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Climate tech may have seen a decline in 2024, but the new data also shows a sector maturing with larger deal sizes.
Corporate investment in the climate technology sector fell by 7% to $12.9 billion, which is $1 billion less than Number from 2023according to the data in the new PitchBook report. The report found that the size of the round increased in 2024 and investors seemed more willing to back companies that came out of their seed round.
For years, investors have favored early-stage companies, investing significant sums in pre- and early-stage startups. This is partly due to the relative youth of climate technologies. After a short winter following the implosion of cleantech with the Great Recession that began in December 2007, founders and investors have retooled their approach, grappling with new markets and technologies.
That shift has fueled early-stage opportunities. As these startups matured, they began capturing larger late-stage rounds at higher valuations, according to PitchBook data.
In 2024, the median deal size was $7 million, up $1 million from the previous year, while the median pre-money value rose to $44.5 million from $31.5 million the previous year. The number of completed deals fell by 27% to 568. In 2023, climate technology startups raised a total of $13.9 billion through 782 deals.
Climate tech’s figures from last year also reflect broader market trends. The number of deals decreased across all sectors, although the value of deals increased closer to 2022 levels mainly due to AI-related investments in companies such as Anthropic, Databricks, OpenAI, xAI and Waymo, which together collected 43.2% of the total value of contracts in Q4.
The lull in climate tech investment comes as investors nurse a sort of hangover from the exuberance during the pandemic. As venture dollars poured into climate tech (and several other sectors), deal sizes, numbers, and valuations grew.
Now, while some of those early-stage companies want to raise again, they are facing a harsher environment in which investors carefully observe the unit economy. Those startups that struggle are having a harder time raising money, while those that have cracked the code have been rewarded with bigger deals, investors told me.
