Climate tech investment trends – five years on since the Paris Agreement

As the UN’s Climate Conference COP26 approaches, in collaboration with London & Partners, we’ve taken a look at the trends in global climate tech investment and innovation since the signing of the Paris Climate Agreement five years ago.

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Climate tech is booming globally

Since the signing of the Paris Climate Agreement, global climate tech investment has skyrocketed, with five times more VC funding in 2021 than 2016.

2021 has been a record year for climate tech investment, with $32B raised so far this year.

Europe is the fastest-growing region globally for climate tech, with investment growing faster than the global average: 7.0x vs. 4.9x between 2016 to 2021 year to date.

London is a climate tech powerhouse

London is one of the driving forces behind Europe’s rapid growth in climate tech. London startups have raised $3.3B in VC investment since 2016, 16% of Europe’s total.

The value of London-based climate tech startups has also soared in the last two years to a combined $28B, due in part to large exits for Arrival and Depop in the last year.

With a thriving climate tech ecosystem, London is home to 416 climate tech companies – more than any other European city.

The UK capital is also a hub for climate tech funds, with London-based VCs raising over half of Europe’s dedicated climate tech funds in the last two years. The largest climate tech funds raised in 2021 include a $900m fund by London-based Lightrock, a $312m fund by London-based 2150 and a $200m fund by Munich-based Blue Horizon. Q4 is also already on a roll, with Ecosia’s $350M climate-focussed World Fund announced just today.

London has great potential for future growth

The growth of climate tech is been driven by significant global investment into areas such as transportation, energy and circular economy solutions.

London is the second city globally for the number of climate tech rounds raised by startups, suggesting an active ecosystem with significant growth ahead.

Climate tech companies in London are scaling – the city is home to 3 climate tech unicorns and 6 potential future unicorns.

“The global tech industry has a fundamentally important role to play in the fight against climate change and we need global cooperation and collaboration to drive forward urgent action. Today’s findings demonstrate the innovation and creativity of climate tech firms in London tackling the climate crisis. Home to the largest cluster of climate tech companies in Europe and a thriving ecosystem of dedicated VC funds and accelerators alongside world-class researchers and talent, London’s tech sector is coming together to tackle the global climate crisis.”