The Circular Carbon Network gathers detailed information about the leading players in the emerging Circular Carbon Economy in a series of living online data Indexes. We believe this is the most comprehensive collection of market data about this critically important emerging sector available anywhere. The purpose of the Circular Carbon Market Report is to share an analysis of our data in a way that gives more context, character, and depth to this ecosystem, increases overall societal interest and understanding, and facilitates informed action. We hope you find it useful.

Here are some of the highlights of our analysis:

The Innovator Index and Deal Hub

The Innovator Index and its companion database, our Deal Hub, tracks key technology, product, commercial, and capital data about the solution provider landscape for potential investors, commercial partners, and other key stakeholders.

Key Findings

The Circular Carbon innovator landscape is diversifying and growing rapidly. There is a broad spectrum of companies from around the world developing and commercializing a varied range of innovative Circular Carbon solutions for applications in different end markets. Moreover, even though the sector is still relatively young, there are meaningful numbers of companies at all stages of technology maturity, commercial deployment, and revenue generation, from new startups doing their first pilots to successful growth stage businesses. The same is true for the increasing depth and breadth of the investment opportunities we are seeing on the Deal Hub, where we find a diversity of deals across investment stages, type and size of investments sought, valuations, target investors, and other key factors.

• Significant Increase in Capital Raised: We were able to identify investment-to-date totals for 185 out of 403 companies in the Index of approximately $3 billion. Since our 2020 report, this is an increase totaling $884 million.
• Meaningful Increase in Total Investment Opportunities: There was a 14% increase in capital sought (by slightly fewer companies) compared to 2020 numbers. Our Deal Hub tracked 105 companies (roughly a quarter of the entire Innovator Index) seeking over $816MM in capital in 2021.
• Valuations Increasing: The total pre-money valuation for all the companies in the Deal Hub (62/110 companies) comes to over $6.9B. This is a significant increase from 2020 — by $5.4B — and this number is likely understated. This strongly suggests that increased general interest in the sector (by entrepreneurs, investors, policymakers, and corporates) is now leading to rising valuations, something to watch carefully in the coming year(s).
• Company Formation Picking Up Pace: Of the companies we have founding year data for, 52% report they were established in 2015 or later, and 9% of all companies with founding year data were started in 2021 alone.
• Wide Distribution of Technology Readiness, Including Growing Cohort of Mature Companies: While 42% of the reporting companies in our Index classified themselves as early-stage TRL’s of 1-5, even more (58%) classify themselves as somewhat technologically advanced at a TRL of 6 or above. Nearly half of those report as highly advanced (TRL 8 & 9).
• Growing Revenue Traction: Of the companies that we have revenue information on, over half are already generating revenue. Half of these are generating over $1MM. At the same time, 44% are still pre-revenue. Total revenue reported by companies in the Index ranged from $562MM to $1.425B.

Key Findings

The emerging Circular Carbon investor landscape is already quite diverse and includes a broad range of institutions, types, and size of investments. Overall, the firms in the Index are managing a significant amount of capital and express a high level of interest in a wide spectrum of Circular Carbon opportunities. All of these different factors can be filtered and viewed in the Capital Index here.

• Increase in Corporate Equity Focused on the Sector: Corporate Equity is the largest investment type reported in the index, having increased by 46% from 2020. This is perhaps reflecting the growing rush of equity capital into earlier-stage Circular Carbon solutions that are coming to market.
• Increase in Target Check Sizes: The majority of investors in the Index reported being able to deploy an initial investment of $1MM or more into a single company, while 29% are looking to invest $10MM or more.
• Notable Increase in Patient Capital: The majority of investors indicate a typical horizon of between 3-7 years. However, we are also tracking a 150% increase in patient capital (7+ year horizon) from 2020, a good indicator that more investors are comfortable with the longer technology and market development times that are likely required for the maturation of the emerging Circular Carbon economy.
• Increase in Impact Focus, Decrease in Returns-Only Focus: The expressed preference of the investors in our Index report that impact and returns are equal factors in their investment decision making (28%). An increasing number stated they are willing to accept lower returns or higher risk for impact, representing 15% of the firms in our Index. These results suggest that the shift towards integrating impact into investment decisions is here to stay.
• Significant Increase in Tracked Capital Deployed: Our research has identified 80 investments totaling $244MM into Circular Carbon-specific opportunities (both Carbontech and Carbon Removal) by investors within the Capital Index. This is an 87% increase in the value of investments recorded in the Index versus 2020 ($131MM in 2020).

Key Findings

While corporate intersection points are still clustered at the “front end” of technology development (R&D and investment in technology developers), corporations are also engaging by supplying critical components to the market, commercializing their own solutions, hosting commercial demonstration projects, and collaborating across institutional boundaries. These activities, however, are still just emerging and there is evidence that there is a general lack of strategic clarity about their role in, and the impact on their businesses of, the Circular Carbon Economy. Given the slow pace of change in large organizations, this may be understandable; but it may not be enough.

CCN’s Corporate Index covers 80 large global corporations from 21 countries and 19 industry verticals (from oil and gas, power, and chemicals companies to technology and consumer products companies). While about two thirds of the worlds largest emitters have a net-zero pledge, the corporates in this Index represent approximately 17% of both global CO2 emissions and Fortune 500 corporate revenues , and employ over 7 million people.

• Corporate Activity Expanding from R&D to Purchasing and Investment Companies added to the Index in 2021 are more focused on purchasing and investment than last years data shows. Two-thirds of these additions are active in purchasing Circular Carbon solutions, in sharp contrast to 2020, when purchasing was the lowest reported focus area. Similarly, nearly two-thirds of these new additions are focused on investing in third-party solutions, while less than half are involved in R&D.
• Growing Corporate Investment Interest in Carbon Removal Corporate interest in investing in Carbon Removal solutions is pacing that of Carbontech, with each increasing between 42% and 44% year-over-year amongst those corporates in our Index with a cleantech-focused investment arm. In fact, overall, 78% (18) of the 23 corporate cleantech investors now have carbon removal as a core focus or secondary focus.
• DAC-to-Sequestration Top Corporate Carbon Removal Investment Focus, Natural Carbon Removal Solutions Rising Too This year, DAC-to-Geologic Sequestration appears to be the top focus for corporate investors interested in Carbon Removal, with 79% (15/19) of those disclosing their target Carbon Removal interest areas highlighting that pathway. DAC-to-Durable-Products is another similar highly represented focus area for corporates in the Index. We also found a significant growth in interest in Natural Carbon Removal solutions, with Soil Carbon Sequestration and Afforestation/Reforestation each doubling this year as focus areas. Finally, Ocean-Based Carbon Removal and Enhanced Weathering were each new to this year’s report and have gained the interest of 3 and 2 corporates in the Index respectively.

The Catalyst Index

The Catalyst Index is designed to help market participants of all types better understand and access the services, expertise, resources, and support that the growing number of enabling organizations in and around the Circular Carbon sector offer.

Key Findings

The emerging Circular Carbon Catalyst ecosystem includes a diverse spectrum of over 23 types of organizations, with the most common being NGO’s, convenors (like CCN), and commercial service providers (like attorneys, consultants, and engineering firms). These organizations are generally modest in size with less than 100 employees, but are also highly focused on the Circular Carbon sector, with a majority focused on Carbontech-related issues specifically. The target core customers and stakeholders of these organizations are primarily entrepreneurs and corporates, but also include capital providers, governments, and the public. All of these different parameters can be filtered and viewed in the Catalyst Index here.

• Growing Diversity in Catalyst Org Types Conveners and Platforms are the most common organization type this year, versus last year’s leader NGOs. Service providers are the second highest, perhaps evidence of the growing business opportunity in servicing the Circular Carbon economy. There is also growth in Accelerators and Think Tanks.
• Significant Increase in Policy Focus and Overall Diversity of Activities We saw a significant increase in organizations focused on Policy (a 144% increase from last year) with 23 more policy-focused organizations added in 2021. This is both a reflection and possibly a driver of increased global policy activity around Circular Carbon and climate change more generally.
• Diverse Target Customers, Large & Small, with Government Noticeably Rising on the List In order to understand who the organizations in the Catalyst Index seek to pair themselves with, we identified each of their core target stakeholders. The two top customer groups are on opposite ends of the size spectrum – corporates and start-ups. The other large groups are capital providers, governments and the general public. As the numbers suggest, many seek to serve multiple of these groups. Government as a target stakeholder grew noticeably this year, which might reflect the uptick in Circular Carbon-relevant policy activity globally.

This is our second annual Market Report, a comprehensive and detailed analysis of the key players in the Circular Carbon Economy. Our first-of-its-kind 2020 Market Report laid the foundation for this Report. This year we have focused on expanding the breadth and depth of our Indexes.

Built on Unique Databases

CCN has continued to aggregate data on the participants in the growing Circular Carbon ecosystem in our catalog of Indexes. These include:

• The Innovator Index (featuring over 400 leading solution developers),
• The Deal Hub (detailing nearly half a billion dollars of live investment opportunities for accredited investors),
• The Capital Index (which profiles over 160 active climate, carbontech, and carbon removal investors),
• The Corporate Index (focused on the growing list of global companies active in the sector),
• The Catalyst Index (tracking the organizations who are the leading enablers of the Circular Carbon Economy, such as service providers, technical experts, and policy advocates).

Broadening Beyond Our Base

It is important to note that our databases were originally built based on data from the NRG COSIA Carbon XPRIZE, which focused more directly on carbon capture and utilization (also known as “carbontech”). While we have since expanded our focus to include the broader world of carbon removal (including technological, oceanic, geological, and biological solutions), the foundation of our data is rooted in the carbontech sector, and this does still influence our overall numbers. We are now actively looking through a broader Circular Carbon lens, and adding data to all our Indexes about the rapidly growing and diversifying carbon removal space, including the emerging innovators competing in the XPRIZE Carbon Removal.

Focused on Informing and Inspiring Action

The goal of this report is to share an accessible and digestible version of what we have learned about the state and direction of the Circular Carbon economy through working with our Indexes. By identifying current opportunities and challenges for the continued growth of this space, we ultimately aim to catalyze more informed activity in the circular carbon economy at an accelerated pace.

Methodology

The data compiled in this Report comes from a broad combination of sources, including internal quantitative research, self-reported data by market participants in response to our surveys, and the generous cross-sharing of market data by our global partners. We believe it provides a uniquely detailed resource to the marketplace. We also recognize its limitations. We know there are many gaps in our data and in our coverage. The responsibility for any inaccuracies rests with us alone. As the Circular Carbon Network is not a commercial data research service, but a market catalytic, non-profit initiative, we rely on collaboration and data sharing to improve the depth and richness of our Indexes. If you are actively engaged in the Circular Carbon Economy, we invite you to add or update data about your organization here.

The Carbon Removal Imperative

It is common knowledge to anyone working in or around the Circular Carbon field that in order to limit the most severe effects of climate change, we need to reach net-zero emissions by 2050, and net-negative shortly thereafter. To do this, we need to remove upwards of 1,000 billion tonnes of carbon dioxide from the atmosphere by 2100 (IPCC), and possibly 2 to 4 times that amount. With current global annual emissions at around 51 billion mtCO2e, the math tells us that even if we start deploying Circular Carbon solutions at scale today, we will still need to see an annual growth rate in reductions and removal capacity of over 55% to avoid a 1.5 degree Celsius global temperature rise. Delaying deployment at scale, even by a few months, has measurable and exponential effects.

The Pathways

The good news is that we already know how to get there. There is a broad portfolio of solutions for both removal and mitigation – and these solutions will thrive when scaled concurrently and together, not in separate silos. As we know, there is no one silver gigaton bullet. 

Together, the players in this emerging sector represent possibly the most unique cross section of industries and professionals ever working together in history. From big agriculture to big oil, industrial engineers to geologists, ocean kelp to chemical solutes, those working in the Circular Carbon sector are united by the common goal of reversing a century of atmospheric imbalance (and for many, rebuilding successful, sustainable industries in the process). 

As you will find in our 2021 Market Report, all the major Circular Carbon solutions one can imagine are starting to come into play, across technological, biological, and geological pathways.  For clarity as we lay out our findings across these emerging pathways in this report, some definitions are in order.

About the Index

Climate innovators are the lifeblood of the Circular Carbon Network. The focus of the Network is to increase investment and commercial interest into these innovative companies. By bringing in-depth information together in one place about these innovators, our goal is to provide a data-rich resource for educating the market and mobilizing more active engagement.  

We analyze innovators working in Circular Carbon through several criteria. First and foremost, the solution must be a Circular Carbon one – in either carbontech or Carbon Removal. From there, we look for companies that are at least engaged in the pilot phase of their project, which can mean they have an active demo or have secured seed or pre-seed funding.

By laying out key details about these companies and their status, pathways, and needs, we aim to provide market participants with a disciplined guide to the Circular Carbon startup landscape. 

While the Innovator Index focuses on characterizing the rapidly evolving and growing solution provider landscape across a broad variety of practical, technical, and commercial dimensions, the Deal Hub is designed specifically to address the needs of capital providers and features investor-relevant information about live investment opportunities. Through these databases, we catalyze action by helping:

• Investors find Circular Carbon companies that fit their thesis
• Entrepreneurs feature their company to a capital audience
• Corporates identify potential startup innovation partners

Both databases include data gathered directly from companies via targeted surveys and through the review of public information by our research team. Because of our US location and the US and European location of many of our data partners, these databases are weighted towards North America and Europe, though we are working to expand our coverage of innovators from other global regions. We welcome your nominations of companies to add to the Innovator Index or Deal Hub. Despite these limitations, we believe we have compiled the largest public databases of Circular Carbon innovators and deals, ever. We hope you find them, and our analysis of the data we have gathered so far below, useful.

Company Formation Picking Up Pace

Of the companies we have founding year data for, 52% report they were established in 2015 or later. In fact, 9% of all companies with founding year data were started in 2021 alone! As the Index will surely capture more innovators founded this year in the future, there is a clear upward trend of company formation in the Circular Carbon space. Still, it is important to remember that 25% have been around for 10 years or more, so the Circular Carbon ecosystem also has a significant cohort of more mature companies.

Increasing Geographic Diversity, with Some Blind Spots

The number of countries represented in our Innovator Index increased to 35 (from 27 last year) – with the majority of these additions coming from Europe. While we saw some new additions from South America and Asia as well, most of the Index remains weighted toward innovators from North America and Europe, which is both a reflection of where there is significant start-up activity and where we have more on-the-ground market intelligence. We look to continue adding in innovators from under represented continents, particularly Asia, Africa and South America. You can nominate a company or add data here.

This year, we made a significant effort to add more “Carbon Removal” (durable removal of CO2 from the atmosphere through technological, biological, or geological mechanisms) companies to our Index on top of the “Carbontech” (technological carbon capture, utilization, and sequestration) focus we started the Innovator Index with in conjunction with the Carbontech focus of our partners at XPRIZE. This year, we added several new solution types, including Geologic Sequestration, Biologic Sequestration, and Market Infrastructure categories.

Increased Carbon Removal Coverage, Continued Carbontech Growth

In 2021, Carbon Utilization remains the most common Circular Carbon Solution Category in the Index (39% who responded to our survey are pursuing Utilization). Even though we added more Carbon Removal companies, this actually represents a 14% proportional increase in focus on Utilization since 2020, showing sustained and growing in those approaches (CO2-to-building materials, fuels, polymers, etc.). At the same time, the proportion of companies indicating they are pursuing BOTH Capture & Utilization has decreased significantly from 41% to 13%, perhaps indicating a trend towards specialization as the ecosystem matures.

Finally, across the Carbon Removal categories, we saw a real increase in Direct Air Capture (DAC) as a solution type being pursued by innovators compared to 2020. This year, DAC represents almost a third of all solutions being developed by companies in the Index for whom we have solution category data.

Increasingly Diverse Product Pathways

Looking at the macro category of product that is being made by companies on our Innovator Index (versus the macro category of Circular Carbon solution that is being pursued, per the above), we find a quite diverse mix of product pathways. Like last year, Fuels (13%) and Chemicals (12%) are clearly the most common individual product categories, followed by Building Materials and Captured CO2 (11% each) and Advanced Materials (9%). Work in the latter two categories (Captured CO2 and Advanced Materials) has doubled in the Index from last year, even as we added over 150 new companies. This again supports the macro trend of continued growth of entrepreneurial activity in Carbon Utilization that we saw in the Circular Carbon Solution Pathways data above.

New this year, however, and reflecting our effort to expand the lens to the broader Carbon Removal and Sequestration landscape, we are also seeing an increased and significant number of companies pursuing the natural product pathways, such as algae, biochar, and various forms of forest-based and land-based sequestration (21% of all companies in the Index for whom we have this information).

Broad Mix of Process Types

While companies are pursuing many technology process pathways, Biological processes dominate (17%), followed by Thermal processes (15%) and Electrochemical processes (15%). Even as our Innovator Index has grown by (150) companies, the distribution of process pathways remains very similar to 2020.

Wide Distribution of Technology Readiness, Including Growing Cohort of Mature Companies

While we saw almost double the amount of companies reporting their U.S. D.O.E Technology Readiness Levels in 2021 (231), the distribution of technology readiness in our Index stayed almost exactly the same as in 2020. Specifically, as one might expect for a rapidly emerging sector, 42% of the reporting companies in our Index classified themselves with early- stage TRL’s of 1-5. However, even more (58%) of the companies in our Index classify themselves as somewhat technologically advanced at a TRL of 6 or above, and nearly half of those report as highly advanced (TRL 8 & 9). With the important caveat that this data is self-reported, this data again suggests that the Circular Carbon market is continuing to mature and has a significant segment of companies that are already more technologically advanced than may be commonly assumed.

Companies Also Maturing in Commercial Readiness

As more companies come online in this space, we are seeing an increase of those in the Research & Development (R&D) phase. If we analyze companies in the R&D stage by year founded, we see 77% of them were founded in 2021 and 30% in 2020. At the same time, we are also reporting a slight increase in companies in the Commercial Demo phase. Overall, over 77% of all companies in the Index have advanced beyond R&D and are actively commercializing.

Growing Revenue Traction

Of the companies that we have revenue information on (189) 56%, or 105 companies, are already generating revenue. Of those, over half (60 of 105) are generating over $1MM. At the same time, 44% are still pre-revenue. Because revenue is reported in ranges, the total revenue reported by companies in the Index who supplied this information ranged from $562MM to $1.425B. It’s worth noting, however, that we only have this data for 45% of the companies in the Index (185 of 403), so the actual range is probably significantly higher.

Evolving Customer Mix

We surveyed companies about their target customer industry to further understand the potential customer bases of solution providers in the Index. In expanding our data to include Carbon Removal, we added several target customers to reflect a diversifying industry – from aquaculture to forestry. However, and not surprisingly, hard to decarbonize, energy intensive sectors like Oil & Gas, Chemicals, and Building and Construction are the most common target customer industries for innovators in the Index. Agriculture and Carbon Markets are also newly popular target customer industries, likely representing the growing demand for carbon offsets.

Commercial Customers and Funding Partnerships Sought

To better clarify where potential partnership opportunities lie, we asked innovators for their current top commercial needs. In diversifying this category of responses, we added several tactical options (like hiring and PR), as well as more in depth partnership questions. It will come as no surprise that solution providers are seeking commercial customers (24%) and fundraising (22%), first and foremost. There is also a need for site hosts (12%), key partners for development (12%), and suppliers of key components (6%).

Significant Increase in Capital Raised

We were able to identify investment-to-date totals for 185 out of 403 companies in the Index. These companies have raised approximately $3 billion so far. In terms of trends, we were able to track a significant increase in total capital raised since our 2020 report, totaling an increase of $884 million. For comparison, the amount of reported capital raised between 2019 and 2020 was $220 million. This influx of capital raised aligns with the surge of interest we are seeing in the Circular Carbon space generally.

We also analyzed capital trends for companies added to our Index in 2021, where we weighted the reported capital growth to the number of company additions. Here we found a 307% increase in investment per company compared to 2020, which indicates slightly fewer, but significantly larger deals happening over the last 12 months.

Capital Sources Broadening, but Still Predominantly Non-Institutional

Although we are seeing a broader distribution of funder types than in our 2020 data, Angel and Family Offices still represent the most common funding type (22% combined). Institutional investors overall only increased as a funding source by 6% from last year. While that may be a sign of growing institutional interest in the sector, non-institutional capital is still the leading source for Circular Carbon innovators. Additionally, Founder funding (11%) is a new and significant category this year, perhaps indicating that founders are increasingly confident in investing their own capital.

About the Deal Hub

The Deal Hub lists both “corporate” investment opportunities (investments into companies) as well as project investment opportunities (investments in specific deployments), though to date, as shown below, it has been weighted toward corporate-type investments.

The information on the Deal Hub is supplied by the offering entity (e.g. start-up or company or project sponsor). Once a deal has gone 60 days past the “Anticipated Closing Date” as indicated by the company, it is moved from the “Active Deals” list to the “Historic Deals” list.

Meaningful Increase in Total Investment Opportunities

Our Deal Hub tracked 105 companies (roughly a quarter of the entire Innovator Index) seeking over $816MM in capital in 2021. This is a 14% increase in capital sought (by slightly fewer companies) compared to 2020. Larger capital raises by Circular Carbon companies may represent a growing confidence by innovators to take on outside capital and to scale more quickly.

In terms of the deal size distribution, we tracked 34 deals in 2021 that are under $2MM, the majority of opportunities listed in the Deal Hub. Interestingly, we also found 4 deals over $50MM sought. The rest of the deals land between $2MM – $35MM (56). This spread of available deals sizes represents opportunities for a broad range of investors.

As of the publication of this report, 82 companies raising approximately $511M are listed as Active Deals on the Deal Hub.

Overall, we are seeing an increasing pace and larger round sizes in the live investment opportunities we track.

Standard, but Evolving Capital Types Sought

We are continuing to see a fairly typical spectrum of types of capital sought for an emerging sector, with Corporate Equity (106 companies, or 40%) again being the most common. However, there is a noticeable increase in companies seeking Project Equity compared to 2020, which may signify increased progress towards commercial deployment in the sector. At the same time, government and philanthropic funding appear in the Index for the first time in 2021, representing a combined 23% of the type of capital sought (from 59 innovators). This seems to represent continued (or growing) interest in non-commercial sources of capital and may indicate that commercial investors’ growing focus on the sector may be outpaced by other capital providers.

Diverse, but Early-Stage Weighted Deal Flow

As you would expect in a growing sector, over 75% of all Deals we tracked are in early investment stages, with the large majority of those seeking Seed funding. Interestingly, 45% of the “Series A” deals listed are for over $10 million, which is on the high side for a typical Series A. In addition, 16 deals are later-stage – Series B+ and include SPACs, Mezzanine, and Bridge funding rounds. The majority of all deals tracked on the Deal Hub, however, are earlier investment stages. With at least 88 companies formed in the last five years (2016-2021), this large amount of early-stage deal flow is consistent with a sector with a large amount of new entrepreneurial activity.

Patient & Strategic Capital Preferred

Family Office and Angel investors (combined) continue to be the most sought after type of investors within our Deal Hub. Corporate Strategic and Venture Capital are also a strong preference for innovators seeking funding. This mix is very similar to the previous two years of our analysis of this data point.

However, this year we see an interesting discrepancy relating to Government Funding, where nearly 30% say they have received Government Funding previously, but only 12% of companies in the Deal indicate that they are seeking Government Funding going forward. It will be interesting to see if this shift towards commercial investors holds in the wake of some of the historic government funding opportunities announced recently (e.g., the billions of dollars for a “Carbon Negative Shot” contained in the 2021 US Infrastructure Bill).

Overall, the current distribution of investors sought by innovators reinforces again that investors with generally longer time horizons (family offices) and strategic objectives (corporates) remain preferred (and perhaps more inclined) targets for Circular Carbon innovators than pure institutional, financially-oriented investors for the moment.

Broad Range of Deal Sizes

There is a total of $816M in deals listed in the Deal Hub in 2021, with a relatively broad range of round sizes represented. We tracked 34 deals that are under $2MM, the majority of deals we saw. Interestingly, we also report 4 deals seeking more than $50MM. The rest of the deals land between $2MM – $35MM (56). This spread of available deals represents opportunities for a range of investor types.

Valuations Increasing

The total pre-money valuation for all the companies in the Deal Hub that listed this figure (62/110 companies) comes to over $6.9B. This is a significant increase from 2020 — by $5.4B — and likely significantly understates current enterprise values in the sector given the missing data points. This strongly suggests that the increased general interest and market activity in the sector (by entrepreneurs, investors, policymakers, and corporates) is now leading to rising valuations and increased entrepreneurial progress, something to watch carefully in the coming year(s).

In terms of the overall distribution, sixty percent of companies in the Deal Hub report a valuation of $20MM and under (39), with the other 40% reporting a valuation over $20MM. Eight companies reported a valuation under $1M, more than reported over $100M (5).

The CCN Capital Index tracks capital providers who are currently active or interested in Circular Carbon investment opportunities. By tracking a broad range of data about the investment profiles, preferences, and performance of capital providers active or interested in the sector, we aim to accelerate and increase the flow of capital into the Circular Carbon economy. Specifically, the Capital Index is designed to help:

• Investors build syndicates and identify potential co-investors across stages
• Investors identify potential sources of follow-on capital
• Limited Partners find active funds in the carbon sector
• Entrepreneurs find potential sources of capital across asset classes (e.g. equity, project finance, grants, etc.)
• Strategic corporate VCs identify institutional investors to collaborate with

The data for the Capital Index was compiled from a mix of direct responses by capital providers to a structured series of questions and a review of publicly available information by our research team.

Growing Diversity of Investors Entering the Sector

Forty-six percent of the firms in our Capital Index are Venture Capital-type institutions, a slight decrease from 2020 (when they made up nearly 60%). This is likely a reflection of our efforts to broaden our research lens as well as the growing attraction of the Circular Carbon sector to the full spectrum of capital providers.

Private Equity (16%), Family/Angel investors (12%), Corporate Investors (9%), and a diversity of other institutions represent the rest of the firms in the Index.

While we classify a clear majority of all the institutions in the Capital Index as early-stage focused firms (not surprising given the still-emerging nature of the sector), later stage investors now comprise about 24% of the firms in the index as well.

Increase in New Firms, Increase in Impact Focus

Despite the impact of Covid-19, there continues to be robust new investment firm creation focused on Climate Tech and Circular Carbon. Twenty-eight percent of all the capital providers in the Index were founded in the last five years.

Of those founded in 2021, we see a third coming from the United Kingdom and a majority from California. One interesting trend we saw in the firms added in 2021 is that they all report they optimize for impact as well as financial returns. None indicate a sole focus on returns. Additionally, they all report having similarly diverse focus areas across Food and Agriculture, Industrials, Information Technology, and Energy.

Western-Weighted Geographic Coverage

The majority of the firms in our Capital Index are headquartered in the US (75%). We have representation from 14 other countries as well – mainly from Europe (15%) and Canada (6%). While additions to the Index have increased representation from Oceana, our data coverage is clearly biased toward our greater familiarity with capital market players in the US and Europe. We are committed to expanding our research to other important global regions and welcome the help of our Network and partners to bring data about investment activities in these areas to our attention. You can access the form to nominate a capital provider for our Capital Index here.

Increase in Corporate Equity Focused on the Sector

Firms are deploying a broad range of investments into the Circular Carbon sector. Corporate Equity is the most common type of investment, followed by Convertible Debt, which reflects the dominance of Venture and Private Equity firms in our Index. In fact, Corporate Equity increased by 46% from 2020, perhaps reflecting the growing rush of equity capital into earlier-stage Circular Carbon solutions that are coming to market.

There are also a meaningful number of firms now making Project Equity and Project Debt investments (22 combined) and an even larger number (32) making Mission Related Investments (MRI’s), Program Related Investments (PRI’s) and grants, representing the fact that we have a good number of Foundations and Family Offices with philanthropy vehicles in the Index.

Focus on Directs with Modest Growth of Interest in Funds

The majority of firms in the Index make direct investment only (investments directly into companies versus into funds), however 23 firms say they also consider and make investments into funds. This is a slight increase from the 2020 report data, indicating a continued and growing interest in capitalizing additional Circular Carbon funds.

Circular Carbon Focused AUM Continues to Increase

The firms in the Capital Index are currently managing over $201 billion. This is heavily influenced by two large institutions, TPG and Generation Investment Management with $108B and $36B under management respectively. However, it is worth noting that both of these firms launched new climate-specific funds this past year (the TPG Rise Climate Fund with $5.4B AUM, and Just Climate with an AUM reported to be at least $1B). The remaining investors manage a total of $58B between them. Excluding the outliers, the average AUM is $544MM, while the median is $300M. The largest investor manages $6 billion and the smallest $1.3 million.

Diverse Stage Focus – Early to Growth

Investors are deploying capital across many investment stages, from pre-seed to project finance. There is a near equal balance between those looking to deploy in earlier stages (Pre-Seed 10%, Seed 18%, Series A 21%) and later stages (Series B+ 51%). In contrast, a smaller percentage are looking for Project Finance, Mezzanine, Public Equity or Public Debt investments (8% total).

Increase in Target Check Sizes

The majority of investors in the Index reported being able to deploy an initial investment of $1MM or more into a single company, while 29% are looking to invest $10MM or more. Compared to 2020, there are signs of movement towards slightly larger investments, with investment ranges of between $1MM to 25MM now being the most common stated targets. As the sector continues to mature, we hope to identify more capital providers who are interested or moving into the Circular Carbon space.

Increased Openness to Pre-Revenue Companies

Nearly three-quarters of firms (68) indicate that they always, regularly or sometimes invest in pre-revenue companies, an increase from last year’s data. This indicates a willingness to take on early-market investment risk, which is likely needed if we are going to finance and grow the Circular Carbon solutions needed in the increasingly tight timeframe we have.

Continued Interest in Early-Stage, Increased Interest in Growth-Stage

Most capital providers in the Index (70%) are targeting companies in their early commercial stages (pre-revenue through $5MM of revenue). While there is continued interest in these early-stage companies, there is also a growing focus amongst investors in the Index on companies with meaningful revenue traction. 67 firms, or roughly a third, indicate they are looking for companies with over $5MM in revenue. This may reflect the beginnings of maturation in the Circular Carbon capital ecosystem as expectations for commercial traction increase.

Robust Pool of Leaders and Followers

Most investors (44%) will either lead or follow, with no stated preference between the two. Roughly a third prefer to lead, a reduced number from 2020. Only a small number indicate a preference for following. It is encouraging to see both types of investors in the market, given that it is unlikely all investors in the Index have built the technical due diligence capabilities that evaluating Circular Carbon opportunities often requires.

Notable Increase in Patient Capital

The majority of investors indicate a typical horizon of between 3-7 years. However, we are also tracking a 150% increase in patient capital (7+ year horizon) from 2020, a good indicator that more investors are comfortable with the longer technology and market development times that are likely required for the maturation of the emerging Circular Carbon economy. A small number (5 firms) are also working with permanent capital. The Circular Carbon economy, like other impact investing themes that require evolutionary change in large human systems, needs time to mature, but it also needs capital. This positive trend towards more patient capital is encouraging.

Increase in Impact Focus, Decrease in Returns-Only Focus

Circular Carbon is a leading sector that represents a shift in the investment thesis from returns only focus to investing for a positive impact on issues of concern. The expressed preference of the investors in our Index reflect this, with a large number stating that impact and returns are equal factors in their investment decision making (28%). In fact, the number of firms reporting “Returns Only” as their only focus decreased by 6% in 2021 from 2020 and represents the smallest portion of investors. Additionally, an increasing number stated they are willing to accept lower returns or higher risk for impact, representing 15% of the firms in our Index. These results suggest that the shift towards integrating impact into investment decisions is here to stay. In a sector with the potential for high performance in both returns and impact, this is good news.

Diverse Macro Focus Areas, with Growth in IT and Food & Ag

While we see a wide range of investment focus areas representing a diverse spectrum of industries, Energy and Industrials are the most dominant. We saw a noticeable increase in firms generally focused on information technology from 2020 to 2021 (from 12% to 24%), perhaps indicating both the growing relevance of Circular Carbon opportunities to conventional silicon valley-type firms as well as the rise of IT-related Circular Carbon solutions (such as marketplaces and other enabling, software based solutions).

Additionally, as broadened our lens to include investors interested in Carbon Removal (not just Carbontech) in the Index this year, we found that Food & Agriculture emerged as a focus area for 18% of the investors now in the Index.

All Cleantech-Interested Index

Our search for capital providers continues to be focused on those firms that are already active or interested in the broader cleantech sector. Unsurprisingly then, cleantech is a core focus, the core focus, or something that 100% of the investors represented in our Index consider.

Diverse Cleantech Focus Areas, with Notable Increased Focus on Circular Carbon

There is a broad range of clean technology sectors that investors in the Index are focused on, with most selecting at least 6 sectors of investment. Energy-focused sectors are at the top of the list, such as energy efficiency, energy storage, solar and mobility. Encouragingly, we saw a ~33% increase of interest in carbon-related sectors (Carbon Removal, Carbon-to-Value, Carbon Capture) since last year.

Significantly Increased Interest in Carbontech

Carbontech — defined as technology-enabled means of capturing, utilizing, and/or storing CO2 — is an increasing focus of investors in our Index. Currently, 74% of all capital providers consider Carbontech investment opportunities. This is up by almost 20% points from last year. These carbon-curious investors represent $177 billion of total assets under management.

DAC Up, EOR Down

Zooming in on the pathways in Carbontech that investors are focused on deploying capital to, there is a fairly even spread of interest in all the well-known pathways. Two outliers are a lower general interest in carbon-to-enhanced-oil-recovery (EOR) and a higher general interest in Direct Air Capture (DAC). The low level of interest in EOR is somewhat surprising, considering that it has long been considered an attractive, existing entry market for carbon capture companies to exploit. On the other hand, the recent Covid-driven drop in global oil markets has likely reduced those opportunities. On top of that, EOR has a controversial profile amongst some audiences, especially environmental advocates, who view it as counter-productive to capture carbon to produce more fossil carbon. It is possible that this decrease is being replaced by an increased interest in DAC, where we saw a 50% increase from 2020.

Interest in Carbon Removal Significantly Up

The majority of firms in our index report that Carbon Removal is a core focus, secondary focus, or something they are considering. The number of firms with a core focus on Carbon Removal increased by 16 to 34% of responding firms, an encouraging increase over the last 12 months. These carbon removal-interested investors represent $177 billion of total assets under management, 88% of the AUM in the Index

DAC On Top Again, But Other Pathways Expanding

Direct-Air-Capture-to-Durable-Products continues to lead the list of focus areas in Carbon Removal that investors are pursuing, followed by Soil Sequestration, Direct-Air-Capture-to-Long-Term-Geologic-Sequestration, BECCS, Biochar and Forestation. There is a continued increase in interest in DAC as both existing solutions continue to mature and new solutions emerge. That said, it is worth noting again that our overall data set is still likely influenced by our original, NRG-COSIA-Carbon-XPRIZE-focus on Carbontech.

In contrast, investor interest in BECCs has appeared to drop, perhaps due to the increasing scrutiny around related land-use issues. There is also a rise of interest in IT-related solutions and Market Enablers, which is consistent with the continued maturation of this sector and the mainstream IT-experienced investors it is attracting.

It is also worth noting here that the “Other” category is quite large, indicating the explosion of interest and innovation in the Carbon Removal field. We will work to continue updating our Index to capture and better categorize the growing diversity of solutions.

Significant Increase in Tracked Capital Deployed

Our research has identified 80 investments totaling $244MM into Circular Carbon-specific opportunities (both Carbontech and Carbon Removal) by investors within the Capital Index. This is an 87% increase in the value of investments recorded in the Index versus 2020 ($131MM in 2020).

Overall, 29% of the investors in the Index indicated that they have made at least one investment in the space, an increase of 8% from last year. However, of those investors who provided a response to this question, fully 54% had deployed capital into the sector to date. Given the limited response to the capital-deployed question and the clear evidence of new firms and increased AUM focused on the sector, we are likely significantly under-counting the percentage of investors on the Index who have in fact deployed capital into the sector.

Based on the data we have, the average deal size was just over $3MM, while the median was $500,000. These numbers are somewhat skewed by the large number of <$1MM of R&D-focused investments from the Emissions Reduction Alberta fund, which deployed 48 out of the 64 investments new to the index in 2021.

Government and Institutional Investors Top Tracked Capital Deployers

This year we added Project Finance Firms, Accelerators, and Government as Capital Provider categories in the Index. Together, these categories accounted for $113MM of new funding in 2021 (Government accounted for $103MM of that). Private Equity ($51MM), Corporate Investment ($26MM), and Venture Capital ($25MM) are the other leading investor types who have recently deployed capital.

We were somewhat surprised by the low level of capital sourced from Family Offices and Angels, though given the privacy-preferences of those investor types, the Index is almost certainly under-counting the amount of capital they have deployed into the sector.

Similarly, given the total amounts raised by startups in our Innovator Index (approximately $3B to date) and the new investment opportunities we tracked in our Deal Hub in 2021 ($816MM), we are also certainly under-counting the total amounts deployed by investors in the Capital Index overall.

About the Index

As some of the world’s largest emitters of CO2, large corporations have a huge role to play in the transition to a Circular Carbon economy. Beyond complying with evolving regulatory requirements and reducing climate-related business risk, these companies also have much to gain in the form of new revenue streams, new innovations, brand enhancement, and other strategic benefits.

The purpose of CCN’s Corporate Index is to identify, measure, and characterize corporate activity that meaningfully intersects with the Circular Carbon sector. Our goal is to both better inform the marketplace about these activities as well as facilitate more efficient collaborations between corporates and technology innovators, investors, and other key societal actors critical to the growth of the Circular Carbon economy.

In that vein, a corporation must have at least one concrete intersection point with the sector to be included in the Index (specifically, Circular Carbon-related R&D, Investment, Project Hosting, Purchasing, Sales, or other material intersections). Our research team gathered this information through a review of publicly available information. In all likelihood, our Index under-represents the level of corporate activity in the Circular Carbon sector globally. We welcome nominations [link] and updates [link] to the Corporate Index to continue to improve its usefulness and accuracy.

Carbon-Intensive Industries Still Dominant, But Interest Broadening Across Sectors

Over half of the corporate representatives in our Index are in the Energy (21), Materials (16), and Consumer Discretionary (12) sectors, followed by Technology (9), Utilities (9), Consumer Staples (8), and Industrials (7). Overall, large companies operating in the energy and carbon-intensive industrial sectors are still leading the charge in our Corporate Index, however, we are now also seeing noticeable growth in interest from companies in a broader range of sectors, particularly consumer- and technology-focused companies.

Still Primarily US and Europe Focused

Corporations headquartered in 21 different countries are represented in the Index, with a significant percentage based in North America and Europe. Our corporate coverage parallels our other Indexes with a large percentage of organizations coming from North America, and Europe (particularly US, Canada. UK, Germany, France). As we have stated before, this may be somewhat a product of where significant Circular Carbon activities are currently being generated, but it is also likely a significant reflection of the biases and limitations of our coverage. We are actively seeking to add companies with significant Circular Carbon activities from around the world. You can nominate a large company for the Corporate Index here. [INSERT LINK]

Exploding Corporate Climate Commitments

In 2021, corporate climate commitments grew in frequency, scope, and ambition. Overall, 95% (76/80) of Corporates in our Index have carbon reduction commitments of some form, which is consistent with other reports that over 60% of the largest publicly-traded companies in the world by revenue have documented net-zero targets. Of those with reduction commitments, 17 (21%) have specific Carbon Removal goals this year, as opposed to 6 (10%) last year. Anecdotally, we are also hearing of billions of dollars of corporate purchasing demand for carbon removal credits. All of this is in line with CCN’s 2020 Market Report forecast of growing corporate interest in carbon removal.

For context on our coverage, while it is still a limited cross-section of all corporate activity in the Circular Carbon sector, the companies in our Index already represent 17.24% of all global emissions.

Corporate Activity Expanding from R&D to Purchasing and Investment

Overall, corporates in our Index are most focused on Circular Carbon-related Research and Development, which is not surprising as the sector itself is still just emerging.

However, companies that were added to the Index in 2021 are more focused on purchasing and investment. Two-thirds of these additions are active in purchasing Circular Carbon solutions, in sharp contrast to 2020, when purchasing was the lowest reported focus area.

Similarly, nearly two-thirds of these new additions are focused on investing in third-party solutions, while less than half are involved in R&D.

Carbon Capture and Carbon-to-Value Top R&D Focus Areas

Research & Development related to Carbon Capture from Existing Sources remains the most common R&D focus for corporations in the Index. In addition, a majority are focusing on Carbon-to-Value solutions — with CO2-to-Fuels (13%), Enhanced Oil Recovery (8%), CO2-to-Polymers (6%), and CO2-to-Building Materials (6%) taking the lead. As we widened our lens to look for corporate activities relating to Carbon Removal in 2021, we found 15% of the companies in the Index conducting R&D on land-based solutions.

Finally, of note, of the companies focused on R&D, 32% are hosting projects as well.

Significant Increase in Corporate Interest in Carbontech Investments

Carbontech innovators are capturing the attention of an increasing number of corporate investors. Out of 36 corporate cleantech investors, 17 (47%) list carbontech as an investment focus area and 25 (69%) currently consider such investments. 27 corporates are at least considering deploying capital in carbontech, a 42% increase from last year (19). Overall, there is a noticeable increase in the levels of corporate interest in Carbontech.

Increased Interest in Carbon-to-Value, Continued Interest in Carbon Capture

Like 2020, the top four corporate Carbontech investment interest areas this year are: (1) Carbon-to-Value Fuels and Chemicals, (2) Point-Source Capture, and (3) Direct Air Carbon Capture (DAC). However, interest in Carbon-to-Value overtook Carbon Capture among the leaders, with Carbon-to-Value Fuels and Chemicals nearly doubling year-over-year in interest.

Notably, Building Materials and New Materials each at least doubled in interest from last year, perhaps indicating growing demand for embodied carbon in buildings and infrastructure.

Growing Corporate Investment Interest in Carbon Removal

Corporate interest in investing in Carbon Removal solutions is pacing that of Carbontech, with each increasing between 42% and 44% year-over-year amongst those corporates in our Index with a cleantech-focused investment arm.

In fact, overall, 78% (18) of the 23 corporate cleantech investors now have carbon removal as a core focus or secondary focus.

DAC-to-Sequestration Top Corporate Carbon Removal Investment Focus, Natural Carbon Removal Solutions Rising Too

This year, DAC-to-Geologic Sequestration appears to be the top focus for corporate investors interested in Carbon Removal, with 79% (15/19) of those disclosing their target Carbon Removal interest areas highlighting that pathway. DAC-to-Durable-Products is another similar highly represented focus area for corporates in the Index.

We also found a significant growth in interest in Natural Carbon Removal solutions, with Soil Carbon Sequestration and Afforestation/Reforestation each doubling this year as focus areas.

Finally, Ocean-Based Carbon Removal and Enhanced Weathering were each new to this year’s report and have gained the interest of 3 and 2 corporates in the Index respectively.

Modest Increase in Corporate Circular Carbon Purchasing

We found a slight but meaningful increase in Corporate purchasing of Circular Carbon products and solutions over 2020, with 24% of all companies (19/80) making direct purchases of CO2 or Carbontech and Carbon Removal solutions. Purchases of gaseous CO2 tend to be for food & beverage or enhanced oil recovery applications, however, more companies are now also starting to buy products derived from CO2, such as “e-Fuels.” Porsche’s offtake purchase of e-Fuels produced from CO2 and water for its motor sports division is a prime example of this.

Corporate Carbon Offset purchases (reflected in the “Other” category in the chart) also seem to be increasing, While their use is gaining traction both in our Index, our direct conversations with companies, and in the press, it is often difficult to determine which specific companies are making these purchases based on publicly available data. Still, our research found that 18% of corporate Circular Carbon purchasers in our Index are purchasing offsets.

Growing, More Diverse Corporate Circular Carbon Sales Activity

Our research found that over 25% (21/80) of all the Corporates in the Index are involved in some form of Circular Carbon sales, with half of those companies involved in selling Circular Carbon solutions (such as carbon capture technologies).

We also see an increasing number of corporates selling multiple Circular Carbon solutions, while 6 are both selling and purchasing.

We found a low level of activity in the sales of carbon credits, with only 3 corporates involved in credit sales, indicating that purchasing offsets is currently more common than generating them at the corporate level.

Substantial Project Hosting Activity in the Energy & Industrial Sectors

Roughly a third of the corporates in the Index, or 26 companies serve as Project Hosts for Circular Carbon solutions. Despite representing only 33% of the Corporate Index, Project Hosts account for 60% (3.7/6.3 GTCO2) of Scope 1, 2, and 3 emissions and all operate in energy or heavy industry. Though perhaps not surprising, this data suggests that the greater a company’s connection to CO2 emissions, the more invested they seem to be in hosting Circular Carbon projects through which those emissions can be reduced or sequestered.

Heavy Focus on Carbon Capture Projects by Heavy Industry

Half of all the Circular Carbon-related projects hosted by companies in our Index (24/48) are focused on carbon capture, including biogas and flue gas capture. Again, this is perhaps not surprising given that all these project hosts operate in the energy and heavy industrial sectors.

Notably, however, six companies in the Index are now involved in CO2-derived fuel projects, triple the number of such projects we found last year.

About the Index

Market catalysts can take many shapes and forms — from individual “thought leaders” to non-profit advocacy organizations and industry associations to more commercial service providers, project developers, and more. These actors both help stitch together a critical supportive infrastructure and bring a level of vision, passion, and missionary zeal that a new space needs to survive and thrive.

The Catalyst Index is designed to help market participants of all types better understand and access the services, expertise, resources, and support that the growing number of enabling organizations in and around the Circular Carbon sector offer. We report here on over 100 organizations that play a significant role in supporting the growth of the sector. All the data in the Catalyst Index is derived from our research team’s review of publicly available information as well as user submitted data. We know that our Index just represents the tip of the iceberg of this growing ecosystem and welcome nominations and suggested updates to the Index.

Growing Diversity in Catalyst Org Types

We are seeing a more even distribution of support organization types in the Catalyst Index than last year – a sign of the growing richness of the ecosystem. Conveners and Platforms are the most common organization type this year, versus last year’s leader NGOs. Service providers are the second highest, perhaps evidence of the growing business opportunity in servicing the Circular Carbon economy. There is also growth in Accelerators and Think Tanks.

Continued US and European Focus

Like our other Indexes, the Catalyst Index remains strongly weighted towards organizations headquartered in North America, with most other institutions in Europe. In Europe, we see Germany adding 3 new additions to the Index, and the UK playing an even more prominent role (14% this year vs 9% last year).

Flourishing of New, Entrepreneurial Support Organizations

Most organizations in the Catalyst index have a small number of employees — under 10 is the most common and 53% have less than 25 employees. There are also a modest number of large organizations (over 1,000 employees). Most of the new additions in the Index in 2022, however, remain in the under 100 employee range. Given the still early stage of the sector, it is perhaps not surprising that smaller, more entrepreneurial organizations are the first movers into the space.

Significant Increase in Policy Focus and Overall Diversity of Activities

Since our core goal for the Catalyst Index is to help participants in the Circular Carbon economy find the specific types of support they need to advance their respective work, we track the type of core services or activities that each of the organizations in the Catalyst Index undertakes. This year, there is an even broader distribution of core activities amongst organizations in the Catalyst Index, a positive indicator that the sector is evolving, specializing, and growing.

Specifically, we saw a significant increase in organizations focused on Policy (a 144% increase from last year) with 23 more policy-focused organizations added in 2021. This is both a reflection and possibly a driver of increased global policy activity around Circular Carbon and climate change more generally. Similarly, the following diverse set of core activities also doubled in representation in the Index: Research & Development, Communications, Conferences, Offsets, Design, Certification Services, and Engineering Services.

Diverse Target Customers, Large & Small, with Government Noticeably Rising on the List

In order to understand who the organizations in the Catalyst Index seek to pair themselves with, we identified each of their core target stakeholders. The two top customer groups are on opposite ends of the size spectrum – corporates and start-ups. The other large groups are capital providers, governments, and the general public. As the numbers suggest, many seek to serve multiple of these groups. Government as a target stakeholder grew noticeably this year, which might reflect the uptick in Circular Carbon-relevant policy activity globally.

Strong Focus on Circular Carbon Across the Index

Because we specifically seek to add organizations to the Catalyst Index that already have Circular Carbon-relevant activities, it is not a surprise that 94% of the entities in this year’s Index have Circular Carbon as a Core Focus or a Secondary Focus. However, we see this as confirmation that these organizations may be worth considering as collaborators for market participants who are looking for specific types of support tracked in the Index.

Carbontech Top, but Increasing Focus Across all Circular Carbon Pathways

Organizations in the Index are focused on a wide variety of Circular Carbon solution pathways, with carbon capture and carbon-to-value pathways clustered at the top. This may reflect both CCN’s historic focus on carbontech (and hence knowledge of and interactions with related catalyst organizations) as well as the more “established” nature of carbontech in general in comparison to the newer biological and geological Carbon Removal pathways that have started to come into focus more recently. However, this year’s additions to the Catalyst Index definitely increased and diversified the level of coverage across the broader spectrum of Circular Carbon solutions