Climate tech

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Introduction

Climate Tech refers to an array of technology solutions designed to address climate change and its environmental effects. This can be done by reducing GHG emissions or adapting our systems to environmental changes.

Within the broad spectrum of climate tech, we find different types of technology, such as hardware, software, API, IoT, and biotech. Climate applications span a wide set of industries and sectors.

Here below, you can find some of the main applications for these technologies.

Combined enterprise value

In 2022, the combined enterprise value of global climate tech startups dropped by 20% to $2.0T, before recovering and reaching $2.6T all-time high in 2023.

The climate tech ecosystem increased its combined value by 60x in a decade.

Investment by geography

Climate tech VC funding is not being immune to the slowdown in the VC market. The first two quarters of 2023 are showing a ~50% slowdown in respect to 2021/2022 levels. Notably, Europe has watched up with the US and slightly leading in funding this year.

Zooming out, climate tech funding reached a record of $70B of VC funding in 2021, 2023 will certainly not reach these levels but widely surpass 2020 and any previous years.

Overall, climate tech VC investment increased by 24x within the last decade (2022 vs 2012.

Top countries

The US remains the top country by climate tech funding in 2023, followed by China, UK and Germany.

Cumulatively, the US has invested $120B in Climate Tech startups since 2018, 3x more than China. UK, Sweden, Germany and France follow with $9-13B in funding.

Top hubs

The Bay Area and New York have attracted the most funding in 2023, followed by London and Paris.

The US remains the top country by climate tech funding in 2023, followed by China, UK and Germany.

Cumulatively since 2018, the US has claimed 4 of the top 6 hubs, with only Shangai in Asia and Stockholm in Europe as 3rd and 5th hubs. London, Paris and Berlin follow closely.

Share of total investment

The shares of climate tech investment more than tripled within the last ten years. We also noticed that while the amount invested in climate tech decreased last year, as seen above, its global shares increased by 25% from 8 to 10%.

This indicates that while the market crunch has slightly hit climate tech startups, their popularity among VCs is increasing.

Climate tech and Impact

Looking more closely at the wider impact ecosystem, the numbers considerably change. Here, climate tech attracts the bulk of the impact investment between 70% and 80%.

This indicates that impact startups focusing on climate and the environment are considerably more attractive than startups with a social focus.

Round sizes

If we look at median rounds sizes in recent years, we can notice an upward trend for both climate tech and the overall startup ecosystem in recent years.

Climate tech startups show values similar to the rest of the ecosystem, demonstrating that impact does not come at the expense of attractiveness for VCs. Median round sizes are a good proxy for valuations and can even be more meaningful than valuations at early stages.

Looking at the changes in 2022 and 2023 with the market downturn, early-stage round sizes have held and grown even for both categories, while at later stages, performances diverge strongly.

Climate tech remained resilient at Series B and Series C+, while the rest of the ecosystem dropped strongly.

By verticals

Energy has been by far the most invested segment in climate tech in 2023 ($11B as of July 2023), almost double the amount flowing in the transportation sector. Energy has also been the fastest-growing among the top 4 climate tech verticals in the past two years. Historically transportation had been the most funded segment, attracting 54% of the funding in 2019.

It’s share of VC funding has now decreased to 21% so far in 2023, while energy has grown from 16 to 39% in the same timeframe.

Overall, energy + transportation still accounts for over 60% of the funding.

Carbon has been the fastest-growing segment, reaching $5.1B in 2022.

By segment

Electric mobility has attracted the highest share of global investment since 2019. Despite a 48% drop between 2021 and 2022, the vertical is still up 46% from 2020.

In 2022, renewables was the second top-funded segment, overcoming other prominent verticals such as EV battery and alternative proteins.

In the last 24 months, circular economy startups registered a 101% growth.

The fastest-growing segment in the last 12 months has been carbon capture and storage with a 300%+ growth to $3B.

Other segments showing strong growth have been climate fintech and hydrogen.

Early stage by vertical

Looking at early rounds, the ranking changes considerably. This time, circular economy is the top funded segment with 458M in 2022, followed by alternative protein and urban tech.

The bulk of verticals registered a decrease in investment in the last 12 months, albeit remaining relatively stable compared to 2020.

Agritech segments are among the few segments that registered growth in 2022. Specifically, regenerative and precision agriculture grew by approximately 100%.

Methane emissions mitigation and carbon capture and storage have seen instead the highest growth in the last two years.

Top investors

Top investors in climate tech in 2023 and cumulative all time, filtered by their typical first round of investment (entry round).

Partners

 

 

 

 

 

Leading early-stage VC-accelerator

Rockstart is an early-stage VC and accelerator that empowers purpose-driven founders across three domains: Energy, AgriFood and Emerging Technologies.

Rockstart invests in early-stage startups and provides access to capital, market, and expertise by connecting founders with co-investors, mentors, partners, corporates and the wider Rockstart network.

Rockstart has invested in more than 300 startups, and its alumni value to date is more than $1bn.

Rockstart is an international team of 45+ professionals dedicated to empowering purpose-driven founders to become scalable and drive positive change on a global scale. Rockstart has notable exits such as Wercker, Bouw7, iClinic, and in 2021, 3D Hubs, Brincr and Dan.com. The company has offices in Amsterdam, The Netherlands, Copenhagen, Denmark and Bogota, Colombia.

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