Accelerating Tomorrow

How investment in emerging technology is transforming our world for the better

As the world strives to forge a more sustainable future, emerging technologies carry immense problem-solving potential. And because innovation requires investment, venture capitalists and other financial leaders will play a crucial role in the push for positive change.

Investments in emerging technologies that boost sustainability and address climate change are seeing rapid growth. Global climate-tech investments rose to $16.6 billion in Q3 2023, according to BloombergNEF, which noted that the strongest investment growth “took place in companies focused on decarbonizing heavy industry.”

In Bloomberg Media’s Future Technologies Study, sponsored by Mubadala, we surveyed global investors and venture capital leaders to reveal which emerging technologies are believed to be most important to achieving a sustainable future, and to understand how investment is accelerating the development of these crucial technologies.

Which sectors do these decision-makers view as most important to achieving sustainability goals? What are the motivations behind their investments? What opportunities and obstacles do they envision?

Artificial intelligence will change the way we work and live

Across global markets, venture capitalists and investors see investment playing a central role in supporting digital transformation in the years ahead.

However, one technology is front of mind for these investors due to its ability to accelerate digital transformation: artificial intelligence. In our study, investors saw artificial intelligence as four times more important to digital transformation than blockchain and nearly five times more important than automation and cloud computing.

That excitement is apparent in the investments that they’re making. According to PitchBook data compiled for Bloomberg, the value of funding for AI companies climbed 27% globally, to $17.9 billion in the third quarter of 2023 compared to the year before.

Technologies seen as key to accelerating digital transformation

What Investors and Venture Capital Leaders are saying

Hedge fund investor

“When we put money into things like AI and automation, we can change the way many industries work. This makes them more efficient and lets them do more in less time.”

Private equity investor

“The application of artificial intelligence and Big Data analytics in sustainable development will be a hot investment area.”

Venture Capital Leader

“Artificial intelligence technology investments can change our way of life and work for the betterment of society.”

Renewables and energy storage will lead the way to a more sustainable future

Investment opportunities in climate technology have grown beyond solar panels and batteries to include food and agriculture, the built environment and climate finance.

However, investors and venture capital leaders still see renewables and energy storage as the emerging technologies that are most important to supporting a sustainable future, outpacing sustainable infrastructure, connectivity and EVs in our survey.

Emerging technologies that are most important to achieving a sustainable future

These same two technologies—renewables and energy storage—are also seen as the ones that will attract the most investment in 2030.

That view is consistent with BloombergNEF, which says that for the world to be on track for net zero, about $1.2 trillion needs to be invested in wind and solar every year between 2023 and 2030.

What Investors and Venture Capital Leaders are saying

Hedge fund investor

“Providing funds to technologies such as renewable energy, energy storage, wastewater control and recycling can reduce the impact on the environment and enhance the sustainability of resources.”

Private equity investor

“In the future, investment in solar power, wind power, and energy storage technologies will decrease the dependence on fossil fuels and promote the spread of renewable energy.”

Venture Capital Leader

“Renewable energy storage technology, with the integration of new technologies, can help reduce dependence on fossil fuels and promote sustainable development.”

But perhaps what’s most interesting is that technology has not replaced the human factor when these investors are deciding which companies to invest in. Even in this era of data and analytics, our survey reveals that investors and venture capital leaders rely first and foremost on the company management team when making an investment decision.

What tools and/or information do you use to make decisions about investing in emerging technologies?

Profits and progress drive investment in emerging technologies

The potential gains from emerging technologies are massive. According to Bloomberg Intelligence, the generative AI market could reach $1.3 trillion in 2032, and it is a dominant catalyst of positive estimate revisions and multiple expansion for most tech segments, including hardware, software and internet.

Top motivations for investing in
emerging technologies

Our survey reveals that investment in emerging technologies is driven by diverse motivations, including innovation, diversification, greater returns and first-mover advantage.

Overall, climate change lags behind these factors as drivers of investment in emerging technology, but not everywhere. In the US and the UK, investors and venture capital leaders list climate change as a Top 3 motivation for investing in emerging technologies.

One reason for this gap in the investment landscape around climate change could be the fear of the unknown. In our survey, investors and venture capital leaders both agree that a lack of defined standards and quality control are the biggest barriers to investment in emerging technologies

These unknowns may be driving investors toward seeking short-term returns from their emerging technology investments and discouraging them from adopting the long-term vision necessary to finance the energy transition.

That’s where the public sector comes in. Whether through policies or incentives, most respondents see governments playing a primary role in achieving a sustainable future.

Gaps in the current investment landscape that could prevent the achievement of a sustainable future

What Investors and Venture Capital Leaders are saying

Hedge fund investor

“Sustainable technologies face high risks and uncertainties at the early development stage and investors will be very careful about investing in them.”

Venture capital leader

“Investment often favors established tech over innovative sustainable solutions.”

Venture Capital Leader

“Right now, the investment landscape often focuses too much on quick profits and certain technologies, rather than evenly supporting long-term sustainability across different areas.”

Will emerging technologies rise to the challenge of climate change?

The amount of investment needed to achieve a net-zero world by 2050 is staggering. BloombergNEF estimates it could cost $196 trillion in investments for the world to reach net-zero carbon emissions by 2050, as many countries have pledged to do, to avoid catastrophic global warming.

In addition, BloombergNEF suggests annual green investments will need to nearly triple to $6.9 trillion by 2030 if we are to have any hope of hitting net zero by 2050. This transition means that consumers, businesses and government will need to swap gas-powered vehicles for EVs, and replace fossil fuel-powered energy with renewables like wind and solar, including new grids to connect them.

Emerging technologies can provide a powerful engine to drive the world toward this sustainable future. Our survey reveals a strong consensus among investors and venture capital leaders that sustainable goals are within reach and that technology will play the leading role in achieving them.

Likelihood that the world will achieve a sustainable future by 2030

50% Highly Likely
45% Likely
- 95% of respondents
  agree

3% Neither likely nor unlikely
1% Unlikely
1% Highly unlikely

Agreement that “Technology will play the lead role in the world achieving a sustainable future”

60% Completely agree
38% Somewhat agree
- 95% of respondents
  agree

2% Neither agree nor disagree

The Megatrend Effect

If emerging technologies really hold the promise of a sustainable tomorrow, the key question is, how? One reason for optimism is the way emerging technologies intersect with megatrends, the powerful and transformative global forces shaping our future.

Investors must take a holistic view of these megatrends to understand how they interconnect with each other and how they will be impacted by emerging technologies to reveal risks and opportunities.

Emerging Technologies

Megatrends

Connectivity & Digital collaboration tools

Digital Technologies

The widespread use of technologies involving the representation, storage, and processing of information in bits.

Renewable energy and energy storage

Climate Change

The human-induced warming of the atmosphere resulting in environmental degradation.

Health / medical technologies

Inequalities

The differences between the levels of health, wealth and opportunity across groups of people.

Health / medical technologies

Demographic Shift

The overall slowing of population growth resulting in population aging, e.g., declining fertility and increasing life expectancy.

Sustainable infrastructure

Urbanization

The increasing concentration of the world's population in cities.

This connection between emerging technologies and megatrends amplifies the positive impact of these technologies. For example, the climate change megatrend will amplify the development of emerging technologies like renewables and energy storage, while the megatrend of urbanization will create opportunities to implement sustainable infrastructure technologies.

In the investment landscape, everything is connected. The role of investment in accelerating progress is to see both the short-term challenges and long-term potential of emerging technologies and find opportunities to support those technologies that will have the most impact on tomorrow.

The future depends on it.

Mubadala’s Strategy

Mubadala is a sovereign investment company, based in Abu Dhabi, that invests with a long-term horizon across sectors and geographies to generate sustainable returns while making a positive and lasting impact on current and future generations.

Guided by our convictions, our understanding of the long-term global trends, and our commitment to responsible investing, Mubadala focuses on nurturing industries of the future and investing in exceptional companies poised to revolutionize our way of life. These companies are distinguished not only by their outstanding management teams and innovative products and services but also by their capacity to harness talent, culture, and ecosystems for technological advancement. This approach enables them to maintain a competitive edge, develop sustainable business models, and deliver superior performance. Innovation and the advancement of emerging technologies are central to their successful growth and fostering a sustainable future.

As a trusted partner and responsible steward, Mubadala actively engages with top-tier investors and industry leaders to invest capital and bolster the growth and innovation of our portfolio companies.

The Bloomberg Media study underscores the vital role of innovation and emerging technologies in achieving sustainability. It also highlights the pivotal role investors play in propelling these technologies forward, enhancing their economic viability, and generating positive societal impacts. Industry innovation, portfolio diversification, profitable economics, and proactive investor engagement are key motivators and drivers of success for responsible investors. The overarching theme is collaboration and partnership, aimed at jointly addressing global challenges, seizing opportunities and accelerating positive and lasting impact.