Data snapshot: The state of climate tech investment

Many branches of technology with the potential to seriously reduce carbon emissions are being overlooked by venture capital investors, according to a report from PwC.

In October 2023, PwC analysed a dataset of more than 32,000 deals that involved 8,000 climate tech start-ups, which was worth more than $490 billion.

Climate tech is not immune to economic headwinds, though it has fared better than the general market. Total venture capital and private equity investment fell 50.2 percent in 2023 compared with 2022. Investment in climate tech start-ups dropped by 40.5 percent in the same time frame.

The sector has also been gradually growing its market share: 10 percent of VC and private equity investment now goes into climate tech, up from less than 3 percent in 2016.

Within the climate tech space, there is a noticeable imbalance between how much investment a subsector receives and its GHG emissions. Industrials, while accounting for 34 percent of emissions, only received 8 percent of start-up investment from 2013 to Q3 2022. In contrast, mobility received half of all climate tech investment over the same period, despite accounting for just 15 percent of emissions.

Similarly, technologies with the potential to seriously reduce emissions often go underfunded. Food waste management products received less than 1 percent of climate-tech venture funding, despite the technology having the potential to reduce emissions by 95 gigatons if scaled. At the other end of the spectrum, light-duty battery electric vehicles received more than 10 percent of climate VC capital, despite the technology only having the potential to reduce emissions by 12 gigatons, according to the report.