2022 was the peak year for climate tech venture capital fundraising, reaching $18.7 billion, according to a PitchBook report.
The report highlighting climate tech specialist managers in venture capital globally has offered insights into fundraising trends, comparisons with the wider VC space, and detailed fund manager lists.
One finding from the report authored by New York-based senior emerging technology analyst John MacDonagh is that most climate specialist funds target a wide range of climate technologies. However, a subset of these funds focuses specifically on areas such as clean energy, low-carbon mobility, or sustainable food and agriculture.
Data shows decrease in late-stage climate tech funding
Investors are drawn to climate-focused funds for various reasons, according to the researchers. LPs are attracted to climate-focused funds for several reasons, including general tailwinds for many areas of climate tech, which may face increased demand due to the rapid adoption of other technologies—such as the growing need for energy storage as we see growth in intermittent renewable energy deployment, like in solar and wind. In other areas, incentives or compliance pressure is driving rapid development of climate tech in, for example, direct air capture or green hydrogen.
Despite the decline in overall VC fundraising from 2022 to 2023, climate tech specialist funds maintained a consistent share of the total fundraising. According to the report, this stability suggests that the overall decline was more related to broader VC market conditions than a lack of interest in climate tech.
DC pension schemes’ climate-friendly investments up 23% since 2021
So far in 2024, 18 climate funds have closed, with five exceeding $300 million. This pace is comparable to 2023, which saw 37 funds close throughout the year, with only three surpassing the $300 million mark.
The report has segmented the funds into four categories: broad climate tech, clean energy, low-carbon mobility, and sustainable food and agriculture. The majority of funds fall into the broad climate tech category. Just over 50% of these funds are managed by firms headquartered in the US, with the UK being the next most common location.
