In a sign of stabilization in U.S. venture capital, survey results show long-term tailwinds behind climate change technology
San Francisco ,
“The steady flow of funding and the growing number of funds and companies investing in this space have laid the foundations for continued support and investment in climate change technology solutions,” he said.
Powered by SVB's proprietary data and insights, the 2024 Future of Climate Technology report reveals the outlook for climate technology and the broader innovation economy. Despite a significant decline in the innovation economy and an overall decline in venture capital funding, climate change technologies are showing remarkable resilience. Although trading activity remains strong compared to other sectors, invested capital decreased by more than 50%, mainly due to a reduction in excess trading.
SVB The future of climate technology This report details current fundraising activities and challenges, macro trends, and emerging technologies. The 2024 report also analyzes his four themes that will shape the future of climate technology.
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Startups have less capital available: Declining VC investment, rising interest rates, and low valuations all increase the cost of capital and make it difficult for companies to raise funds for their operations. As a result, most companies need to focus on charting a path to profitability and efficiency so they don't run out of runway. -
Incentives are important for climate change technology: Tax credits have boosted the carbon capture market, with 427 new CCUS projects announced in the past two years. -
Focus on emissions that are difficult to reduce: As incentives gain momentum, VC growth is expected to continue driven by promising technologies such as industrial heat, SAF, green cement and steel, and clean baseload power. -
Sectors targeted for withdrawal activities: The exit window is almost closed, reflecting the overall market. Recent poor performance of SPACs and IPOs, high interest rates, and continued uncertainty are preventing companies from exiting.
Key findings of the 2024 report:
Climate change technology financing remains resilient
- While venture capital funding across the U.S. has hit a six-year low, climate technology funding has remained stable, settling at levels similar to 2020. Among the most active CVCs, climate technology now accounts for 11% of deals, up from 2% in the US. 2020.
businesses are short of cash
- In addition to reduced investment, climate technology's capital-intensive business model leaves 60% of climate technology companies with less than 12 months of cash runway (compared to 53% of all technology companies). As a result, companies have become more focused on profitability. 76% of climate technology software companies have improved their EBITDA margins year over year, and 65% of climate technology hardware companies have also increased their profits.
Climate change technology has long-term tailwinds
- Approximately 88% of global carbon emissions are subject to net-zero targets. Demand for climate change technology solutions continues to grow, and advances are driving down the cost of sustainable technologies. It is now cheaper to develop new renewable energy sources than to continue using fossil fuels.
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To read the full Future of Climate Tech report, click here:
Future of Climate Change Technology Report |
SVB is a leader in providing market insights into sectors across the innovation economy. For a complete library of SVB signature reports, please visit: Market Research Industry Trends and Insights |
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