COP 29: A Crucial Moment for Health Tech Innovators to Act on Climate

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COP 29: A Crucial Moment for Health Tech Innovators to Act on Climate

With the upcoming United Nations Climate Change Conference (COP 29) in Baku starting on November 11th, it's vital for health tech innovators to focus on the connection between climate change and health technology. These sectors are linked through common challenges in technology, engineering, chemistry, investment trends, and their impact on human life.

A Planet in Peril: Health at Risk

The World Health Organization (WHO) has made it clear that climate change isn't just an environmental issue—it is a public health crisis. Increasing global temperatures, rising pollution, and more frequent natural disasters are putting pressure on health systems worldwide. Developed nations are seeing more heat-related illnesses such as asthma, respiratory issues, and heart disease, while developing nations grapple with food insecurity, which in turn drives the spread of infectious diseases.

If we don’t address environmental sustainability, health technology will only treat symptoms rather than the root causes of illness. It is critical that health tech leaders keep a close eye on policy changes and economic investments in the climate space. The well-being of humans is intrinsically tied to the health of our planet, intertwining the value of both sectors.

Where Health Tech Meets Climate Tech

Health tech and climate tech share more similarities than may initially appear. Both sectors rely heavily on advancements in engineering, data analytics, and chemistry to create life-improving solutions:

• Technology and Data Analytics: Health tech uses AI, machine learning, and big data analytics to diagnose diseases, monitor patient health, and personalize treatments. Similarly, climate tech employs these technologies to predict weather patterns, track emissions, and manage energy systems. In both areas, data drives innovation, and success will hinge on the ability to track, analyze, and respond to trends.

• Chemistry and Materials Science: In health tech, breakthroughs in materials science have led to advancements in medical devices, drug delivery systems, and biomaterials. Climate tech relies on chemistry for innovations such as renewable energy solutions, carbon capture, and sustainable materials. Both sectors depend on chemical innovation to solve complex challenges—whether in human biology or environmental sustainability.

• Engineering and Infrastructure: Health tech innovators are creating advanced devices like real-time health monitoring wearables and precision robotic surgery systems. Meanwhile, climate tech developers are designing renewable energy grids and resilient infrastructure to cope with climate change. Both fields require cutting-edge engineering to improve the quality of life worldwide.

These shared technological and scientific foundations suggest that collaboration between health tech and climate tech could spark synergies that accelerate innovation for the benefit of both humans and the planet.

Why COP 29 Matters for Health Tech Innovators

The COP 29 conference presents a pivotal opportunity for global cooperation on climate solutions. It will bring together government officials, scientists, and industry leaders to discuss policy, set climate targets, and showcase new technologies designed to address climate change.

Each year, 400 million tons of plastics are produced, with half of them used for single-use items. Hospitals are significant contributors to landfill waste, producing 5.9 million tons annually in the U.S. alone, much of it being non-degradable plastics. Companies like UBQ Materials, which converts landfill waste into usable goods, and Solutum, pioneers in biodegradable packaging, offer solutions that align with the goal of reducing healthcare’s environmental impact.

Health tech innovators should pay close attention to COP 29 for several reasons:

• Regulatory Changes and Policy Frameworks: Governments are increasingly focused on regulating carbon emissions and sustainability, and COP 29 will be a forum for shaping these regulations. Health tech companies must stay informed about how policy changes could impact product development, supply chains, and corporate sustainability efforts.

• Funding and Investment Opportunities: With more emphasis on climate-friendly technologies, funding opportunities for projects that combine health and environmental sustainability are expected to grow. COP 29 will highlight investment priorities, especially in regions most affected by climate change. Health tech companies aligning with climate goals may find new funding streams and opportunities to expand into emerging markets.

• Collaborative Innovation: The conference will showcase both policy discussions and the latest climate technologies. This offers health tech innovators the chance to collaborate with climate tech firms on complementary solutions, from sharing AI-driven data on heat-related health risks to integrating renewable energy into healthcare infrastructure.

• Corporate Social Responsibility and Sustainability: Consumers and investors are increasingly demanding sustainability and social impact from companies. COP 29 will likely stress the importance of corporate sustainability in the health and climate sectors. Health tech companies that don’t address their climate impact could face reputational risks, while those that do will stand out as leaders in their industry.

Innovators Must Unite for People and Planet

For too long, the health tech sector has been focused solely on human health, neglecting the undeniable connection between planetary health and human well-being. As COP 29 approaches, health tech innovators have the opportunity to broaden their perspective and recognize the link between their work and climate technology, which will shape our future.

The solutions to the health crises of tomorrow won’t come solely from hospitals or diagnostic settings. They will require an understanding of how environmental sustainability influences human health. By engaging with climate tech, health innovators can help build a future where both people and the planet thrive.

COP 29 is a chance for the health tech sector to listen, learn, and take action. It’s a moment to acknowledge that without a healthy planet, we can’t have healthy people. It’s a time to work together with climate tech to protect the future of life on Earth.

Can Africa’s Climate Tech Deliver the Big Wins to Match Funding Growth?

A venture capitalist has two primary roles: investing in companies with the potential for substantial returns and managing relationships with the limited partners (LPs) who provide the capital. In Africa, these LP relationships increasingly revolve around development finance institutions (DFIs), which have become major sources of funding for VC firms.

This dynamic gives DFIs considerable influence over the direction of Africa's venture capital landscape, as these firms are required to adhere to impact metrics set by DFIs. These institutions, often funded by governments or international organizations, channel investments in line with their backers' objectives. As a result, with a global push toward addressing climate change, DFIs have increasingly incentivized investment in climate technology in Africa.

This reliance on DFIs is unique to the African VC ecosystem. Unlike global VC firms, African venture capitalists have limited access to traditional funding sources such as pension and endowment funds, forcing them to turn to DFIs, which have fueled a significant surge in VC funding on the continent.

Institutions like the International Finance Corporation (IFC), which has invested in Africa's largest and second-largest VC funds, manage billions of dollars and see VC firms as essential drivers of innovation, job creation, and economic development in Africa due to their local expertise and reach.

"Limited partners have opinions and make recommendations, but we often engage in healthy discussions. It's a collaborative process," said Kola Aina, general partner at Ventures Platform, in an interview with TechCabal.

These recommendations have significantly contributed to the recent growth in climate tech funding across Africa, even as overall VC funding has declined. In 2023, climate tech became the second most-funded sector in Africa, raising $1.04 billion, a 9% increase from the previous year.

Aina noted that this growth is partly driven by LP priorities, listing partners like France’s Proparco, British International Investment, and the IFC. However, the funding surge does not fully align with the commercial viability of most climate tech solutions in Africa. "It's more of a policy-driven sector than a commercially-led one," remarked the general partner of a $30 million fund who wished to remain anonymous.

Despite the rising investment in African climate tech—from $340 million in 2019 to over $1 billion in 2023—the high upfront costs of many climate solutions pose a challenge to scaling. While funding has poured into the sector, there is no clear estimate of its total market value, despite its broad coverage across sub-sectors such as electric vehicles, solar technology, and recycling.

While climate tech holds great promise for Africa, a continent heavily impacted by climate change, current solutions have not yet effectively addressed the region’s specific needs. This contrasts with the fintech boom of the early 2020s, which saw success stories like Paystack and Flutterwave rise to prominence, helping shape a vibrant ecosystem. In climate tech, similar transformative breakthroughs, beyond electric two-wheelers, have yet to emerge.

“We welcome the rise in climate tech investments, but it's important to carefully evaluate their viability,” said Aina.

DFI funding was instrumental in launching Africa's telecommunications sector, showcasing the power of patient capital. For climate tech to have a similar transformative effect, the continent needs startups capable of delivering scalable solutions soon. Without key players driving significant change, the potential of climate tech in Africa may remain unrealized.

Surviving the Tech Reset: European Insights for Global VCs

In recent years, venture capital has experienced a strong growth phase, driven by stimulus measures and historically low interest rates, benefiting founders, angel investors, and venture capitalists (VCs) alike. This surge of capital blurred traditional roles, with founders becoming investors, angel investors transitioning into VCs, and growth investors exploring early-stage startups. Investments flowed freely, driving up valuations.

The European experience offers valuable insights for navigating these global challenges. Between 2017 and 2022, Europe faced market corrections as rising interest rates and falling valuations led to a "tech reset," complicating fundraising efforts for both VCs and their limited partners (LPs). As Joe Schorge of Isomer Capital put it, "Nothing works unless fundraising works," since this capital is essential for funding startups.

In Europe, this reset exposed a growing divide between VCs' optimism and LPs' caution. Some funds reduced portfolio valuations by up to 50%, while others delayed addressing the downturn, damaging trust between investors and fund managers. LPs seeking quick liquidity became frustrated, fueling an increase in secondary market activity during a challenging time.

Our research, based on over 300 interviews with LPs and VCs, provides strategies for navigating this environment and improving fundraising efforts. While rooted in the European experience, these insights have global relevance:

Navigating the Tech Reset

1. Embrace the Tech Reset
   Instead of viewing this period negatively, VCs can use it to build stronger relationships with LPs. Resilient connections increase the likelihood of securing follow-up commitments from existing LPs, while new partnerships can be forged on the basis of trust and thorough due diligence. Daniel Keiper-Knorr of Speedinvest attributes their success in raising €500 million during and after the reset to open and proactive communication with LPs.

2. Differentiate to Align with LPs
   In a tough market, differentiation and transparency are critical. VCs must clearly define their value proposition and ensure it aligns with LPs' long-term objectives. HV Capital illustrates this with its dual-fund strategy, which separates investments into two distinct funds—one focused on early-stage ventures and another on growth-stage companies—enabling them to meet the varying expectations of different investors.

3. Prove Performance
   Demonstrating performance is key, particularly for VCs with a limited track record. LPs seek consistency, strong networks, and evidence of strategic focus, evaluating not just returns but also how fund managers navigate downturns and manage exits. Rodrigo Ferreira from Vinthera notes that a track record reflects more than just past performance; it shows alignment with the investment thesis. For newer managers, LPs may look for proof of concept through successful angel investments or early achievements.

4. Manage Difficult LP Behavior
   Building and maintaining relationships with LPs requires vigilance, particularly when dealing with challenging behaviors like delayed commitments, sudden withdrawal of interest, or unresponsiveness during critical fundraising stages.
   To address these issues, VCs should conduct thorough due diligence on potential LPs, including their decision-making processes and track records with previous fund commitments. Chris Wade of Isomer Capital emphasizes that fairness and transparency are essential in setting clear expectations early on. VCs can also benefit from sharing experiences with their peers to identify patterns of unreliable behavior.

   
   However, it's important to recognize that not all volatility stems from bad faith. External factors, such as economic changes or internal LP challenges, can cause delays. When LPs fail to communicate these changes promptly, it can lead to unnecessary friction and distrust.

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