Despite the declines, global regions like the US and Europe have made gains in median deal sizes this year, and both the US and EU continue to provide government grants and loans to climate tech solutions. China, on the other hand, has rolled back some of its clean energy subsidies, and VC enthusiasm has waned in the country this year.

Globally, governments are focusing more on early-stage technologies that are ready for commercialization. Two prime examples in the US are nuclear fusion energy and direct air capture of CO2, both of which have received substantial funding from the US Department of Energy this year.

Download the full report to access comprehensive data and charts on the evolving state of climate tech across sectors, geographies, and more.

Below, we cover key shifts in Q3’24.

• Climate tech funding falls to $4.8B in Q3’24, marking the lowest point since Q2’20. Venture capital has shifted away from the sector as high interest rates impact climate tech’s capital-intensive projects and as investors pivot toward AI, which tends to feature more rapid developments and shorter commercialization timelines.

• M&A activity drops dramatically in Q3’24, with only 43 deals completed — a more than 50% decline from the previous quarter. While notable exits like Kyte Powertech ($277M valuation) and SRE Power ($72M) suggest a steady appetite for grid infrastructure solutions, the overall slowdown signals a more selective M&A environment, potentially limiting exit opportunities for highly valued climate tech companies.

• US and European deal sizes show resilience despite the slowdown in global funding. In the US, the median deal size has reached $6M in 2024 YTD (up from $4.3M in 2023), while Europe’s median deal size has grown to $4.9M (up from $3.7M in 2023), indicating sustained investor confidence in these markets.

• Despite declines in overall climate tech funding, companies commercializing solutions in carbon capture, utilization, and storage (CCUS) continue to secure significant capital, as demonstrated by Twelve‘s $200M Series C round in September. Twelve is using the funding to finish building its Washington state facility, where it will produce sustainable aviation fuel (SAF) that it claims can deliver up to 90% emissions reduction compared to conventional jet fuel.

Source: CB Insights — Twelve Funding Insights

• Electric vehicle technology funding reaches a critical low of $0.6B in Q3’24, marking its lowest point since early 2020. However, the sector still attracted notable deals, including 24M Technologies‘ $87M Series H round at a $1.3B valuation, pointing to selective investor appetite for more mature EV tech companies.

More energy resources from CB insights:

• 5 climate tech markets gaining momentum in 2024
• The grid tech market map: The companies tackling the growing need for reliable electricity
• The energy impact of generative AI: 3 technologies transforming the future of data centers
• Analyzing 15 oil & gas leaders’ tech priorities: Here’s where incumbents are buying, investing, and partnering
• Sodium-ion batteries are poised for a breakout moment — energy players should prepare
• Why energy giants should have green ammonia on their radar

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Essential resources to understand the future of energy & climate tech:

• State of Climate Tech Q2’24 Report — Here’s where climate tech funding is going and where we’re seeing pockets of interest.

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However, as deal sizes have gotten smaller, the space has seen a corresponding shift toward early-stage dealmaking. In 2023, 69% of climate tech deals went to early-stage companies — an increase of 14 percentage points vs. 2022.

Using CB Insights data, we break down the climate tech landscape and the markets and startups seeing the most traction.

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Despite equity funding to the space dropping 39% YoY to $41B in 2023, deal counts actually ticked up 4% to over 2,700. This was driven by an increase in early-stage deals, which represented 69% of all deals in 2023 — up from 55% in 2022.

To see where climate tech is heading in 2024, we looked at the tech markets with the most early-stage investment activity in 2023:

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As industrial businesses look to improve their sustainability profiles and operational efficiency, they’re adopting a range of solutions from climate tech vendors. This has been accompanied by a surge in VC activity: In 2022, venture capital funding to climate tech reached a record high of over $70B.

These technologies range from carbon capture and storage — which helps industrial firms reduce and sequester their emissions — to more sustainable materials and fuels for specific industries like construction and aviation. They also include platforms to manage energy use, recycling, and more across industrial sites.

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Even as broader venture activity slows down, BEV has maintained a decent pace of investment. Over the past year, BEV has participated in 45 deals going to companies in the climate tech space.

Using CB Insights data, we mapped how BEV has spread its climate tech investments across agtech & food tech, renewable energy & grid storage, and beyond.

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The post This is where Bill Gates’ Breakthrough Energy Ventures is prioritizing its climate tech investments appeared first on CB Insights Research.

Climate risk analysis platforms collect data and create predictive models to help organizations understand their climate-related risks (e.g., exposure to wildfires or flooding), develop a climate risk strategy, and minimize their environmental footprint.

Climate risk analysis companies are using artificial intelligence (AI) and machine learning (ML), geospatial monitoring, satellite data, and weather-predictive modeling to analyze data.

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In this hot climate tech environment, big tech companies Microsoft, Amazon, and Google have stepped up their efforts in climate tech product development, investment, and partnerships.

Download the report to find out:

• How each giant intends to tackle their ambitious net-zero carbon emissions goals
• How big tech companies are adding new carbon accounting and climate risk analysis features to their platforms
• The areas of climate tech where big tech is investing
• Where each big tech company is headed in the climate tech space

Report Highlights:

• Big tech has set ambitious net-zero goals and players are working toward reducing their carbon footprint. While all 3 giants have made net-zero commitments, Microsoft is the most aggressive, with the goal to be carbon negative by 2030.
• Big tech is vying for a piece of the climate tech software market. In particular, Microsoft and Google have launched carbon accounting software offerings for subsets of their existing users.
• Climate tech investment is heating up. For all 3 incumbents, climate tech is an investment area of growing importance. Amazon and Microsoft have launched funds focused exclusively on climate tech, while Google has created an accelerator focused on climate tech startups.

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