Underserved Market: startups tackling the Wildfire problem

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A bit of background on wildfires

Climate risk is increasingly affecting the way that governments and enterprises work, with the effects of climate change being felt more than ever. These unprecedented consequences have more immediate impact on different aspects of our lives.

Year 2020 has so far been less than ideal, to say the least. Even though Californians have been sheltering in place for the last 7 months due to the pandemic, they are now forced to face raging wildfires and hazardous levels of air pollution

Extreme weather has caused catastrophic wildfires in the West Coast over the last several years, with 2020 being the worst year so far. Hundreds of thousands of people have been displaced, thousands of homes and businesses have been destroyed and entire natural ecosystems have been turned to ashes.

So far in 2020, 8,400 wildfires have burned more than 4.1 million acres, including 9,200 structures, in just California alone. This year through mid-September, it is estimated that the fires in California resulted in over 90 million metric tons of CO2 — this is about 30 million tons more than the total CO2 emissions resulting in providing power to the entire state. Since about 85% of terrestrial carbon is stored in green areas and about 1/3 of California is covered by forests, the wildfires have created a vicious cycle where climate change results in more CO2 emissions.

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Since the beginning of 2019, California has spent $500 million to expand Cal Fire’s resources, including equipment, technology and personnel. A few new policy changes also followed:

  • A new bill that requires PG&E and other major electric utilities to spend a combined $5 billion on wildfire safety

Nevertheless, the situation is more out of control than ever, even with the huge spending increases in wildfire management and prevention solutions. These include traditional approaches such as deploying more personnel, helicopters and alert systems. Since wildfires have gotten exceedingly devastating in the last few years, perhaps it’s time to change the way we deal with wildfires and look at nascent technology innovations that can help us do this more efficiently and cost-effectively.

What are the startup solutions in the market?

There are technology innovators working on solutions to better predict, prevent, detect, monitor and respond to wildfires.

  • Predict: technology solutions that use weather forecasts to identify areas of danger under extreme heat conditions

There aren’t many startups working on solving the wildfire problem, and not many innovation organizations supporting this either. Y Combinator nowadays has ~200 companies per batch, but none of their startups in recent years address this urgent problem.

In order to bring more transparency regarding startups that are working on solutions to wildfires, I’ve outlined the different types of startups in the market and provided a synthesis of some key trends observed in the space, as entrepreneurs begin to capitalize on mitigating this environmental problem. Below is the market landscape I created for startups focused on wildfires.

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Ending Remarks

All of these startups share in common product/services that deliver low costs, increased efficiency and transparency for stakeholders involved and affected by wildfires. Due to recent events, I hope to see more companies tackling this problem in a sector that is antiquated and lacking in innovation.

Unfortunately, the biggest challenge for companies operating in this space is that they often face a small market of potential customers that are reluctant on adopting startup technology and take several years to commit to just partnerships contracts. This includes utilities, government agencies and local governments, who have long sales cycles. Municipalities and government agencies have tight budgets and complex procurement processes, and usually the elected governing body has to vote on approvals for new expenditures, with budget allocations reflected in future fiscal years only. Most of these organizations don’t even allocate budgets to trying out new solutions to manage wildfires, while requiring multiple stakeholders to approve new expenditures if anything is even proposed. This is the biggest bottleneck that inhibits innovation in this sector, and I’d be very excited to see innovations addressing this problem.

Furthermore, since wildfires are complex and difficult to manage, there’s no one-fits-all solution that addresses the different stages of the wildfire lifecycle. The most efficient ways to manage it will require collaboration from all the different stakeholders involved including local governments, regulators, technology innovators, disaster response teams, amongst others. At the same time, new approaches will need to be scalable to create impactful results nation-wide, and new business models will be needed to cater to customer business processes (they generally prefer a one-time fee over recurring revenue schemes).

I am excited to watch this ecosystem evolve with new players taking a data-centric approach to help local governments manage and respond to wildfires more efficiently. I would love to see more solutions that help prevent and respond to wildfires — these would have a very high level of impact regarding the current situation, while offering more options in two sub-sectors that are highly underserved when compared to the wildfire detection and monitoring category.

If you or someone you know is working on a solution to help manage wildfires, it would be great to hear from you. Feel free to add me and message me via LinkedIn — I’m always happy to exchange thoughts: https://www.linkedin.com/in/dennisfromperu/

Disclaimer: This blog represents solely my own opinions, not my employer’s.

Written by

Investor at UL Ventures. LatinX. Salsa Dancer. VC Trends. A personal blog for the curious mind.

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