Founded by an expert in geography and globalization, Alpha climateThe company’s AI-based platform helps real estate owners and investors analyze the impact of climate change on their investment portfolios. The Singapore-based startup announced today that it has raised $5 million in seed funding led by Jungle Ventures through its new First Check@Jungle program for second-time founders and operators with significant experience.
Climate Alpha’s clients include institutional investors such as Oaktree Capital, Bentall Green Oak, and US homebuilder Lennar.
The platform uses Geographic Information System (GIS) data and economic models to help property owners understand the impact of climate change on their properties. It also uses public and private data streams and proprietary machine learning algorithms to generate projections of the financial impact of climate change.
Before founding Climate Alpha, founder Parag Khanna wrote a book called “Mobility: Where people are moving for a better futurelooks at how climate change, geopolitical upheaval, and technology are affecting where people live.
While working on the book, Khanna and his brother also began helping their parents look for climate-resilient locations to retire to. Parag asked Kailash Prasad, director of FutureMap Research, to correlate the climate profiles of different locations with property value projections. This association, called “Climate Oasis”, was launched as a future map practice area and in turn evolved into “Climate Alpha”. During the pandemic, Climate Alpha won a grant from the Singaporean government to develop its data science capabilities. She also started working with real estate developers such as Lennar and Capitaland.
Khanna told TechCrunch that Climate Alpha wants to “decode the complex interplay between geopolitics, demographics, climate change, geography and economics” (the combination of disciplines is called “spatial finance”). He adds that climate alpha is in many respects an extension of the “action” thesis, supported by data science, climate modeling, and econometrics.
“Real estate has been up and trending to the right for decades, but suddenly that’s no longer the case, whether because of climate change and rising insurance, demographic outflows, rising interest rates, changing investment patterns or all of the above,” Khanna said. “We design these complex interactions in ways that give more confidence in where to invest and where not.”
Using data from sources such as industry-standard climate models, census and economic data, Climate Alpha can provide detailed data on physical climate risks, including forecasts and recording, for any location in the world. It is also able to include factors such as the reliability of power grids and economic momentum, both of which are able to offset risks, in countries such as the United States and Canada (with more added). Climate Alpha shows the expected future growth of a location’s economy and asset values compared to historical trends, to help investors make decisions.
For example, Oaktree Capital uses Climate Alpha’s risk and resilience assessment system to find hot spots in its portfolio, report back to investors and identify future high-growth locations to invest. Atlas Capital leveraged Climate Alpha data to create a climate-resilient multi-asset ETF.
Climate Alpha will use its new funding to expand its research and sales teams and grow its investment advisory services. Khanna says his goal is “to become a global platform to guide asset managers towards flexible investments across public and private markets.” It is also expanding into the insurance industry and establishing a global fund with major asset managers to invest in climate-resilient real estate.
The startup plans to raise a Series A round in the first half of 2024 which it will use to leverage data and other geospatial datasets, build a global resilience index and expand its platform to public investors.
“We are excited to support Parag in its vision of using an AI-driven platform to identify climate-resilient assets for fund managers globally,” Rishabh Malik, Partner, Jungle Ventures, said in a statement. Parag comes with the right domain expertise to solve this problem and the platform has seen some highly credible early adopters in a short period of time.