Climate tech investments from venture-capital and private equity fell 40% in 2023 as economic uncertainty and geopolitical conflict dent investor confidence, according to PwC’s 2023 State of Climate Tech report.
This year’s report analysed over 8,000 climate tech start-ups and over 32,000 deals worth more than US$490bn (£402bn). The underlying dataset, PwC’s Climate Tech Investment Index, has been significantly expanded this year, with nearly double the number of start-ups tracked and a broader range of deal types examined compared to last year. It found that the fall in climate tech investment was significantly smaller than the VC and PE average fall of 50% across sectors. As a result, the share of VC and PE funding going into climate tech continued to rise, accounting for more than 10% of private market start-up investments in 2023, up from 7% in 2018.1
There are also signs that climate tech investment is becoming more mainstream, with seasoned climate investors (who have invested in five or more climate tech deals) taking up a smaller share of the total number engaging in climate tech, as the share of first-timers increases. Meanwhile, for the first time, more deals are happening at the mid-stage than at the early stage.
Commenting on this, PwC UK global climate leader, Emma Cox, said: “The development and scale-up of climate technology is an essential part of meeting the climate challenge. So, while it is not surprising that absolute levels of investment in climate tech have fallen along with the market, it is concerning.
“The good news is that the sector has performed well in relative terms, with investment falling less than in other areas. It is also encouraging to see a shift in the balance of investments towards technologies that can cut emissions the most. Now we need to see that shift continue, coupled with an increase in the absolute levels of investment in all technologies with the potential to cut emissions.”
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