Strategic investors are taking the lead in climate innovation, participating in 6 out of every 10 deals in emerging technologies in H1 2025. While generalist investors pull back, corporations are doubling down on industrial decarbonization technologies.
Net Zero Insight’s State of Climate Tech H1 2025 report explores how this shift is unfolding, where corporate capital is flowing, and why strategics are playing an increasingly central role in shaping the next phase of Climate Tech deployment.
Strategic investors show resilience in a cooling market
In a declining global dealmaking market, strategic investors activity remains relatively steady, with a 15.8% drop in deal activity in H1, compared to 27.5% in venture. Net Zero Insight’s data shows that corporations continue to invest in decarbonization solutions, even in a tighter capital environment.
This reflects a focus on strategic fit rather than short-term returns, with strategics capitalizing on the downturn to acquire solutions supporting long-term decarbonization.
A select few technologies capture strategics’ attention
Our analysis of hundreds of emerging Climate Tech solutions found that strategic investors are engaging less with mature verticals such as solar and wind, to focus on technologies with greater decarbonization potential.
The data shows a consistent rise in the share of equity deals across technologies like Sustainable Aviation Fuel (SAF), Carbon Capture and Utilization (CCU), green hydrogen, and low-carbon cement and concrete. These asset-heavy innovations are capital intensive but offer longer-term value and integration potential for industrial players.
Strategic acquisitions also reflect this trend. The majority of recent M&A activity has focused on technologies supporting Industrial Heating and Cooling and Energy Management Systems (EMS) followed by carbon reporting and offsetting, CCUS, and biofuels, sectors seen as critical enablers of net-zero commitments.
Corporates leverage distinct commercial pathways to gain foothold in climate-critical markets
Strategic corporations are increasingly engaging Climate Tech startups through a mix of equity investments, acquisitions, and offtake agreements. While each model varies in purpose and structure, they all serve a shared objective: to secure long-term access to emerging technologies aligning with their decarbonization goals.
The sectors that appear consistently across all three strategic engagement models include batteries, solar, EV and charging infrastructure, smart grids, hydrogen, carbon capture and offsetting, and alternative proteins. These technologies offer a mix of near-term application and long-term scalability, making them attractive to corporates aiming to meet emissions targets while positioning for future growth.
Strategic investments signal a decisive shift toward advancing climate transition
Strategic investors in Climate Tech are playing a more focused role by targeting solutions critical to their industrial transformation goals. It is especially visible in asset-heavy technologies aligned with hard-to-abate sectors. As a result, strategic investors are emerging as key enablers of the next phase of Climate Tech deployment.
Want to dive deeper into which industrial decarbonization solutions are driving strategic M&A, and which region is seeing the most resilient strategic deal activity – the US or Europe? Explore the full analysis in our latest State of Climate Tech H1 2025 Report.
