The role of venture capital in climate resilience

A farmer in Uganda.

Mercy Corps Ventures, the venture capital arm of Mercy Corps, invests in startups building climate resilience and financial resilience for communities across the world. We’ve supported 30+ ventures to scale and raise over £70 million in follow-on capital. Read on to learn about the role our ventures play in building a world where everyone can prosper.

 

Climate change is accelerating.

Frontier markets are particularly vulnerable to the impacts of climate change — extreme weather events, reduction in land for agricultural activities, reduced availability of water, and market shocks are increasing the risk of food insecurity, conflict, and displacement. It’s been estimated that by 2030, climate change could push a further 100 million people into poverty, with developing countries bearing an estimated 75–80% of its costs.

At Mercy Corps Ventures, we invest in high-impact seed and early stage startups that are developing climate adaptation solutions for people living in climate-vulnerable communities in frontier markets.

Startups and venture capital have a key role to play in increasing climate resilience. Innovation and high-impact entrepreneurs are developing scalable solutions to help communities adapt to climate change — solutions that will support people through financial shocks, like insurance and technology-enabled financial tools; solutions that can enhance their livelihoods, like climate-smart agriculture technologies; and solutions that can increase the resilience of their communities, like secure property rights and sustainable supply chains.

The U.N. Secretary-General, António Guterres, has called for 50% of the total share of climate finance to be spent on climate adaptation. This mandate will require us to leverage all the tools in our toolbox. Entrepreneurs will have to test a variety of business models, funds will have to be open to different return horizons, and funders will have to unlock a variety of catalytic capital structures. We’re seeing the market for climate adaptation solutions growing and have intensified our focus on climate resilience.

We are building a constellation of investments across three themes of financial resilience, adaptive agriculture and livelihoods, and climate-smart communities, that collectively give individuals and communities the agency to adapt and thrive in the face of climate change.

Cloud to Street is a deep science platform that allows governments, NGOs, and insurers to accurately assess, price, transfer, and respond to catastrophic flood risk, plugging the global insurance gap in real time.

Ignitia provides hyper-local weather forecasts for farmers in the tropics with enhanced accuracy from AI. Their team is currently reaching around 1.7 million farmers with 24-hour forecasts that are 20–50% more accurate than others.

Meridia provides an end-to-end solution for land and property documentation for farming communities. With formal land titles, smallholder farmers have tenure security and unlock access to the tools they need to expand production.

OKO is an agricultural microinsurance provider for climate-vulnerable smallholder farmers. Their aim is to ensure that farmers have greater income stability and are able to access decent loans with proof of insurance, resulting in higher agricultural yields through the ability to invest in improved production.

Pula designs and delivers innovative agricultural insurance and digital products to help smallholder farmers endure yield risks, improve their farming practices, and bolster their incomes over time.

Topl is a blockchain protocol that provides traceability and transparency up and down the supply chain. This aims to revolutionise how businesses engage with, prove, market, and monetise sustainable practices, and ultimately strengthens the entire system.

Turaco provides affordable health and life insurance for low-income workers, many of whom are climate-induced urban migrants. Driving financial inclusion is key to building resilience to climate shocks.

Confronting climate change is the most pressing issue of our time, and action on climate adaptation now will drive climate resilience in the future. The founders of transformative solutions in emerging markets are building toward this future, and we are here as investors and partners to accelerate their growth.

This isn’t just the right thing to do, it’s the next big market opportunity.

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