interest and support for sustainable investments in both the public and private sectors. Brazil's recent talks with other countries to establish a framework for sustainability-linked bonds demonstrate this trend, alongside the government's focus on implementing regulations such as the national program RenovaBio aimed at promoting biofuels and reducing greenhouse gas emissions. Additionally, the public sector is making moves towards passing a bill to amplify carbon credits by concessions, opening up new opportunities and highlighting the importance of climate initiatives. Despite the need to monitor market conditions, the potential for climate tech is still vast, and with public support, the private sector can continue to thrive. The question remains whether the industry can overcome current macro challenges and maintain long-term success in venture. As an investor, I'm definitely hoping to see current climatech companies in LatAm prosper. ⚡

🔗 & few of my other reads of the week...

~ & maybe a few other things… 🎶

I always appreciate reading about non-tech topics to keep things diverse and interesting. So today I'm excited to share one of my favorite findings with you, which is a story about music, history, and… love. ❤️

As a bit of background, a great friend of mine who works in the music industry once shared with me the most interesting (and poetic) story about a song, Seikilos Epitaph - the oldest known song in the world, dating back to around the first or second century BC!

// The Seikilos Epitaph, the oldest song ever dated

The story behind this song is simply beautiful. Seikilos was a man who lived in an ancient town that is in modern-day Turkey. He was a lover of music and believed that songs had the power to touch the hearts and souls of all who heard them.

The most widely accepted theory about the Seikilos Epitaph is that when Seikilos' wife passed away, he commissioned a tombstone in her honor. However, this was not just any tombstone - it was a testament to Seikilos' love for his wife and the enduring power of their love. He wanted to immortalize their love for each other.

On the tombstone, Seikilos inscribed a simple melody with words that spoke of the fleeting nature of life and the importance of making the most of our time on Earth (I guess they lived a pretty happy life together). The composition goes like this:

"While you live, shine
Have no grief at all
Life exists only for a short while
And time demands its toll"

The song became known as the Seikilos Epitaph, and it is recognized as the oldest known musical composition with both lyrics and melody. It was only rediscovered in the 19th century, and scholars and musicians continue to marvel at its beauty and simplicity, offering insight into the musical practices of the Hellenistic period. Cool, right?

But to me, the most beautiful part of this story is that Seikilos truly immortalized his love for his wife. It's 2023, and we can still listen to the Seikilos Epitaph, which serves as a timeless reminder of the enduring power of love and music. ❤️

~ & that's all folks… 🥕

I hope you enjoyed this week's edition of Tech Digest featuring climate tech and perhaps learned something new about music, history, and culture as well. I am truly grateful for your support and for being a part of this growing community.

If you haven't already, I encourage you to subscribe to this newsletter and share it with your friends and family on the buttons below. 🙃

& stay tuned for more exciting updates and stories in my next edition.⚡

Bisous,
Isabela Mac