VC funds in Climate Tech raised (globally) $3.4 billion in the first half of 2024, with two thirds of the most active climate tech investing groups globally headquartered in the US
BOSTON -- September 26, 2024 – Value Creation Labs® (VCL) today announced the release of Capturing Climate Tech Opportunity: US Startups 2024 Report. Led by veteran analysts Galen Moore and Kyle Gibson, the report, sponsored by Fidelity Investments®, unpacks the US climate tech startup market in 2024 through the lens of VC funding, identifying key subcategories and top regional hubs.
“Our comprehensive analysis of the climate tech sector reveals great growth across the US, with strong clusters concentrated in the Northeast, Southern California, Texas and the Pacific Northwest,” said Zach Servideo, founder of Value Creation Labs, publisher of the report. “We’re confident this reporting will further stoke the embers of ventures addressing the climate crisis.”
Download the report at no cost thanks to Fidelity Private Shares, with support from Latham & Watkins, New England Venture Capital Association (NEVCA) and Proximity.Consulting. Download here: https://info.valuecreationlabs.co/climate-tech-report. (Disclosure: *Fidelity Private Shares LLC, NEVCA, Latham & Watkins and Proximity.Consulting are not affiliated.)
“More so than in almost any other industry, climate tech founders need access to incubators and communities that can support their trajectory,” Kristen Craft, VP, Business Partner Manager at Fidelity Private Shares. “This need is driven by two factors: first, climate tech companies often sell into behemoth industries (like shipping or telecom), so they need access to the connections and networks that an incubator can provide. Second, given that so many climate tech companies require hardware (and other capital-intensive resources), they benefit from economies of scale when it comes to purchasing.”
Boston-area companies made a strong showing this year, which should come as no surprise when you consider the region is home to Greentown Labs, the largest climate tech startup incubator in North America. Greentown Labs was a contributor to this report, along with representatives from the Massachusetts Executive Office of Economic Development (EOED).
“The Healey-Driscoll administration is setting a national example through bold policy, including a cabinet-level Climate Chief, ambitious climate targets, and a cross-agency strategy for climate tech economic development,” said Secretary Yvonne Hao of the Massachusetts Executive Office of Economic Development. “Beyond legislation, Massachusetts has the key ingredients to lead in climate tech and become a global innovation hub. With proven success in life sciences as a model, we’re capitalizing on our strengths in R&D, top talent and world-class universities, startups with groundbreaking technology, and accelerators & incubators to grow our thriving innovation ecosystem. There’s a ton of momentum – and this is just the beginning.”
Here are some key trends VCL’s analysts uncovered that are driving climate tech growth:
● AI reducing emissions: Artificial intelligence (AI) technology is contributing to initiatives to reduce emissions by embedding reasoning capabilities into machinery and processes.
● Robotics is carrying the weight of climate tech innovation. Robotics technologies are being deployed in climate tech solutions to unlock new opportunities in recycling, energy and water infrastructure monitoring, and autonomous last-mile delivery.
● Cloud and SaaS are maximizing efficiency of digital work. Using public cloud infrastructure instead of a private, on-site data center can reduce corporations’ carbon emissions from digital applications by as much as 80%.
Climate tech deal activity
US climate tech VC deal activity in 2024 is on track to fall just short of 2023 figures. As of July 2024, the industry has closed $6.7 billion in more than 360 deals.
According to an analysis by Pitchbook, specialist VC funds in climate tech raised (globally) $3.4 billion in the first half of 2024. This rate is tracking toward an increase over 2023, which saw $3.9 billion raised for the whole year, but still far below the outlier $18.7 billion raised in 2022. According to our analysis of Pitchbook data, out of the six most active climate tech investing groups in the first half of 2024, four are in the US.
The report also explores the legislative trends impacting climate tech growth. “The impact of the Inflation Reduction Act (IRA) on the Climate tech industry cannot be overstated,” said Stephen Ranere, Partner, Latham & Watkins Emerging Companies Practice. “The IRA touches on almost every aspect of climate policy in the United States and has dramatically expanded the availability of clean energy tax credits. This includes tax credits for established technologies, like wind and solar, as well as a host of emerging clean energy technologies. Climate tech startups find themselves well-positioned to take advantage of these incentives, provided that the IRA remains in place in the coming years.”
This report is part of a series of reports produced by Value Creation Labs. If you’re interested in participating in future reports, contact zach@valuecreationlabs.co.
About Value Creation Labs®Founded in 2021, Value Creation Labs® (VCL) unites a team of strategists, technologists, creatives, analysts and tacticians that can lead and support companies’ immediate and long-term goals. Our consortium’s consultants have built products and executed go-to-market strategies for household brands and startups that have achieved billions of dollars worth of value in exits and revenue. Serving in a myriad of leadership roles, VCL has consistently built and managed high-performing domestic and global teams for its partners spanning product development, technology, marketing, branding, and other key functions. Learn more at www.valuecreationlabs.co.
About Fidelity Investments
Fidelity’s mission is to strengthen the financial well-being of our customers and deliver better outcomes for the clients and businesses we serve. Fidelity’s strength comes from the scale of our diversified, market-leading financial services businesses that serve individuals, families, employers, wealth management firms, and institutions. With assets under administration of $14.1 trillion, including discretionary assets of $5.5 trillion as of June 30, 2024, we focus on meeting the unique needs of a broad and growing customer base. Privately held for 78 years, Fidelity employs more than 75,000 associates across the United States, Ireland, and India. For more information about Fidelity Investments, visit https://www.fidelity.com/about-fidelity/our-company.
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