Inside 8X Ventures’ $25M bid on MENA’s cleantech, climate tech ecosystem
Dubai-based 8X Ventures wants to promote the growth of cleantech and climate tech startups in the Middle East as governments eye sustainable and green solutions.
The MENA region’s economy has flourished on the back of oil and gas extraction and trading. However, with the world now moving away from fossil fuels, the group of countries, especially the GCC region, is now significantly pushing towards technology and green solutions.
MENA countries are increasingly committing to net-zero efforts. Ahead of the COP26 climate conference held in 2021, countries including Saudi Arabia, the UAE, and Bahrain committed to charting roadmaps towards a green economy to drive future growth. Saudi Arabia has pledged to invest over $186 billion in green growth till 2060 while the UAE has pledged to reach its net-zero goal by 2050.
While the governments are doing their bit, investor interest has remained low. Dubai-based 8X Ventures wants to bridge this gap.
The venture capital firm was launched in 2022 to support the growth of deeptech startups offering clean and climate-focussed solutions in the MENA region.
“It’s a large and highly underrepresented startup ecosystem right now. But the region is gearing up to be at the forefront when it comes to cleantech and climate tech revolution,” Chirag Gupta, Managing Partner at , tells YS Gulf Edition. “So, any investment made to a climate tech startup in the region, which has been backed with strong deep tech, can create a huge growth impact over time.”
The VC firm plans to deploy $20 million in the near future in the climate tech and cleantech startups of the region. It also plans to help at least one-third of the startups in its portfolio to expand to the Middle East. The goal is to enable at least five startups to operate in the region by 2024.
8X Ventures has also kept aside a pool of around $5 million for cleantech and climate tech startups that are based out of the Middle East and are actively working in the region.
8X Ventures was founded by Chirag Gupta, Esha Arya, Ajay Singh Rajput, and Vinod Agarwal. Since its inception, the VC firm has made 12 investments in early- to seed-stage deep tech startups spanning India, Singapore, and the United Kingdom. It is helping these startups—including UK-based ZenPulsar and India-based Solinas and XYMA Analytics—expand to the Middle East.
Nishanth Raja, Co-founder and CEO of , shares his experience of working with 8X Ventures, "8X Ventures team has a pragmatic approach to investments in deeptech startups. Their mentorship and growth advice has helped us strategise our business solutions for our expansion into global markets, especially in the Middle East.
He also says, "Chirag Gupta has helped us connect with several industries in the Middle East as we are expanding globally, predominantly focussing on industries adopting Industry 4.0 technologies and innovative solutions."
Apart from funding, 8X Venture provides post-investment guidance, strategic guidance to portfolio companies, operational guidance, and connections to other investors and customers for global expansion.
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Cleantech and climate tech in MENA
While the efforts of the governments for cleantech and clean energy have borne some fruit, there still is a large gap in terms of venture capital funding in sustainable and climate-focussed startups in the region.
“It is more like a chicken-and-egg situation. Since there is a lack of high-quality startups in these sectors, VCs are not comfortable putting their money. Again, startups are awaiting VCs to deploy more money that will fund cleantech and climate tech,” Gupta observes.
The lack of financial backing has weighed down the climate tech sector in the region for a long time. According to a 2016 study by Wamda Research Lab, the absence of funds and lack of VC interest were the major reasons behind the slow growth of the sector. The only exceptions to the trend were Catalyst Private Equity and E2E Integrated Solutions.
The pandemic saw a further decline in funding activities in the cleantech and climate tech sectors. In 2020, Clean Energy Business Council noted that while the fintech industry raked in funds from 41 deals, only five deals went to the climate tech sector.
However, Gupta is optimistic. He refers to cleantech companies, especially those from India, such as XYMA and Solinas, which are finding greater cashflow opportunities and better unit economics in the MENA region.
“The Middle East is the fastest-growing region in terms of adaptation of technology. Regulations are also catching up with technology,” he says.
He advises cleantech and climate tech startups to test their proof of principle and proof of concepts in their home country before exploring the Middle East. “If they come in too early, they might burn too much cash for very little impact,” he points out.
Gupta notes that incubators and accelerators like Hub71 are also supporting the growth of the sector in the region. For instance, Hub71 partnered with Siemens Energy in Abu Dhabi to identify cleantech and climate tech startups in the region and explore investment opportunities in line with the UAE’s drive to invest in green infrastructure and clean energy projects.
8X Ventures is among the likes of , Arise Ventures, and FTV Capital, which are also participating in the funding of cleantech and climate tech startups in the region.
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Edited by Kanishk Singh and Swetha Kannan