Funding Trends & Deal Flow KPIs by Sector
Essential KPIs for tracking climate tech investment trends, with 2024-2025 benchmark ranges for deal sizes, valuations, and sector allocation patterns.
Climate tech investment has matured from a niche category to a major asset class, with annual venture funding exceeding $50 billion in 2024. Yet the market is evolving rapidly: investor focus is shifting from deployment plays to deep tech, valuations have reset from 2021-2022 peaks, and the funding gap between early and growth stages is widening. This benchmark deck provides the KPIs that matter for understanding climate investment, with ranges drawn from 2024-2025 deal activity.
The Investment Landscape
BloombergNEF reports global clean energy investment reached $1.8 trillion in 2024—exceeding fossil fuel investment for the first time. Within this, climate tech venture capital represents approximately $50-60 billion annually, down from peak levels of $70+ billion in 2021 but still 3x pre-pandemic levels.
The composition has shifted. Software and fintech climate solutions (carbon accounting, energy management, climate risk) attracted significant 2020-2022 capital but now face funding challenges as investors demand path to profitability. Hardware and infrastructure (batteries, hydrogen, grid technology) are gaining share despite longer development timelines.
Geographic distribution is evolving. While US remains dominant (50-55% of global climate VC), Europe (25-30%) and Asia (15-20%) are growing. China leads in climate hardware deployment but venture investment is harder to track.
The 8 KPIs That Matter
1. Total Climate Tech Investment Volume
Definition: Aggregate venture capital deployed into climate and clean energy technology companies.
| Year | Global Climate Tech VC | YoY Change | % of Total VC |
|---|---|---|---|
| 2020 | $28B | +35% | 9% |
| 2021 | $72B | +157% | 14% |
| 2022 | $58B | -19% | 16% |
| 2023 | $48B | -17% | 20% |
| 2024 | $52B | +8% | 22% |
Climate share growing: Even as absolute volumes moderate from peak, climate tech's share of total VC continues rising. Climate is increasingly mainstream, not specialized.
2. Deal Size by Stage
Definition: Median and average funding round sizes across investment stages.
| Stage | Median Round (2024) | Average Round | vs. 2021 Peak |
|---|---|---|---|
| Pre-Seed | $1.5-2.5M | $2-3M | -15% |
| Seed | $3-5M | $5-7M | -25% |
| Series A | $12-18M | $18-25M | -30% |
| Series B | $35-55M | $50-75M | -35% |
| Series C+ | $80-150M | $120-200M | -40% |
| Growth | $150-350M | $200-400M | -45% |
Round size compression: Post-2021 correction particularly hit growth rounds. Companies that raised at peak valuations face challenging follow-on dynamics.
3. Valuations by Sector and Stage
Definition: Pre-money valuations as multiples of revenue or raised capital.
| Sector | Seed (Pre/Post) | Series A | Series B |
|---|---|---|---|
| Carbon Accounting/MRV | $8-12M pre | $25-40M | $80-130M |
| Energy Storage | $10-15M pre | $35-55M | $120-200M |
| Hydrogen/E-fuels | $12-20M pre | $40-70M | $150-300M |
| Grid/Electrification | $10-18M pre | $30-50M | $100-180M |
| Agriculture/Food | $6-10M pre | $20-35M | $60-100M |
| Climate Software | $7-12M pre | $22-38M | $70-120M |
| Industrial Decarb | $12-18M pre | $35-60M | $120-220M |
Revenue multiples declining: Peak 2021 valuations of 50-100x ARR for climate SaaS have compressed to 10-25x. Hardware companies valued on technology milestones rather than revenue multiples.
4. Sector Allocation Shifts
Definition: Distribution of climate VC investment across technology categories.
| Sector | 2021 Share | 2024 Share | Trend |
|---|---|---|---|
| Mobility/EVs | 32% | 22% | Declining (maturity) |
| Energy (Renewable) | 18% | 16% | Stable |
| Energy Storage | 12% | 18% | Growing |
| Industrial Decarb | 8% | 14% | Growing |
| Food/Agriculture | 10% | 9% | Stable |
| Carbon/Climate Data | 8% | 7% | Declining |
| Built Environment | 7% | 8% | Stable |
| Hydrogen/E-fuels | 3% | 5% | Growing |
| Other | 2% | 1% | - |
Industrial and storage gaining: As "easy" software and EV plays mature, investor attention is shifting to harder industrial decarbonization and enabling infrastructure.
5. Funding Gap Analysis
Definition: Ratio of capital available to capital needed at each stage.
| Stage Transition | Funding Ratio | Implication |
|---|---|---|
| Seed → Series A | 1:3 (oversupplied) | Many funded, few progress |
| Series A → Series B | 1:1.5 | Moderate compression |
| Series B → Series C | 1:2.5 | Valley of Death |
| Series C → Growth | 1:4 | Severe gap |
| Growth → Public/PE | 1:3 | Limited exits |
Valley of death deepening: Companies raising $20-50M face the hardest path forward. Growth equity for climate hardware is particularly scarce.
6. Time Between Rounds
Definition: Median months from one funding round to the next.
| Stage Transition | 2021 (Peak) | 2024 | Extended By |
|---|---|---|---|
| Seed → Series A | 14 months | 20 months | +43% |
| Series A → B | 16 months | 24 months | +50% |
| Series B → C | 18 months | 30 months | +67% |
| Series C → Growth | 22 months | 36 months | +64% |
Runway implications: Companies need 24-36 month runway to reach next milestone. Raise appropriately—running out of capital before demonstrating progress is existential.
7. Investor Concentration
Definition: Concentration of capital among investors and geographic distribution.
| Investor Type | Share of Climate VC | Trend |
|---|---|---|
| Dedicated Climate Funds | 35-42% | Growing |
| Generalist VC (w/ climate thesis) | 25-32% | Stable |
| Corporate VC | 12-18% | Growing |
| Government/DFI | 8-12% | Growing |
| Family Offices | 5-8% | Stable |
| Crossover/Growth | 3-8% | Declining |
| Top 10 Climate VC Firms | % of Deals | Significance |
|---|---|---|
| Lead rounds | 25-30% | High concentration |
| Participate in rounds | 45-55% | Even higher |
Concentration risk: A small number of climate-focused firms dominate deal flow. Relationship quality with these investors matters disproportionately.
8. Exit Activity
Definition: Liquidity events providing returns to climate tech investors.
| Exit Type | 2021 Volume | 2024 Volume | Change |
|---|---|---|---|
| IPO | 45 | 8 | -82% |
| SPAC | 65 | 2 | -97% |
| M&A (Strategic) | 180 | 145 | -19% |
| M&A (PE) | 25 | 35 | +40% |
| Secondary Sales | Limited data | Growing | Emerging |
| Exit Metrics | Median | Top Quartile |
|---|---|---|
| Time to Exit | 8-10 years | 5-7 years |
| M&A Multiple (Revenue) | 3-5x | 8-15x |
| IPO Valuation vs. Last Round | 0.8-1.2x | 2-4x |
Exit drought: IPO and SPAC markets essentially closed for climate tech in 2023-2024. M&A continues but at moderate valuations. Secondary markets emerging as release valve.
What's Working in 2024-2025
Deep Tech Resurgence
After years of software preference, hardware-intensive climate companies are attracting investor interest again. Companies with defensible technology moats (novel chemistry, proprietary manufacturing) command premium valuations despite longer development timelines.
Breakthrough Energy Ventures, Lowercarbon Capital, and DCVC exemplify funds comfortable with 10+ year horizons for deep tech plays.
Government-Enabled Investment
IRA, EU Green Deal, and equivalent programs are de-risking climate investments. Tax credits, loan guarantees, and grants reduce private capital requirements and improve returns. Climate companies citing government support raise at higher valuations and faster timelines.
Loan Programs Office (LPO) at DOE has committed $40B+ to climate infrastructure, enabling projects that wouldn't proceed with private capital alone.
Strategic Corporate Investment
Corporate venture arms (Shell Ventures, Chevron Technology Ventures, BASF Venture Capital) are increasingly active, providing capital plus customer relationships and operational expertise. Strategic value proposition helps climate companies access markets.
2024 saw several corporate-led Series B and C rounds that might not have closed with financial sponsors alone.
What Isn't Working
Growth Stage Gap
Companies that successfully complete Series A and B often cannot raise Series C or growth rounds. The capital requirement ($50-200M) exceeds climate VC fund sizes while returns timeline exceeds growth equity expectations. This "valley of death" causes promising companies to fail or sell prematurely.
Proposed solutions (climate infrastructure funds, patient capital pools) are emerging but not yet scaled.
Revenue vs. Impact Tension
Investors increasingly demand path to profitability, but many climate solutions serve markets (carbon removal, adaptation) where willingness-to-pay is policy-dependent. Companies caught between impact mission and revenue pressure face strategic paralysis.
Clearest success: companies where climate benefit and economic benefit align (energy efficiency, electrification where TCO favors EV).
Geographic Capital Gaps
Climate investment remains concentrated in US/EU while climate solutions are needed globally. Emerging market climate tech faces particular funding challenges—higher risk perception, smaller fund presence, currency/exit concerns.
Some specialized funds (Africa Climate Ventures, Amasia) target underserved geographies, but volumes remain small.
Key Players
Established Leaders
- Brookfield Renewable Partners — World's largest publicly traded renewable power platform. $100B+ AUM in clean energy.
- NextEra Energy — Largest renewable energy producer with 24,600 MW capacity and 30 GW project backlog.
- BlackRock — Managing $70B in sustainable fixed income. Climate infrastructure investments globally.
- Goldman Sachs — $750B sustainable finance commitment by 2030.
Emerging Startups
- Climeworks — Direct air capture pioneer. Raised $650M including $450M from Partners Group.
- Form Energy — Iron-air battery technology. Raised $1.2B+ for 100-hour storage.
- Twelve — CO2 to chemicals technology. Raised $200M+ from breakthrough investors.
- CommonGround — Climate tech dealflow platform connecting investors and startups.
Key Investors & Funders
- Breakthrough Energy Ventures — Bill Gates' $2B climate fund backing 100+ companies.
- Lowercarbon Capital — Chris Sacca's $800M fund backing carbon tech.
- TPG Rise Climate — $7B climate investment fund.
Examples
Form Energy (Iron-Air Batteries): Raised $800M+ including $450M Series E in 2024 for long-duration energy storage. Differentiation: novel iron-air chemistry enabling multi-day storage at 90% lower cost than lithium-ion. Investors: Breakthrough Energy, TPG Rise, GE Vernova. Demonstrates continued capital availability for differentiated deep tech.
Watershed (Carbon Accounting): Raised $100M Series C at ~$1.8B valuation in 2024—down from peak private market comparables but still substantial. Business model: SaaS platform for enterprise carbon management. Signals: carbon accounting consolidating around leaders; generalist climate software facing harder path.
Climeworks (Direct Air Capture): Raised $650M in 2024, largest private round for DAC. Use of funds: scale Mammoth facility in Iceland, develop US projects. Investors: Partners Group, GIC, Baillie Gifford. Demonstrates deep pockets available for category-defining climate solutions with credible path to scale.
Action Checklist
- Benchmark current metrics (ARR, growth rate, unit economics) against sector peers
- Plan 24-36 month runway to account for extended fundraising timelines
- Target investors with demonstrated climate thesis and appropriate stage focus
- Articulate both climate impact and path to economic sustainability
- Consider strategic corporate investors for customer access and validation
- Explore non-dilutive capital (grants, government programs) to extend runway
- Prepare for longer time to exit and plan cap table accordingly
- Build relationships with climate-focused growth investors before Series B
FAQ
Q: How should I think about valuation in current market? A: 2021 peak valuations are no longer relevant benchmarks. For climate SaaS, expect 10-20x ARR at Series B (vs. 40-80x at peak). For hardware, valuation is milestone-driven—technology demonstration, pilot success, customer contracts. Avoid down rounds if possible, but don't over-optimize for valuation at cost of runway.
Q: Is climate tech funding declining overall? A: Volumes are down 25-30% from 2021 peak but still 3x pre-pandemic levels. More importantly, climate is taking larger share of shrinking total VC pie. The correction affects all VC, not just climate. Quality companies continue to raise; marginal companies struggle.
Q: How do I bridge the growth stage gap? A: Options include: project finance (for infrastructure), government programs (DOE LPO, EU programs), strategic partnerships with commercialization path, structured financing, and international development finance institutions (for emerging market focus). Pure equity at growth stage is hardest path.
Q: When will exit markets reopen? A: IPO window depends on broader market conditions and rate environment. Most observers expect gradual improvement 2025-2026, with first climate tech IPOs likely companies that went public via SPAC and are now seasoned. M&A continues regardless—strategic acquirers need climate solutions regardless of public market conditions.
Sources
- BloombergNEF, "Energy Transition Investment Trends 2024," January 2025
- PitchBook, "Climate Tech Venture Report Q4 2024," January 2025
- CTVC, "Climate Tech VC Deal Database and Analysis," 2024
- Sightline Climate, "State of Climate Tech 2024," October 2024
- DOE Loan Programs Office, "LPO Portfolio Update," December 2024
- Crunchbase, "Climate Tech Funding Analysis," 2024
- S&P Global, "Energy Transition M&A Activity," 2024
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