Trends in Climate Tech capital diversification

Blackrock just took a big write-down on its Global Renewable Power Fund III. Because of two ill-fated investments in Northvolt and SolarZero. Surprisingly, a $4.8 billion fund saw its internal rate of return plummet due to just two portfolio companies faltering. This fund was BlackRock's third flagship GRP fund, part of its bet on the energy transition and a push towards renewable energy and infrastructure. Many of the funds’s assets are early-stage climate infrastructure investments in: EV charging, renewable generation, and power storage and transmission. Are they simply making bad investments or is this a prequel to what to expect? What this tells me about climate tech investing: 1. The significant impact of two companies on a $4.8 billion fund suggests that traditional risk models needs reevaluation. The conventional playbook for diversification doesn't quite work in climate tech. When companies in your portfolio are all betting on similar technological advances or regulatory shifts, they tend to sink or swim together. Traditional risk models might be missing these hidden correlations. 2. The Northvolt situation is a wake-up call - throwing money at climate tech isn't enough. These companies need investors who roll up their sleeves and get involved. We're seeing a shift from passive to active investing, where deep operational expertise is just as crucial as the capital itself. 3. SolarZero, a major player in New Zealand Energy Sector, was far from an early-stage startup when BlackRock acquired it in 2022. Despite its 50-year history , something went wrong. It hints at a broader challenge: global funds rushing into new markets might be overlooking local market dynamics and regional complexities in their eagerness to deploy capital in the renewable space. As this sector matures, we need a new framework for resilient investment strategies that can better weather the failures of individual companies while capitalizing on the overall growth trend in clean energy. #climatetech #VC #investment #newbook #fundclimatetech #blackrock Link for the news in the comments.

India’s Green Financing Opportunity Could Shape a Century   India stands at a defining moment where a growing economic momentum meets an urgent climate imperative. The capital we choose to deploy today, and the priorities that guide this deployment, will influence not just our development trajectory but also the century that India shapes for the world.   At a global scale, the key outcomes from the recently concluded COP30 point towards the immediacy of climate action and the pivotal role of green financing. With strategic policymaking and the emergence of a climate-focused entrepreneurial ecosystem, India has a real opportunity to lead the global cleantech transition and achieve its commitment to reach net-zero by 2070.   Today, Green finance is powering innovation and scaling climate action while enabling entrepreneurship and opening avenues in infrastructure and job creation. At the heart of this transition is India’s rapidly expanding climate-tech or cleantech entrepreneurship ecosystem. Entrepreneurs are building impactful solutions across solar microgrids, battery storage, EV charging, carbon capture and sustainable packaging. According to a news report published by Inc42, Indian climate tech startups attracted over $2.2Bn in new funding over the last 18 months. Despite this momentum, early-stage climate ventures, especially in Tier 2/3 regions, often face barriers in accessing institutional capital. The government is addressing this through policy pivots that strengthen transparency and build confidence in the climate innovation ecosystem.   Subsequently, upper-layer NBFCs, lenders and development finance institutions are collaborating to bridge funding gaps. We are also seeing the rise of innovative financing structures, including blended finance models that combine concessional and commercial capital, thematic green funds to de-risk early-stage investments and ESG-aligned investment frameworks. These tools are helping channel capital to the most impactful and scalable climate innovations. As policy intent aligns with an expanding pool of capital, I truly believe India is well-positioned to become a global cleantech hub. This convergence of finance, innovation and sustainability promises to power India’s transition, strengthens local economies, create green jobs and ultimately shape the green trajectory of the next century not only for the Global South, but for the world.   Now is the time for policymakers, lenders, investors and corporations to take unified action. If India accelerates its green financing architecture with the same ambition as digital and infrastructure transformation, India could set a global benchmark for climate-led growth. The next century will be defined by those who fund the future and India is on the right track to lead the change.

One data point worth pausing on… According to the latest Sightline Climate (CTVC) analysis (https://lnkd.in/ezEChF5h), TDK Ventures was the most active corporate VC in climate tech in 2025 by deal count. In that context, being at the top of the list feels less like an accolade and more like a mirror held up to the market. At this point, the scale of what is happening in energy is no longer debatable. AI-driven power demand, grid modernization, electrification, and industrial transformation are converging fast. The need for clean, firm, and resilient energy is no longer cyclical or thematic. It’s structural. Against that backdrop, being highly active shouldn’t feel exceptional. It raises a different question: if this opportunity is so clear, who is choosing not to lean in, or not to stay the course? Most of the technologies that truly move the needle — grid infrastructure, long-duration storage, advanced materials, power electronics, and AI-enabling systems — do not fit neatly into short funding cycles or hype-driven timelines. They demand endurance paired with conviction. We see this firsthand across our 2025 investments and broader portfolio: - Grid-scale and long-duration storage with Peak Energy, including a $500M+ deployment agreement reshaping the economics of the grid - Advanced grid infrastructure and power electronics through Amperesand’s $80M raise for solid-state transformer technology - AI infrastructure at the physical layer, from photonics with Mixx Technologies Inc’ $33M Series A to inference compute with Groq’s $750M recent funding round (and $20B moment) - Electrification at scale, from industrial systems to mobility, including Ultraviolette Automotive’s electric motorcycles in India - Edge and systems intelligence, with EdgeCortix as our first investment in Japan, bringing AI closer to where energy and data meet - Data center and logistics infrastructure, from Nubis Communications’ acquisition by Ciena to Starship Technologies’ $50M Series C for autonomous delivery What is emerging across the ecosystem is a clear divide: 🔹 Plenty of capital is willing to show up early 🔹 Far less capital is willing to remain engaged when progress is nonlinear, engineering-heavy, and occasionally quiet At TDK Ventures, we invest with urgency because the transition demands action, but we approach the work with endurance, mindful that only patient capital has the chance to compound over time. Conviction without endurance fades. Endurance without conviction stalls. From that perspective, this moment is less about volume than about consistency: the responsibility to remain engaged in sectors that matter, even when they are capital-intensive, technically complex, or temporarily out of favor. The work continues. And so does the commitment.

You think Silicon Valley is the future of climate tech? You couldn’t be more wrong... The most meaningful progress is happening far from the venture bubble, in small labs, research stations, and community workshops where the focus is on solving practical problems rather than chasing scale. 2025 has been a record year for climate tech investment. But the real story isn’t how much money is being raised. It’s what that money is building. The direction of innovation is shifting toward systems that are modular, verifiable, and built for real-world conditions. These technologies can be deployed quickly, maintained locally, and adapted to places that can’t wait for large infrastructure to arrive. 🌱 Releaf Earth (YC 2025) converts food waste into biochar that restores soil, locks carbon, and produces renewable power for local microgrids. Their portable reactors make it possible for small communities to build their own carbon markets. Biochar now accounts for more than 90 percent of all durable carbon removals delivered globally, showing how central this technology has become to practical decarbonization. 🌱 Modular Green Hydrogen startups in programs such as RMI’s accelerator are proving that hydrogen production doesn’t have to rely on billion-dollar plants. Their systems use renewables and recycled water to power rural transport and small industries, aligning closely with the U.S. 45Q incentive for low-carbon hydrogen. 🌱 Recyclable wind turbines built from bio-resins and nanocellulose are beginning to close the loop on renewable energy. They address a long-standing issue in the sector, how to manage the waste created when turbine blades reach the end of their life. 🌱 Bamboo-based cooling panels, now emerging from university and startup labs, use natural condensation to lower indoor temperatures without electricity. Early trials in Asia and Africa suggest they could offer low-cost cooling in regions already struggling with extreme heat and limited access to power. 🌱 AI and satellite mapping tools from companies such as Astraea are providing live, high-resolution data on climate risks. What used to take months of modeling can now be updated continuously, helping governments, insurers, and local planners make faster, better decisions. These examples point to a wider shift. Climate technology is no longer defined by size or spectacle. It is defined by systems that are reliable, measurable, and designed for real contexts. Policies like the European Union’s Carbon Removal Certification Framework are reinforcing this trend, directing investment toward solutions that can demonstrate genuine and lasting impact. The next phase of climate innovation will not be driven by how much it raises or how fast it scales. It will be judged by how well it works, consistently, locally, and over time.

Just dropped: our 4th (!) annual Climate Tech Investment Trends report. These are the charts that I’ll rely on throughout the year to predict where the venture market’s going and piece together what happened in 2024… aka the new normal. Tl;dr 2024 wasn't the launchpad investors had hoped for. The slow rollout of IRA funds, political uncertainty in the US & EU, plus low oil prices and high interest rates meant stalled projects and few corporates and investors willing to buy. But the uncertainty is mostly over. Generalist infrastructure & growth funds are tapping climate as a key sector, and the capital is there to back this next generation of climate tech. 🚀 Record number of 178 exits. 92% acquisitions, most of which were tuck-in deals without disclosed valuations. 6 IPOs, with 2 in emerging markets. 📈 Graduation rates rose, reversing a downward trend that started in 2022. 25% of companies raising money progressed to a later stage. 🤝 Deal count was flat. But with increases in later stage deals as sectors mature. 💼 The investor pool stabilized. Fewer new and departing funds signals that the climate tourists have moved on. ⚡ Clean firm power and data centers top mega deals. Vs the hey-day of Northvolt and Redwood Materials $750M+ rounds, 2024’s largest deals were $500M. Read this report as a double click into the early-stage ecosystem, alongside our Capital Stack report which includes infrastructure & growth equity asset classes. So meaningful to see this report improve year over year, as CTVC grows. Kudos to Julia Attwood, Maria Guerrero Quintana, Kim Zou, Mark Taylor, and the whole Sightline Climate (CTVC) team for continuously raising the bar.

We’re witnessing a paradox: despite a policy environment seemingly hostile to decarbonization (tariffs on cleantech imports, moratoriums on IRA fund disbursements, and the proposed rollback of DOE programs), U.S. climate tech funding surged by nearly 65% in Q1 2025. But what is perhaps more revealing than the capital flows is the rhetorical shift underway. In response to shifting political priorities, a growing number of startups are revising how they present themselves. Companies are beginning to distance their public messaging from terms like “clean energy,” “net zero,” or even “climate,” instead emphasizing “energy abundance,” “supply chain resilience,” and “domestic industrial capacity.” Others are shifting their messaging to appeal less to climate frameworks like the SDGs and more to the strategic language of national security and defense procurement. On paper, it’s a brilliant strategy. Venture funding is up. Nuclear and geothermal are gaining traction, bolstered by rising AI-driven energy demands and a revived narrative of American energy independence. In theory, this is resilience. But it prompts my question: should this reframing be seen as retreat or evolution? Language shapes how capital is allocated, which technologies are prioritized, and how legitimacy is constructed in the eyes of policymakers and markets. If climate tech can only thrive when it avoids talking about climate change, it risks becoming more about political fit than environmental impact. With that being said, it's no question the sector has always contained a range of compelling motivations (climate-first, profit-first, or both). Maybe this moment simply makes that diversity more visible. The challenge now isn’t whether the sector can adapt (it clearly can). But I wonder whether it can do so without losing sight of its core purpose. If climate ventures become contingent on ideological compatibility rather than environmental necessity, the sector may become structurally less accountable to its original goals. Would love to hear how others are thinking about this as I wrestle with it, both strategically and ethically. Source: https://lnkd.in/eCxFX8Kx #climatetech #decarbonization #energytransition #netzero #sustainability

Only 3% of climate VC goes to water. Climate tech had a $40.5 billion year in 2025 (Sightline Climate) Energy grabbed 36% of that. Transportation kept its share. Built environment surged on data center buildouts. Water got a rounding error… it’s not even listed as a category. Two billion people without safely managed drinking water. A quarter of the global GDP exposed to water risk. 40% of the world's food grown on irrigated land. The coolant stack for every chip running the AI boom everyone is funding. And yet, 3%. The reason is structural. Water is priced near zero at the tap. Utilities run on 30-year payback cycles. The buyer is a city council, not a CTO. Venture capital is allergic to all three. This is the opportunity. When a category is this mispriced and this essential, the first capital in is not chasing crowded markets. It is underwriting the next century of infrastructure. Data centers are now the forcing function. Every AI cluster needs water. Hyperscalers are waking up to it. PFAS is waking regulators up to it. The silver tsunami is waking utilities up to it. The next decade of climate will be won on the stack that delivers clean water, clean power, and clean chemistry together. 3% is not a ceiling. It is a starting line. Link in comments.

$2.3 trillion invested in the energy transition in 2025 🌍 According to a research report published by BloombergNEF, $2.3 trillion were invested in the energy transition in 2025. This represents an 8% increase compared to the previous year, achieved despite trade disruptions, geopolitical tension, and policy uncertainty. Clean energy supply chain investment reached $127 billion, climate tech equity returned to growth with a 53% jump, and energy transition debt issuance climbed to $1.2 trillion. All major capital flows moved upward in the same year, highlighting the resilience of the transition. The distribution of capital tells the real story. Electrified transport is now the largest investment area, with $893 billion directed to electric vehicles and charging infrastructure. Renewable energy followed with $690 billion, led by solar, although investment declined as power market reforms in China slowed activity. At the same time, investment in power grids increased 17% to $483 billion, reflecting growing pressure from electrification, renewables, and data center demand. Clean energy deployment is no longer the main constraint. System capacity is. Technology signals are also shifting. Investment declined in hydrogen and nuclear, while energy storage, carbon capture, electrified heat, clean shipping, and clean industry all continued to grow from smaller bases. Capital is becoming more selective, prioritizing scalability and near term impact over long term optionality. Regionally, momentum is becoming more fragmented. China remained the largest market at $800 billion, but recorded its first investment decline since 2013. The European Union grew 18% to $455 billion, contributing the most to global growth, while US investment increased 3.5% despite political headwinds. Growth is spreading across markets, but at uneven speed. One final signal stands out. Energy transition investment now exceeds fossil fuel capital expenditure, yet growth has slowed from 27% in 2021 to 8% in 2025. BloombergNEF estimates that $2.9 trillion per year on average will be required between 2026 and 2030. The challenge ahead is not access to capital. It is grids, supply chains, and the ability to deploy at scale. Source: BloombergNEF, Energy Transition Investment Trends 2026

Europe is world-class at seeding innovation but poor at owning it as it grows. We need to change that! 💪🏼 Here's why, and how: Without a stronger domestic growth-stage ecosystem, we are essentially exporting the economic upside and long-term ownership of our own climate champions to foreign markets. Today, we at World Fund published our latest report: “The Series B Funding Gap in European Climate Tech: Key Market Insights.” The report quantifies a structural “missing middle” in European venture, the early-growth capital needed to take deep tech and hardware-heavy climate solutions from prototype to production. What we found: 1. Europe’s average Series B is $35.2M, more than 20% smaller than the US ($45.5M) 2. Europe accumulated a $13.5B Series B shortfall vs the US, an annual deficit of $2.7B 3. Only 15% of European Seed-backed climate tech companies reach Series B, vs 25% in the US 4. As rounds get larger, European participation drops sharply, by $250M+, nearly half of capital is foreign What we believe it will take to fix it: 1. Mobilising institutional capital (pensions, insurers, banks), supported by regulatory reform 2. Building more mid-sized European growth funds that can consistently lead $25–100M rounds 3. Expanding blended finance models that crowd in private capital at scale If Europe wants climate leadership, energy sovereignty, resilient supply chains, and the economic upside of the clean industrial revolution, we need to close the Series B gap. Special thanks to all those who contributed including Almi Invest, Cleantech for Europe, Cleantech Scandinavia, European Investment Fund (EIF), EIFO, Innovate UK, Tesi, and Dealroom.co. 👇 Read the full report in the link in the comments

90% of climate capital goes to mitigation. But that’s not enough. As investors, we’ve poured billions into capturing carbon, building cleaner tech, and reducing emissions. Yet, climate change is still here. We’re living with its impacts right now. At Symphonic Capital, we see a critical (and underfunded) opportunity: climate adaptation. Here’s what it could look like: 📝 Insurance and parametric products for climate disasters 📊 Data and analytics platforms that predict risk 🔥 Solutions to protect workers in extreme heat Adaptation is not just about survival. It’s a risk mitigation strategy for LPs, a pathway to preserving building assets for overlooked communities, and a key part of closing the health and wealth gaps we’ve committed to at Symphonic. Sydney Thomas and I joined Sherrell Dorsey for an episode of ImpactAlpha’s Plugged In series to talk about climate tech equity and so much more. 🎧 Watch the full conversation here: https://lnkd.in/eJCPypNN #climatetech #climatechange #climateadaptation