2024 Climate Tech Funds Report Summary
Key Takeaways:
1. Fundraising Trends:
- Peak Year: 2022 saw the highest VC fundraising for climate tech specialist funds, totaling $18.7 billion, surpassing the previous year's $8.8 billion.
- Fund Count: The number of climate specialist funds reached a peak of 64 in 2022, declining to 38 in 2023, reflecting a sharp downturn in VC fundraising conditions.
2. Fundraising Activity:
- Decline in 2023: Post-2022, climate specialist VC fundraising experienced a significant decline, attributed to broader VC fundraising challenges, reduced exit activities in the climate tech space, and the impact of high-interest rates.
- First Half of 2024: The report indicates a stronger fundraising trend in the first half of 2024, with $3.4 billion raised by June 25, compared to $3.9 billion for the entire 2023.
3. Fund Count and Capital Raised:
- Share of Total Funds: In 2022, climate specialist VC funds accounted for 1.9% of all VC funds, with a capital share peaking at 5.4%.
- Trend Reversal: By 2023, the share of climate specialist funds dropped to 1.9%, indicating a reversal in the upward trend observed previously.
4. Fund Manager Experience:
- Emerging vs Experienced Firms: Since 2013, emerging firms have managed over 50% of climate tech funds, increasing to over 70% for full years from 2015 to 2023. In 2024, the balance is more evenly split, with 55.6% of funds managed by emerging firms and 44.4% by experienced firms.
5. Notable Climate Tech Funds Closing in H1 2024:
- The report highlights several notable funds that have closed in the first half of 2024, including Chevron Technology Ventures, Norrsken VC, ArcTern Ventures, ETF Partners, and Clean Energy Ventures, with investments ranging from $300 million to $500 million.
Conclusion:
The 2024 Climate Tech Funds Report underscores the dynamic nature of climate tech investment trends, with significant fluctuations in fundraising activity influenced by broader market conditions and the emergence of new players in the field. While there was a notable peak in 2022, the subsequent downturn in 2023 was marked by a shift towards more balanced contributions from emerging versus experienced fund managers, indicating an evolving landscape in climate tech investment strategies. The report suggests ongoing interest and adaptation within the sector, with promising signs of recovery in the first half of 2024.
