Climate Tech Exits and Market Confidence

$45m bet on climate just got real Not a niche anymore. India’s climate startups are crossing scale. WestBridge Capital just led a $45m round in Varaha. With an initial $20 million infusion. That is not small experimental capital. That is conviction capital. For years, climate tech in India sat in pilot mode. Good ideas. Limited absorption capacity. Investors waited for scale. Scale waited for investors. This round signals the loop is breaking. Here is what stands out to me: • Varaha is turning carbon removal into revenue • Farm projects linked to verified carbon credits • Corporate buyers get measurable climate assets • Capital now sees a scalable operating model This is climate moving from narrative to infrastructure. At the same time, Unicorn India closed its third fund at ₹1.2kcr, above its ₹1,000 crore target. Early traction already visible. 7 to 8 portfolio firms raising follow-ons. Deeptech and climate are no longer side themes. They are becoming core venture theses. We are watching capital reprice the future. Not slowly. Systematically. Climate is shifting from ESG language to balance sheet language. And once markets price something into balance sheets, it tends to stay. Curious to see which Indian sectors build the next wave of climate scale. What are you watching in this space?

If we’re being honest, we’ve all already felt this coming — but now the data is definitive. The H1’2024 climate tech funding market has fallen back to 2020 levels. Nothing’s particularly new, though. Since the peak of Q3’21 madness, the climate tech market has been consistently constricting. And to be fair, the market slump isn’t limited just to #climatetech; the broader venture market continues to retrench, be it from sticky inflation, high interest rates, or geo/political chaos. What’s actually novel is that the downtick in funding & deals has finally reached the early stages, and that former darling companies have officially shuttered. Outcomes & key stats: 📉 Seed activity tumbled -30%, echoed by a -25% hit to Series A and B activity, signaling the end of early-stage resilience to the downturn. ⏱ Raising a Series B now takes 2.5x longer than in 2021. 💔 Ten notable climate tech companies filed for bankruptcy in H1’24 including Fisker, Arrival, and Running Tide. The impact to the nascent Carbon sector can’t be overstated, nor is this likely the last shakeup to a former darling startup. 👻 The tourist investors have gone home (-44% count of unique investors), slowing the deployment rate of climate specialist funds. Call it dry powder, slow to fire. Drivers to watch closely: 1️⃣ Graduation rates:  The cohort founded at the start of climate tech’s resurgence in 2018-19 are quickly approaching the Series B cliff. Expect a surge of B-stage urgency to awkwardly coincide with investors taking their sweet time on due diligence (time to raise jumped from 11 to 26 months between rounds!). Meanwhile, growth investment and deals have also dropped precipitously. Late-stage funds are holding on to record levels of dry powder, while holding out for more concrete proof of commercialization and ARR goals. 2️⃣ Fewer, bigger — but better? Despite deal activity rates declining, the deals that did sign & wire were larger and healthier. The average Seed deal size rose 21% verses the year prior. In particular, deep tech startups were able to successfully raise larger rounds. Case in point: Industry sector deals count dropped -41%, while the average Industry deal size jumped +29%. 3️⃣ Sophisticating capital stack:  Despite our “CTVC” name, we’ll be the first to say that the strongest climate tech companies leverage the full climate capital stack -- beyond just venture capital. Many of the most notable deals from the last six months came from companies graduating from equity to project finance and debt in the race to deploy, deploy, deploy. Namely, advanced geo developer Fervo Energy, thermal energy storage provider Antora Energy, and textile-to-textile recycler Syre raised massive rounds for hardware buildouts. Plus, steelmaker H2 Green Steel, lithium extractor Lilac Solutions, and LAES developer Highview Power all raised “FOAK” rounds to support commercial-scale projects. Check out the full Sightline Climate (CTVC) analysis below 👇

We had an amazing conversation with Kim Zou, CEO of Sightline Climate, this week, about venture/growth investment trends in climate tech. She spoke to us from London Climate Week, where she said that "this year feels completely different." For the first time, investors from the U.S., Middle East, Asia, and Canada are flocking to what's historically been a sleepy European conference. The reason? "Definitely pullback in the U.S." We're witnessing a geographic rebalancing. European companies that once came to America for growth capital are staying home. American investors are scouting European opportunities. And the conversations reveal a sector in the middle of what Zou calls a "trickier, tactical" recalibration. It was a really fantastic conversation. Here are some takeaways: 🎯 Tariffs worry investors more than IRA repeal. With 54% of climate tech companies having hardware components, complex supply chains are once again in flux. 💰 The "missing middle" is getting worse. Companies need $45-$100M to build first commercial facilities but face "venture-level risk with infrastructure-style returns." Meanwhile, the DOE – historically the bridge funder – is pulling back just as a "massive wave" of companies hit this critical gap. 📈 Acquisitions doubled, but at "opportunistic costs." Investment dropped 19% in H1 2025, but M&A activity surged – mostly at undisclosed valuations. Lots of bargains to be had for investors. ⚡ Some sectors are thriving anyway. Grid-enhancing tech had its best quarter ever, thanks to AI power demands. The winners: companies that save customers money rather than asking for green premiums. The voluntary sustainability market is "definitely drying up." 🌍 Europe's structural advantages are real. U.S. investors aren't just fleeing uncertainty – they're finding opportunities. Europe's funding gap starts earlier (Series A vs growth stage), and European LPs are still hedging against climate exposure. We're watching climate tech mature from hype-driven to pragmatic. The companies with clear value and realistic exit strategies are finding capital. For investors, the geographic arbitrage opportunities are real, but so are the trade-offs (regulatory complexity, higher electricity costs in Europe). Listen to the full episode for a breakdown of investor sentiment, deal flow, and geographic shifts: https://bit.ly/45LBJXa

ClimateTech is flush with capital, but where are the exits? IPOs are more challenging to pull off. SPACs have all but disappeared. And most climate hardware startups aren't scaling fast enough, or profitably enough, to meet today’s public market thresholds. That’s pushed exits earlier and toward corporate acquirers. But early M&A often means dilution, shorter time horizons, and outcomes that fall short of VC return expectations. In my latest piece, I break down: - Why climate hardware doesn’t fit the VC mold - How M&A timing affects fund performance - What financing models can better support scale

Wall Street cooling on climate commitments. Recent reports show a concerning trend of financial institutions withdrawing from key climate alliances. While these institutions often reaffirm their individual sustainability goals, these departures raise questions about the future of collaborative climate action within the financial sector. A few notable updates: 🟢 Major US banks, including Goldman Sachs, JPMorganChase, Bank of America, Citi, Morgan Stanley, and Wells Fargo, have exited the Net Zero Banking Alliance. 🟢 BlackRock, the world’s largest asset manager, recently left the Net Zero Asset Managers initiative. 🟢 The Net-Zero Asset Managers initiative has suspended all activities and removed its signatories from its website. ESG Dive has a great set of write ups on all of these exits / shifts - https://lnkd.in/gqQufFHt This shift comes amid increased scrutiny from some political figures regarding ESG initiatives. This scrutiny, coupled with evolving (unpredictable?) regulatory landscapes and perhaps shifting internal priorities, may be prompting financial institutions to re-evaluate their participation in these alliances. So, how should we read this trend? There's a good deal of discourse that I've found really interesting. Some argue that these withdrawals signal a weakening commitment to collaborative climate action, suggesting that companies are prioritizing short-term political pressures over long-term environmental goals. Others contend that companies are simply "recalibrating" their approach, choosing to focus on demonstrable internal actions rather than high-profile public memberships. It's also possible that these institutions are seeking more flexibility in their approach to climate action, finding that the constraints of formal alliances hinder their ability to navigate a complex and rapidly changing landscape. Regardless of the underlying motivations, these departures raise important questions about the most effective strategies for driving change within the financial industry...and have me wondering: where are the loudest voices and the boldest actions in this moment of "recalibrating" globally? #sustainability #circularity #finance #ESG #climatechange #netzero

It seems that in 2025 the climate-tech and green-funding party hit the brakes. Why? Not because the planet’s problems went away but because policy support and investor enthusiasm shifted. The rise of a more skeptical climate agenda (hello, Trump era) created uncertainty. Capital that once flooded clean-tech and green funds? It’s ebbing in 2024 the global climate-tech VC market hit ~US$17 billion, down markedly from its early 2020s peaks. That means for climate founders, especially in places like Africa where policy and infrastructure risk is higher, the runway just got shorter. What this means for you: If you’re building a climate-tech business, you will need stronger fundamentals, not just “we save the planet” in the pitch deck. If you’re an investor or policymaker, the era of “any green startup wins” is over now it’s about scalable business models, policy certainty, and global flows. Yes, the planet still needs the work. But the honeymoon phase for climate investment? Might be over. #ClimateTech #VC #GreenInvesting #Policy #Kenya #StartupLessons

2024 was a mixed bag for Climate Tech projects and investment. Here is what defined the year: -Project execution soared: Over 50% of 800+ announced U.S. cleantech projects moved from planning to reality through Q3, shifting from hypothetical proposals to tangible infrastructure. -Global investment challenges: Global sustainability funding hit a four-year low, with cleantech deals and equity funding dropping across the board. Emerging tech took the hardest hit, with new investments falling to less than half of 2023's levels. -Two sectors defied the downturn - Carbon Capture & Storage (CCS) and Hydrogen maintained strong growth trajectories throughout the year. -AI-climate ventures emerged as (unexpected yet expected) champions, securing an extra $1 billion in the first three quarters compared to all of 2023. -Debt Financing was huge: Massive deals dominated the landscape - five transactions topped $1 billion each, pumping over $14 billion into cleantech. This shift suggests the sector is maturing from "risky bet" to "bankable investment." Key takeaway: While traditional investment may have cooled, real-world project execution and innovative financing are moving the energy transition forward. Prominent Deals in 2024: -Pacific Fusion: $900 million Series A for pulsed magnetic inertial fusion technology. -Intersect Power: Over $800 million in financing and a $20 billion partnership with Google and TPG Rise Climate. -Form Energy: $405 million Series F for long-duration battery systems. -Heirloom: $150 million Series B for direct air capture technology. - Fervo Energy: $600 million total funding for geothermal energy. Other notable investments included Twelve, Sila Nanotechnologies, Inc., and Electra. These are companies to follow in 2025! #climatetech #cleantech #climateVC #VC #energytransition #energytechnexus #CCS #geothermal #2024recap Source: Cipher/ PitchBook • 2024 data through December 12.

Alastair Marsh's recent thought-provoking piece in @Bloomberg highlights critical challenges with the current climate tech investing landscape Climate tech projects are capital-intensive with long timelines. Unlike software, much of climate tech requires massive upfront capital for R&D, pilot plants, and manufacturing before significant revenue. This demands longer development and deployment cycles (often 7+ years to scale) that exceed typical 5-7 year VC exit horizons. The classic VC model - built for rapid, asset-light scale-ups - often misaligns with the realities of many climate tech solutions, especially "hard tech." While there’s an abundance of early-stage VC capital for entrepreneurs, later-stage growth that bridges these projects from venture to infrastructure stage is basically absent—that’s called the missing middle. We need to adapt and supplement that approach by layering in other types of capital and bridge the "missing middle." A broader array of financing instruments is essential for climate tech to scale, including patient equity and growth capital, project finance, blended finance, and specialized debt models. Marsh’s piece lays out how family offices are uniquely positioned to be catalyzing players in this space. Their flexibility allows them to deploy capital across diverse segments, filling the gap and driving significant financial returns alongside impact. https://lnkd.in/gUf85Bwy