The founders of Climate X, who mortgaged their homes to stay afloat, are now raising $18 million in a Series A

To date, most of the hottest software platforms in ClimateTech have revolved around carbon accounting, offsetting, removal and regulatory disclosure. For example, New York-based Persefoni (accounting) has raised $164.2 million to date, Berlin-based Plan A (accounting/monitoring) has raised $43 million, and at the lower end of the scale, Supercritical (removal) has raised $15.8 million while CUR8 (removal) has raised $6.7 million. As you can see, the space is broad and diverse.

But one area of ​​the sector that briefly became fashionable before being snapped up by buyouts was assessing climate risk for real assets. UK start-up Climate X, which specialises in climate risk analysis, is coming out of the shadows and tapping into that rich vein again. It has now closed a $18 million Series A funding round led by GV (Google Ventures). The idea is to help financial organisations assess the impact of climate change on their real asset portfolios.

Early backers Pale Blue Dot, CommerzVentures, A/O, Blue Wire Capital, PT1, Unconventional Ventures and Western Technology Investment (WTI) also participated in the round.

Given that the climate adaptation market is worth about $2 trillion, according to the WEF and other experts, there is obviously a lot of room to maneuver here.

And Climate X claims its platform can produce risk assessments for both residential and commercial real estate, as well as road, rail and power infrastructure. Its previous clients include Legal & General, CBRE, Virgin Money and Federated Hermes.

The company is following a path that other startups have taken before that was acquired. Moody’s took over Four Twenty Seven. The Climate Service was acquired by S&P Global.

Co-founded by CEO Lukky Ahmed and CPO Kamil Kluza, both of whom previously worked in corporate risk management, Climate X almost didn’t come to fruition.

“We had a house in Birmingham that we had remortgaged because we didn’t really know how to raise venture capital. We hired a couple of people and thought, ‘We need to pay them!’ So we did. And then, fortunately, after three or four no’s, Pale Blue Dot finally said yes. They paid a small check and that check suddenly led to another conversation about leading the seed round.”

Since then, co-founder and CEO Lukky Ahmed has “learned many lessons about fundraising.”

Lukky previously led stress testing and risk transformation programs for companies such as HSBC Bank and Lloyds Banking Group.

But his road to tech entrepreneurship was long, he told me: “I didn’t go to university. I didn’t know what I wanted to do. I ended up in various jobs in retail and call centers. After joining HSBC, I was involved in M&A transactions and eventually moved to Hong Kong, where I set up the stress testing department, where the bank applied macroeconomic shocks to the profit and loss accounts of different regions.”

Knowing the world was bigger than working for a bank, he returned to London in 2017, where he ended up working for Accenture and met Kluza. Co-founder and CPO Kamil Kluza had modelled risks for companies such as Barclays, MUFG and Accenture: “I basically told him, ‘Let’s do this ourselves, because Accenture is doing 60% of our work, and what do we do?'”

By now it was 2020 and the beginning of the pandemic: “I signed up for Clubhouse and because I heard all these people on Clubhouse talking about Twitter and how much they like to tweet about things outside of Twitter, we met Hampus Jakobsson from pale blue dot because he was in one of these Clubhouse rooms. So I tweeted him and got into his DMS and it went uphill from there.”

When they realized that more scalable climate risk models were needed in financial services, the pair created a digital twin of the Earth using more than 500 trillion data points and a proprietary library of 1.5 billion individual assets and 71 million kilometers of infrastructure.

With a Google Maps-like experience, the Climate X platform allows clients to see the impacts of events like extreme heat and flooding over a 100-year timeframe, right down to a single home. The platform now assesses climate change for financial services clients with over $6.5 trillion in total assets.

The team won Serie A with GV at the helm “because the team is exceptional,” said Lukky.

In a statement, CBRE’s Robert Bernard said: “After a year of evaluating numerous tools and services, we are … working with Climate X to help our clients understand and prepare for the risks associated with climate change.”

Climate X will use the new funding to accelerate its expansion in Europe, North America and Asia-Pacific.