The next frontier in venture capital – Climate Tech

Climate tech – the sector that might just save the world. To mark Climate Week 2020, we’ve been working with PwC to understand the fast-evolving global climate tech landscape, the accelerating venture capital market, and the drivers and barriers for startup growth. 

We found that Climate tech investment has grown at five times the VC market rate over that last seven years. Albeit starting from a low base, Climate tech is rapidly becoming a significant and recognised market segment, with good signals for continued growth. 
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VC and corporate investment in startups developing technology-enabled solutions for climate change, and the transformation to net zero emissions, grew at a faster rate than VC investment as a whole between 2013 – 2019. In that time, $60 billion of early stage capital was invested globally into startups contributing to tackling the net zero challenge. 

  • $60 billion invested into startups tackling the net zero challenge
  • Mobility and transport dominates, followed by food, agriculture and energy
  • $100m+ late-stage deals are growing, and now represent 61% of Climate Tech investment
  • Involvement of strategic investors alongside traditional VCs, including corporate venture capital and governments, will be key to the continued success of climate tech

A new frontier

For such a new sector, definitions are key. Climate tech is defined as a broad umbrella of solutions to reduce greenhouse gas (GHG) emissions. As seen in with breakthrough companies like Impossible Foods and Tier, new applications of innovation in sectors like food and mobility are raising significant capital, while also addressing climate challenges. 

While climate tech is a nascent sector overall in the VC market (approx 6% of total capital invested in 2019), climate tech VC investment increased from $418 million in 2013 to $16.3 billion in 2019. To put that in perspective, that’s approximately three times the growth rate of VC investment into AI over the same period, and five times the average growth in VC.

Celine Herweijer, global leader, Innovation & Sustainability, PwC UK said “The analysis shows the urgency of the opportunity, and gap to close, to support and scale innovative technologies and business models to address the climate crisis. Climate tech is a new frontier in venture investing for the 2020s.

Drivers for growth 

Climate tech related to mobility & transport, heavy industry, and GHG capture and storage are the fastest growing segments in the analysis, followed by food, agriculture, land use, built environment, energy, and climate and Earth data generation. 

Investment in micro-mobility such as e-scooter and bike platforms and wider transport innovation has grown dramatically, recording a compound annual growth rate (CAGR) of 151%, and representing 63% ($37.4 billion) of all climate tech funding over the past seven years. The scale of transport innovation has also driven bigger deals. 

Azeem Azhar, Senior Advisor to PwC UK, founder of Exponential View said “The climate tech market is maturing. As a society we are seeing more entrepreneurs launch startups, more investors back them, and an increasing number of larger funding rounds for later-stage high-potential deals. But PwC’s analysis shows the ecosystem is still nascent, with key gaps in the depth and nature of funding available to founders and tricky structural hurdles for them to navigate as they scale their businesses.” 

Global hubs

Climate tech startup investment in the San Francisco Bay area ($11.7 billion) is 56% higher than its nearest rival, Shanghai ($7.5 billion). Compared to other regions, Europe has heavily invested in energy, particularly in renewable energy technologies (predominantly photovoltaics (PV) cells) and energy storage (batteries), demonstrating the potential for regional specialist capabilities in the second wave of climate tech. 

Outside of mobility and the dominant US and China markets, Berlin, London, Labege (France) and Bengaluru, India all appear in the top ten cities for climate tech startup investment.

Top 10 climate tech investment hubs (excluding Mobility and Transport)

Startup HQ

Funding raised

San Francisco Bay Area, United States


Boston, United States


Berlin, Germany


New York, United States


Sioux Falls, United States


London, United Kingdom


Labège, France


Boulder, United States


Chicago, United States


Pittsburgh, United States



Challenges don’t get more global than climate change, so it’s important that innovative solutions can come from anywhere. On Dealroom we track 1,234 startups based in over 70 countries, all tackling climate action, from Antigua & Barbuda, to Zambia.
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