- Climate tech investments in the US have witnessed six consecutive months of growth, outpacing overall venture capital performance.
- Series B and C+ funding rounds reached decade highs at $30M and $60M respectively in 2024.
- Clean energy deals surged to $7B in 2024, marking a 15% year-over-year increase.
The climate technology sector in the United States is showing a promising trajectory, recording six straight months of growth, according to the latest report from Silicon Valley Bank (SVB), a division of First Citizens Bank. In 2024, climate tech funds surpassed the overall venture capital (VC) sector with a 9% higher internal rate of return (IRR) in the 2020-2024 fund vintage.
Key findings from SVB's "Future of Climate Tech 2025" report indicate that 57% of US VC-backed climate tech companies will need to raise capital over the next year, although valuations are rebounding from 2023 lows. Notably, Series B and C+ funding rounds achieved decade highs of $30 million and $60 million respectively in 2024.
The sector further benefited from significant activity in clean energy deals, which hit an all-time high with 382 deals totaling over $7 billion in 2024, representing a 15% increase year-over-year. This growth aligns with incentives provided by the Inflation Reduction Act (IRA) and the Chips and Science Act, boosting profit margins for many renewable energy producers.
The report also highlights that climate tech software companies reported 30% higher profit margins compared to hardware companies, particularly those with over $50 million in revenue. M&A activities have returned to levels seen in 2020, with financial buyers increasing their share of transactions from 15% to 40% between mid-2023 and early 2024.
Overall, the climate tech sector is poised for continued expansion, with ongoing investment and innovation paving the way for sustainable growth in energy and related industries.
