State of Climate Tech 2023
Net Zero Insights’ yearly analysis on global funding and deal activity in the private market venture space.
17th January, 2024
2023 State of Climate Tech Report from Net Zero Insights Shows A Hard Stop To The Funding Boom of the Past Two Years; Yet Many Reasons for Optimism in 2024.
New report structure features breakdowns by product innovation framework, deal stage, and stakeholder perspectives; offering unparalleled analysis.
LISBON/PORTLAND, Ore. – January 18, 2024 – Today Net Zero Insights, the leading market intelligence platform for Climate Tech, supported by Alder & Co., a purpose-driven climate tech marketing agency, released its annual analysis on global funding and deal activity in the private market and ventures space: State of Climate Tech 2023. While the comprehensive report shows a 30 percent YoY global funding drop for the sector, several key takeaways from the data point toward a brighter year ahead.
As equity investment took the strongest hit (-40 percent YoY), resourceful entrepreneurs turned their attention to public funding opportunities and alternatives, driving non-equity funding for climate tech to a historic high of 34 percent. “The diversification in financing approaches we’re seeing tells a story of a growing maturity within the market,” said Federico Cristoforoni, Co-Founder, Net Zero Insights. “More banks and governments invested in later stage climate tech in 2023 than in 2022.”
First of a kind projects (FOAK) entail a financing approach that addresses the risk of a project which is generally too capital intensive for VCs and too novel for PE/ infrastructure finance. So while there continues to be a valley of death for mid-stage FOAK start ups due to the risk involved in commercialization, later-stage investors and lenders seem increasingly prepared to support readily deployable physical solutions. The top 10 global FOAK deals featured solutions from E-Fuels to Batteries.
“What is very exciting to us is that there is not one single initiative or source of finance that we see trying to enhance FOAK finance, but several,” said Chetan Krishna, Head of Research and Diligence at Third Derivative who is featured in the report. “The spectrum of players is vast and as H2GS’s Boden green steel project shows, there could be many types involved in a single project.”
As the IPO window remains firmly closed and SPAC activity returns to pre pandemic levels, acquisitions are gaining movement with corporate buyers. 2023 saw a historic high of 250 Climate Tech acquisitions, predominantly in the energy, transport, and food & agriculture sectors, the most notable of which was the acquisition of Canadian-based Carbon Engineering by U.S.-based Occidental Petroleum for $1.1B.
“On the heels of COP28 and the hottest year on record, we are seeing stakeholders come together like never before to meet today’s climate challenges with creative business strategies, collaborative financing approaches and branding and service delivery partnerships,” said Melanie Adamson, partner and CEO at Alder & Co., “2024 will be the year of collaborations.”
The State of Climate Tech 2023 report provides three essential breakdowns for data analysis and insight interpretation:
For more information, read the full report here.
About Net Zero Insights
Net Zero Insights is the leading data and research platform for Climate Tech. The Net0 Platform provides access to thousands of startups/SMEs, deals, and investors allowing users to spot new innovations, trends and deals in the rapidly evolving world of climate technology. Investors, corporations, researchers and business developers use the platform to identify new startups and keep track of emerging trends and opportunities. Find out more: netzeroinsights.com
About Alder & Co
Alder & Co. is a leading, global strategic brand marketing agency with the mission to drive the adoption of climate technologies until they become universal. Alder partners with forward-facing, innovative climate tech companies that need progressive brand & marketing strategies to drive growth, secure investment, and make the impact needed to address our generation’s most urgent crisis – our environment. Find out more: alderagency.com
Media Contact
Whitney McGoram: whitney@alderagency.com
As equity investment took the strongest hit (-40 percent YoY), resourceful entrepreneurs turned their attention to public funding opportunities and alternatives, driving non-equity funding for climate tech to a historic high of 34 percent.
First-of-a-kind projects are a crucial and delicate step for breakthrough solutions to reach commercial scale. We selected a few illustrative cases of 2023 and asked the experts to understand today's challenges and opportunities.
While the IPO window is now closed, M&A in climate tech reaches a historical peak in 2023 - and corporations usually the acquirers. Who are the most active players? What solutions are the most in demand?
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