PitchBook Data, Inc.

EMERGING TECH RESEARCH

Nizar Tarhuni Vice President, Institutional
Research and Editorial

Paul Condra Head of Emerging

2024 Climate Tech
Technology Research
Funds Report
Institutional Research Group
VC fundraising from climate tech specialists
Analysis
PitchBook is a Morningstar company providing the most comprehensive, most
John MacDonagh
accurate, and hard-to-find data for professionals doing business in the private markets.
Senior Analyst, Emerging
Technology
[email protected]

Data

Key takeaways
Collin Anderson
Data Analyst

• The Climate Tech Funds Report covers 213 climate specialist VC fund managers,
[email protected]
including fundraising trends, comparisons with the wider VC space, and fund
manager lists. The managers included have a strong focus on climate tech, with
Publishing climate tech investments making up a significant component of their overall

Designed by Jenna O’Malley

investments—though many of them invest in other sectors, including supply
chain management, health, and communication tech.
Published on July 16, 2024

• Most climate specialist funds target investments in a broad range of climate

technologies, though a smaller subset focuses on clean energy, low-carbon
Contents mobility, or sustainable food & agriculture. Manager lists are available for all of
Key takeaways 1 these categories.
Introduction 2
• 2022 was the peak year for climate tech VC fundraising, reaching $18.7 billion,
Climate specialist fundraising trends 3
compared with the $8.8 billion of 2021—the next largest year in terms of capital
Manager lists 7 raised. YTD fundraising for 2024 looks stronger than that of 2023, with $3.4
billion raised as of June 25, compared with $3.9 billion in the whole of 2023.
Inclusion criteria and categories 15

• Through the decline in VC fundraising from 2022 to 2023, fundraising from

climate tech specialist funds remained a consistent share of overall fundraising
(approximately 2.0%), suggesting much of the decline was related to overall VC
fundraising conditions.

• Read our inclusion criteria for the manager lists in the “Inclusion criteria and
categories” section.

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 2024 Climate Tech Funds Report

Introduction
Overall VC investment in the climate tech space has seen peaks and troughs in
recent decades, with a wave of early interest from 2006 to 2011 followed by a period
of low investment until about 2017—at which point VC investment began rising,
reaching a peak in 2021 and 2022.1 The climate tech space contains a broad range
of technologies and applications, though many involve significant engineering
challenges and dependencies on regulation and policy; fund manager specialization
in the space allows a deeper focus on these specifics.

In this report, we expand on the definition of climate tech used in our climate tech
VC investment analyst notes, further including areas like water and soil pollution
remediation, waste reduction, products and services for integrating climate
technologies, and circular economy technologies around reusing and sharing
products. When identifying and segmenting climate specialist funds and fund
managers, this broader definition was used to prevent unnecessary exclusions—for
a detailed explanation of the inclusion criteria and categories used in this report,
see the “Inclusion criteria and categories” section. The fund managers listed in this
report either focus on climate tech investments, include climate tech as a major
component of their investing, or manage a specialist climate tech fund in addition to
other nonspecialist funds.

Many climate-tech-focused fund managers seek investments in a wide range of

climate technologies, with a relatively small number specializing further into a
specific climate tech area such as clean energy, sustainable food & agriculture, or
low-carbon mobility. Impact investing managers often also invest in companies
focused on health and social impact, and managers also frequently allocate capital
to climate-related areas such as supply chain improvements and optimization.

LPs are attracted to climate-focused funds for a number of reasons, including

general tailwinds for many areas of climate tech, which may face increased demand
due to rapid adoption of other technologies—such as the growing need for energy
storage as we see growth in intermittent renewable energy deployment, like in solar
and wind. In other areas, strong incentives or compliance pressure is driving rapid
development of climate tech in, for example, direct air capture or green hydrogen.

Global energy markets are also generating tailwinds for a suite of energy-related
technologies, with volatile costs for fuel resulting in a stronger push for renewable
energy, and the volatile electricity prices increasing uptake of home energy
efficiency technologies, which have also become more accessible in recent years.

1: For more on VC investment in the climate tech space, read our Q1 2024 PitchBook Analyst Note: VC Investment in Climate Tech.

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 2024 Climate Tech Funds Report

Some LPs are specifically looking to make impact investments that produce
beneficial social or environmental impacts alongside financial returns. Though not
all impact investing funds will focus on climate tech, many will include climate tech
investments as a core part of their investment strategy.

Manager lists are included for the following categories:

• Early-stage VC—broad climate tech

• Multi-/late-stage VC—broad climate tech
• Early-stage VC—category-specific funds
• Multi-/late-stage VC—category-specific funds
• CVC—climate tech

Climate specialist fundraising trends

Climate tech VC fundraising activity

64

50

38 38
32
28

18
14
12 11 9
$0.6 $1.0 $0.6 $0.7 $2.7 $4.0 $2.9 $8.8 $18.7 $3.9 $3.4

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Capital raised ($B) Fund count
Source: PitchBook • Geography: Global • *As of June 25, 2024

Specialist VC fundraising in climate tech reached a substantial peak in 2022, with

$18.7 billion raised—more than double 2021’s $8.8 billion, the next highest year.
This trend is also broadly reflected in the fund counts, which rose from nine in
2016 to a peak of 64 in 2022, before falling sharply to 38 in 2023. This was driven
by growth in global acceptance of climate change, a rapid increase in pledges and
commitments from governments, cities, and large companies, and changes to
regulation and policy that significantly expanded the support available for adoption
of climate technologies.

Fundraising declined sharply in 2023 as the overall VC fundraising environment

became more challenging, with a decline in VC exit activity overall and a particularly
steep decline in VC exit activity in the climate tech space—affected strongly by
reduced exits in the low-carbon mobility space. A period of high interest rates has
also suppressed both deal and exit activity. Fundraising in the first half of 2024 looks
stronger than 2023, with $3.4 billion raised as of June 25, compared with $3.9 billion
in the whole of 2023.

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 2024 Climate Tech Funds Report

Climate tech specialist VC fund count as a share of all VC funds

3.0%
3.0%

2.5%
1.9%
2.0%

1.5%

1.0%

0.5%

0.0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Source: PitchBook • Geography: Global • *As of June 25, 2024

Climate tech specialist VC capital raised as a share of all VC

capital raised
6%

5% 4.8%

4%
2.0%
3%

2%

1%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*

Source: PitchBook • Geography: Global • *As of June 25, 2024

Much of this decline in post-2022 climate specialist fundraising is also seen

when looking at overall VC fundraising data, highlighting that many of the recent
fundraising challenges are driven by cross-sector trends. VC climate tech funds
made up 2.0% of all VC funds in 2022 and remained flat at 1.9% in 2023; the share of
total VC capital raised by climate specialist funds peaked at 5.4% in 2022, followed
by a decline to 2.0% in 2023. Looking at 2024 data—as of June—climate specialist
VC funds ticked up to 3.0% of funds by fund count and 4.8% of VC fundraising
activity. Relative to other areas such as healthcare, climate specialist VC fundraising
makes up a smaller share of capital raised, though it is also a younger space than
healthcare and historically has been more reliant on incentives and regulation that
are only recently seeing widespread adoption.

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 2024 Climate Tech Funds Report

Share of climate tech fund count by experience

100% Experienced firm
90%
Emerging firm
80%
70%
60%
50%
40%
30%
20%
10%
0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Source: PitchBook • Geography: Global • *As of June 25, 2024

Many of the most significant drivers of interest in climate tech adoption are
relatively recent, with incentives and regulatory support being among the strongest,
which we see reflected in the ratio of experienced to emerging funds. In every year
since 2013, emerging firms (those managing their first three VC funds) managed
more than 50% of total funds, rising to more than 70% for all full years between
2015 and 2023. YTD 2024 is more balanced with this regard than any previous year,
with 55.6% of funds attributable to emerging firms, compared with 44.4% managed
by experienced firms. Looking at fundraising, the trends are similar, with climate
tech funds managed by emerging managers accounting for more than half of the
total fundraising every year since 2014.

To date, 2024 has seen 18 climate funds close, with five exceeding $300 million:

• Chevron Technology Ventures, Future Energy Fund III ($500.0 million)

• Norrsken VC, Norrsken VC Fund II ($342.8 million)
• ArcTern Ventures, ArcTern Ventures Fund III ($335.0 million)
• ETF Partners, Environmental Technologies Fund IV ($306.8 million)
• Clean Energy Ventures, Clean Energy Venture Fund II ($305.5 million)

18 funds closing in the first half of 2024 is roughly in line with 2023, which had 37
funds close over the whole year; though only three exceeded $300 million, with
the largest being the Astanor Ventures II fund, at $387.8 million. Together with the
overall climate specialist fundraising values, this indicates a stronger VC fundraising
environment for climate specialists in 2024 relative to 2023, though potential
political change later in the year could influence the fundraising environment
significantly, and interest rates may decline only modestly in 2024. Looking at
2022—when climate specialist fundraising was at its peak—60 funds closed, with
nine at or above $300 million. Of these, three were larger than $1 billion: Prelude
Climate Fund II ($8.5 billion), Prosperity7 Ventures Fund ($3.0 billion), and Global
sustainability fund ($1.5 billion). Climate funds larger than $1 billion are rare, with
only seven seen across all years in this dataset; corporate venture capital (CVC)
is well-represented in this group, with Aramco Ventures and Shell Ventures
representing three of these.

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 2024 Climate Tech Funds Report

Share of climate tech VC fund count by size bucket

100% $1B+
90%
$500M-$1B
80%
$250M-$500M
70%
60% $100M-$250M

50% $50M-$100M
40% <$50M
30%
20%
10%
0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*

Source: PitchBook • Geography: Global • *As of June 25, 2024

Share of climate tech VC fund value by size bucket

100% $1B+
90%
$500M-$1B
80%
$250M-$500M
70%
60% $100M-$250M

50% $50M-$100M
40% <$50M
30%
20%
10%
0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*

Source: PitchBook • Geography: Global • *As of June 25, 2024

In all full years since 2013, more than 75% of funds fall into one of the buckets below
$250 million, and in eight of these 12 years, funds at or below $50 million are the
most numerous. Looking at size buckets by value though, there is considerable
variation in the size bucket that represents the largest component of overall VC
fundraising—2022 in particular shows funds in the $1 billion-plus bucket make up
nearly 70% of the year’s total climate tech VC fundraising.

Climate tech funds in this report are segmented into one of four categories: broad
climate tech, clean energy, low-carbon mobility, and sustainable food & agriculture.
Most funds fall into the broad climate tech category. Just over 50% of funds in
this category are managed by firms headquartered in the US, with the UK the next
most common HQ location. Other categories have similarly high representation of
US-headquartered funds, though the clean energy category has almost as many
China-headquartered funds as US-headquartered—many of which allocate capital
to China-based manufacturers of either solar photovoltaic components or battery
technologies for electric vehicles or stationary energy storage. The clean energy