Happy Thursday. In case you’ve been living under a rock for the past few months or haven’t seen any of our previous memos (take a look!), nature has been one of the hottest topics in climate tech lately. With the case for de-carbonization technologies well-established, what was previously seen as a ‘nice-to-have’ co-benefit of traditional carbon projects (NbS), is now receiving its well-deserved place in the limelight.

Today we deep dive on the NatureTech innovators developing measurement technologies that will underpin this emerging market. Let’s get started…

TL;DR:

📏 To better manage, protect and regenerate nature and biodiversity, we must first be able to accurately measure them. It is only with the scaled deployment of various measurement technologies (e.g., bioacoustics, eDNA) that we will be able to provide a monetary value to nature-assets and the opportunities/risks they pose

🌱 Providing a $ value to nature & biodiversity is a lot more complex than we saw in the carbon markets. Startups looking to provide solutions here face a number of headwinds including a slower build up of demand, weaker regulatory pressure and financial restraints.

💰️ Nature & biodiversity data must be made more digestible for businesses. Several start-ups have emerged in the past year looking to aggregate, analyze and draw actionable insights from these datasets. This will help bring the trust and transparency this market needs to draw the vast financial investments required to protect and restore the world’s biodiversity.

⛔ What is the problem with measuring Nature today?

Nature & biodiversity loss can directly impact the bottom-line of businesses. Around $44 trillion of economic value generation (over half of total global GDP) is dependent on nature and is therefore exposed to its loss. It has become clear that businesses must take their interaction with the natural world more seriously as they face growing nature-related supply chain disruption, compliance costs and reputational risks associated with bad practice.

Businesses lack clear and consistent data on the risks and opportunities nature poses to their operations. For businesses to take nature-positive action they first need to understand, in $ value terms, the dependencies they have on nature as well as the potential value case for nature positive action. To make this possible we require comprehensive nature and biodiversity data from across businesses’ operations. Insights must be delivered clearly and concisely, in a manner that leaders outside of sustainability teams can act on.

Traditional biodiversity monitoring methods cannot deliver the accuracy and scalability necessary to underpin a robust financial market . Visual methods, including highly scalable satellite/drone imagery, can lack accuracy and are likely to miss vital nocturnal & cryptic species. Our recent report highlights this further (HERE). Less scalable, more invasive techniques (e.g., sampling and geo-tagging) can disrupt the natural flow of these ecosystems despite granting higher degrees of accuracy.

Scientific consensus is needed to instill confidence in businesses and investors. Despite the huge call for investment into nature and biodiversity projects, scientists and economists still haven’t come to a uniform consensus on how we best measure the $ value risks and dependencies of businesses on nature.

Scalable measurement solutions are a fundamental requirement for unlocking scaled financial investment into nature and biodiversity projects . Whilst early stage investment into nature MRV has steadily risen ($53.4M in 2018 to $305.5M in 2022), more funding is needed to close the $700B/yr biodiversity financing gap. New measurement methodologies and technologies must be developed if we are to attract the vast capital investment required to protect and restore nature.

 🐯 What solutions are emerging to this challenge?

Bioacoustic technologies are able to capture previously neglected biodiversity data points: From whale songs to bird chirps, each species holds a unique audio fingerprint. Bioacoustic recorders are able to capture this symphony, even in dense jungles or after dark. This technology is a key means of bridging the data-gap faced in the nature and biodiversity field. Arbimon, for example, is an open-source AI-powered platform being used to analyze 9.2 million recordings across 940 sites in Puerto Rican rainforests. This data can be used to track restoration progress, manage protected areas, identify endangered species, and highlight benefits of sustainable land-use.

Environmental DNA (eDNA) has revolutionised biodiversity assessment as a non-invasive technique for sampling water, soil, or air to detect species presence. This includes elusive or endangered species by detecting the DNA that species have left behind. New players have entered the market (e.g.,NatureMetrics) to enhance conservation, ecosystem monitoring, and invasive species management by offering a more accurate and efficient means of assessing biodiversity.

Artificial Intelligence is supercharging the speed and efficiency of biodiversity measurement: Forget complex and time-consuming manual analysis. When trained correctly, the use of AI to analyse nature/biodiversity data-sets (e.g., bioacoustics) has been proven to be as efficient as human experts. As these models develop, we can expect the speed and efficiency of species identification, counting and subsequent population change tracking to vastly increase. See our full deep dive on the specific use cases for AI in Nature Here

🔍️ Who are the key players solving these challenges?

AgriSound (York, UK)
Developer of a pollination management platform designed, leveraging bioacoustic technology to better monitor and predict pollination efficiency.
Latest Financing: Seed; Dec 2023; $1.10M*
Investors: Anglia Capital Group
News: Joined forces with M&S to support farmers addressing biodiversity loss, using acoustics to track & boost pollinator activity in real-time.

Biometrio.earth (Saarbrucken, GER)
An ecosystem health diagnostics and monitoring company intended to bring radical transparency to carbon and biodiversity conservation markets.
Latest Round: Currently bootstrapped
Investors: Seed Round TBA (2024)
News: Partnered with automated carbon measurement start-up, PLENO to better assess the feasibility of future carbon projects.

Arbimon (Texas, USA) 
Catalyzing bioacoustic analysis through an accessible AI powered platform
Latest Financing: Philanthropic funding via Rainforest Connection
Investors: N/A (Non-profit)
News: Collaborated with Puerto Rico’s US Fish & Wildlife Services to recommend expansion of protected areas using AI-powered bioacoustic analysis.

NatureMetrics (Surrey, UK)
Developer of a biodiversity monitoring platform designed to identify and quantify organisms in the natural environment using biodiversity science expertise & eDNA techniques.
Latest Round: Series A; May 2022; $15M
Investors: 2150; Ananda Impact Ventures; BNP Paribas; New Atlantic Ventures; SWEN Blue Ocean Partners; Systemiq Capital
News: Partnered with Unilever to deliver regenerative farming practices across its supply chain. 

💼 Business Models

Assessment as a Service: Providing project-based bio/ecoacoustics/eDNA services for a wide range of client use-cases including; land acquisition, ecological assessment, planning submission and the mitigation/monitoring of nature loss (Baker Consultants).

Hardware Providers: Providing technologies that capture data points on nature/biodiversity indicators including bioacoustic recorders and sensor networks to researchers, conservationists, and land managers that enable them to carry out assessments (Wildlife Acoustics). Developing and distributing the hardware required to collect vast biodiversity datasets allows start-ups to position themselves as an enabling technology that can be leveraged and scaled by the more comprehensive biodiversity data aggregation platform players mentioned above.

📈 Two Opportunities

Regulatory tailwinds: accurate, scalable measurement technologies will act as a key enabler of compliance. The Taskforce on Nature-related Financial Disclosures (TNFD) recently announced that over 320 organizations, including financial institutions with more than $14 trillion in assets under management, have made commitments around biodiversity loss in-line with their 2023 recommendations. As a result, we can expect demand growth for accurate, scalable biodiversity data collection techniques (e.g., bio/eco-acoustics, eDNA & geospatial).

Nature-tech solutions can be integrated into existing, well-established climate-services. There are a number of existing climate-tech solutions that have already established a key role in the market (e.g., Carbon-accounting & physical risk assessment). These solutions have the potential to create a solid foothold for additional, aligned nature-tech capabilities to gain traction with corporate clientele as they can be layered into existing in-demand services (e.g., Nature risk assessment & disclosure).

 📉 Four Risks

Customer: Who pays? Despite strong corporate signaling, we can expect to see hesitation. Despite the vast corporate commitments around biodiversity-loss, until strong regulatory pressure coincides with the TNFD’s suggestions, we can expect the market to remain hesitant in deploying capital in a meaningful way. As we have seen with the voluntary carbon markets and the Taskforce on Carbon-related Financial Disclosures (TCFD)’s frameworks, the stand-off between demand stagnation and a lack of high-quality supply (of carbon credits) has plagued the market in recent years.

Timing: Who will live out? We can expect market consolidation as start-up runways fail to outlast significant demand. There is an emerging concern amongst market players that, despite the recent buzz around tech-enabled nature measurement/monitoring services, demand has remained slow. We can expect consolidation amongst early movers in this space as successful firms are able to capitalize on the emerging market whilst those less fortunate quickly run out of their venture-backed capital reserves.

Scalability: Can the technology scale when demand arises? The tech-enabled solutions entering the market face a number of scalability risks including limitations in data processing capacity, compatibility with diverse ecosystems (e.g., ocean vs land), and resource constraints for in-situ measurement & accuracy assurance. As the demand for these services grows on a global scale, substantial investments into infrastructure, resourcing and personnel training may be required to ensure high-quality, replicable service delivery.

Defensibility: Are open source algorithms are good for nature, but could be bad for business? Currently, many of the valuable AI-algorithms being applied to nature/biodiversity data-sets are developed by academic research groups. New market entrants must therefore derive value from other areas of their business models to draw in demand (e.g., data aggregation capabilities, SaaS platforms, UX). Given the market opportunity here, time will tell as to whether existing carbon data players position themselves as buyers or competitors to these new entrants.

 💬 Hear it from the experts