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Before we dive in…
Dive into the capital stack with Joel Armin Hoiland on June 13 at 12:00 PM PT. Hear how government funding and policy shifts are shaping the climate tech landscape. You’ll get fresh insights on how to diligence startups for grant readiness, which technologies are best positioned, and how grants fit into the broader funding stack.
Can't make it? Join CC+ for access to a recording of this and future sessions.
Recapping our conversation with Sophie Purdom
Last week, we hosted a webinar with Sophie Purdom, Managing Partner at Planeteer and Co-founder of CTVC, unpacking the latest insights from CTVC’s climate market briefing. Below is a quick recap of the key trends shaping climate tech this year: where the capital is (and isn’t) flowing, which sectors are surging or slipping, and why early-stage founders still have room to run. Want more? Join CC+ to access the full recording.
Climate Tech in 2025: A Tale of Two Markets
The climate tech market continues to evolve. It continues to grow, but is much more complex beneath the surface. Here's a snapshot of the current landscape from the webinar:
Where the Money Has Gone
Over $182B has flowed into climate tech over the last five years compared to $25B in cleantech 1.0 but it's far from evenly distributed. Three sectors dominate:
Transportation
Energy
Industry
But when you flip from dollars to deals, the picture diversifies: early-stage founders are building across the full spectrum of climate verticals.
Energy overtakes Transportation for the first time since 2020
Annual investment by vertical, 2020–2024 ($bn)
Source: Sightline Climate
🧭 Market Phases & Funding Trends
Three clear market eras have emerged:
2020–2021 Boom: Surging capital, hype, and new entrants.
2022 Retrenchment: Valuations stabilized and check sizes shrank.
Mid-2023 Onward: Flat funding, smaller rounds, but more deals than ever.
📉 Growth-stage investments fell 38% YoY (to <$7B), but early-stage investment has remained steady. That’s your “tale of two markets.”
🔄 Exits & Bankruptcies
More climate tech companies exited in 2024 than ever before—but most were quiet tuck-in M&A deals. Translation: small outcomes.
Major public exit: Ola Electric (India)
Notable M&A: Oxy acquired Carbon Engineering
High-profile failures: SunPower (40-year-old solar firm), Proterra, Volta, Wisk
Exits are still rare, fragile, and often not headline-worthy - a trend to watch in 2025.
🏗️ The Capital Stack Is Shifting
The climate capital stack is evolving fast. With government grants at risk and infrastructure dollars dominating, VCs are being squeezed:
Most VC money still comes from generalist funds (2/3 of capital).
$50B in new AUM was raised recently; but much flows to infrastructure, not VC.
For the first time ever, dry powder shrank
Expect more emphasis on working capital, non-dilutive funding, and catalytic capital like venture debt and project finance.
🔥 What’s Hot (and How to Think About It)
Here’s where capital is clustering:
AI-adjacent infrastructure (e.g., data centers)
Next-gen energy generation (e.g., SMRs)
Energy storage, transmission, and management tools
That said, early-stage investing still comes down to fundamentals: finding sharp teams, solving meaningful problems, and getting in before the generalists do.
📣 Final Thoughts
Despite the headwinds, founders are still building. Over 1,000 new climate startups raised venture funding for the first time last year. Early-stage momentum is holding strong, even if exits and growth capital are slowing.
The takeaway? The opportunity is real, but the market requires more nuanced strategies, smarter financing, and a sober eye toward capital cycles.
Missed the session? Join CC+ for the recording of this and future webinars.
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Note: The Author’s opinions are their own and not necessarily representative of Climate Capital.
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