Singapore-based Climate Alpha analyzes the impact of climate change on real estate

Founded by an expert on geography and globalization, Climate Alpha’s AI-based platform helps real estate owners and investors analyze the impact of climate change on their portfolios. The Singapore-based startup announced today it has raised $5 million in seed funding led by Jungle Ventures through its new First Cheque@Jungle program for second-time founders and operators with a lot of experience.

Climate Alpha’s customers include institutional investors like Oaktree Capital and BentallGreenOak, and American homebuilder Lennar Corporation.

The platform uses Geographic Information System (GIS) data and economic modeling to help real estate owners understand the impact climate change will have on their property. It also uses public and private data streams and proprietary machine learning algorithms to generate forecasts of climate change’s financial impact.

Before founding Climate Alpha, founder Parag Khanna wrote a book called “Move: Where People are Going for a Better Future,” that looks at how climate change, geopolitical upheaval and tech are influencing where people live.

While working on the book, Khanna and his brother also started helping their parents look for climate-resilient locations to retire in. Parag asked FutureMap research director Kailash Prasad to correlate the climate profiles of different locations with property value forecasts. This correlation, called “Climate Oases,” was launched as a FutureMap 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. It also began working with real estate developers like Lennar and Capitaland.

Khanna told TechCrunch that Climate Alpha wants to “decipher the complex interplay of geopolitics, demographics, climate change, geography and economics” (the combination of disciplines is called “spatial finance”). He adds that Climate Alpha is in many ways an extension of the thesis of “Move,” backed by data science, climate modeling and econometrics.

Dr. Parag Khanna, founder and CEO of Climate Alpha

“Real estate has gone up and to the right for decades, but suddenly that’s no longer the case, whether due to climate change and rising insurance, demographic outflows, high interest rates, shifting investment patterns or all of the above,” Khanna said. “We model these complex interactions in ways that give more confidence in where—and where not—to invest.”

Using data from sources like industry-standard climate models, census and economic data, Climate Alpha can provide detailed physical climate risk data, including projections and scoring, for any location in the world. It is also able to include factors like the reliability of energy grids and economic momentum, both of which can offset risk, in countries like the United States and Canada (with more being 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 scoring to find hotspots in its portfolio, provide reporting to investors and identify future high-growth locations for investment. Atlas Capital leveraged Climate Alpha’s data to build a climate-proof multi-asset ETF.

Climate Alpha will use its new funding to expand its research and sales teams and grow its investment advisory service. Khanna says its goal is to “become a global platform for steering asset managers into resilient 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 that it will use to leverage data and other proprietary geospatial datasets, build a global resilience index and expand its platform to public investors.

In a statement, Jungle Ventures partner Rishab Malik said, “We are excited to back Parag in his vision to use an AI-based platform to identify climate-resilient assets for fund managers globally. Parag comes with just the right domain expertise to solve this problem and the platform has seen some very credible early adopters in a short period of time.”