Why climate tech remains a strong sector

🔥 The Future of Climate Tech: 5 Takeaways from Hello Tomorrow 🔥 Busy days last week at Hello Tomorrow in Paris—lots of discussions, strong opinions, and a fair share of debate on the past, present, and future of climate tech. Moderating a panel on the topic, I had the chance to challenge some of the sharpest minds in the space: Liza Rubinstein Malamud (Carbon Equity), Rajesh Swaminathan (Khosla Ventures), and Laurie Menoud (At One Ventures)—right on stage at Hello Tomorrow. So, where does climate tech really stand today? Here are 5 takeaways that stood out: 1️⃣ Climate Tech’s Darwinian Moment Laurie put it bluntly: climate tech isn’t dead, but many companies relying solely on subsidies will be gone in the next 1-2 years. The survivors? Those with better performance and lower costs than existing alternatives. Capitalism is simple—if oil makes money, that’s where it goes. Climate solutions need to be a no-brainer. 2️⃣ US vs Europe: be resilient The panelists emphasised the importance of building business models that can thrive regardless of policy shifts or geography. At the same time, Liza urged European founders to think bigger. Meanwhile, Rajesh reminded us that “yesterday’s tweet” shouldn’t dictate investment decisions—the real wins come from betting on long-term, high-impact inflection points. 3️⃣ What’s Hot, What’s Not This topic itself was hot—plenty of debate, opposing views, and strong opinions. But there was clear consensus on one thing: the only metric that truly matters is strong unit economics. Without it, even the most innovative tech won’t scale. And yes, AI is hot and can play a role in climate, but beware of “AI washing.” It works when it adds real value—think accelerating mineral detection for mining or power management for data centres. 4️⃣ Making Money with Climate Tech Liza, speaking as a fund-of-funds manager, was very clear: climate tech has performed on par with general VC and PE. Cambridge Associates and Dealroom data back this up—the returns are there. In their portfolio, TVPI looks strong, but there’s a catch: lots of unrealised returns. The big question? Will markets open up again this year? That remains to be seen. 5️⃣ The #1 Rule for Climate Founders Laurie’s advice? Forget politics. Focus on economics. The best solutions will win because they outperform and underprice existing options. Rajesh added: the team you build is the company you build—hire talent from industries that have scaled successfully before. And Liza? Plan your entire fundraising journey early—each stage demands a different strategy. 💡 The TL;DR? The market is tough, but winning in climate tech means playing the long game—building companies that make sense with or without policy tailwinds. Last but not least, a big thank you to Arnaud de la Tour, Selma El Ouardi, Jack Fox-Male, and the entire Hello Tomorrow team—great work, and see you next year in the Netherlands! 🇳🇱 #venturecapital #climatetech #liveandkicking

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.

Last week I caught up with some of our climatetech founders and the Wavemaker Impact team in Singapore. It reminded me how much Europe could learn from the pace, creativity, hunger and grit of emerging markets when it comes to building climate solutions. In South Asia, you don’t have the luxury of slow progress or “pilot purgatory.” Climate impacts hit hard and fast, so the innovation mindset is lean, practical and deeply connected to livelihoods. 1. The Green Discount Forget moonshots and massive R&D budgets. Across South Asia, founders are building cleaner and cheaper solutions that work now: modular, low-capex climatetech with real unit economics from day one, like turning waste into biofuel (Octayne) or agricultural residues into biochar (WasteX) while improving customer margins. ✅ Lesson for Europe: Move beyond the “green premium.” We don’t always need new tech; we need to deploy what already works, faster and at scale. 2. Decentralised Energy and Leapfrogging Like Africa skipped landlines to go mobile, South Asia is leapfrogging traditional grids with off-grid solar, microgrids and batteries replacing diesel, from Agros to Helios Solar Company Limited and SOLshare. ✅ Lesson for Europe: Distributed renewable energy isn’t just cleaner; it’s more resilient. Energy security in wartime or flood season may depend on it. 3. Nature-Based and Community-Led Solutions After decades of deforestation and degraded land, pioneering models are fighting back through community reforestation, mangrove restoration and regenerative agriculture. Ventures like Bumi Baru and Fair Ventures Social Forestry make nature profitable by working with local populations. ✅ Lesson for Europe: Climate action sticks when people have skin in the game. Build with communities, not just for them. 4. The Just Green Transition In emerging markets, climate isn’t a distant moral issue; it’s a development and equity issue. Policy conversations link emissions to jobs, food and public health. When clean tech creates livelihoods, people back the transition. ✅ Lesson for Europe: Embed justice, inclusion and affordability at the heart of the transition, not as an afterthought. 5. Adaptation and Resilience South Asia is among the most vulnerable regions to climate change and has no choice but to adapt: flood defences, early-warning systems, better weather data and climate-resilient crops. Ventures like Rize and Intensel Limited prove that resilience and profitability can coexist. ✅ Lesson for Europe: Don’t just decarbonise, adapt. Resilience is also an investment class. After more than two decades building start-ups across Asia, I’ve seen how constraint breeds creativity and urgency drives focus. Europe has the capital, talent and technology. Maybe it also needs a bit more of that emerging-market scrappiness and hunger. Because the truth is, we don’t need to reinvent the wheel. We just need to roll it faster. 🌍💚

🌍 Climate Adaptation Tech: Europe’s Hidden Investment Gem 💧🔥🌾 When we talk about climate tech, most of the spotlight goes to mitigation—clean energy, carbon removal, EVs. But there's a parallel revolution brewing in climate adaptation—and Europe is at the forefront. I’ve spent my career across both and see a better time than ever to focus on emerging adaptation technologies so have been researching this a lot lately. From early flood detection in the Netherlands, to AI-driven drought forecasting in Spain, to wildfire risk management in Southern France, a wave of startups is rising to meet the realities of a changing climate. This isn't speculative. It’s pragmatic—and it’s being backed by policy, capital, and necessity including the rising costs underinvestment. 🇪🇺 The EU is allocating billions through initiatives like the European Climate Adaptation Mission. 🌱 Insurance, agriculture, water management, and urban planning are all demanding adaptive solutions. Allianz has repeatedly warned how escalating climate risks could destabilize financial system from mortgages to supply chain finance. 💼 And the investor landscape is still relatively uncrowded—meaning early-stage access with upside. Exciting to watch some fast growing companies targeting this space like Climate X, Hydrosat, Muon Space, Pano AI and more. Adaptation tech is often viewed as niche but the reality is it’s pervasive and one of the most investable frontiers of resilience. #ClimateTech #Adaptation #Resilience #EUInnovation #SustainableInvesting #VC #ImpactInvesting #EuropeanStartups

Did Climate tech decline in 2025? Here is my take: -Total VC and growth funding was flat year-over-year (less than 10% increase even). I take this as good news given the current anti-climate environment we are in. - AI's insatiable appetite for power became the unexpected forcing function. Data centers needed clean, reliable energy at scale... and suddenly climate tech had a customer with deep pockets and urgent timelines. This drove a fundamental shift in how climate tech gets funded. The market matured fast, with a growing share of capital coming from non-dilutive and blended-finance structures rather than traditional equity rounds. This is where hard tech, capital-intensive technology funding needs to be, and I hope it will lead to more funding mechanisms that are not venture capital. Sector winners : Nuclear: Absolute monster year. Advanced nuclear and small modular reactors attracted some of the largest funding rounds, driven by AI and data center power demands Geothermal: Momentum continued with substantial investment growth, benefiting from drilling innovation and oil & gas talent crossover, again all driven by data center power demands Grid tech: Massive growth as utilities raced to keep up with demand and reliability pressures. Grid modernization became a core infrastructure play Energy overall: Surpassed transportation as the most-funded vertical for the first time in recent memory, highlighting the shift toward energy-supply decarbonization Sector Losers 🙁 : Hydrogen: Funding collapsed 63% YoY as policy support weakened and project economics failed to pencil out. Wave of bankruptcies and consolidation followed Vertical farming & alt protein: Continued consolidation and closures EVs: Market stalled in the U.S. (though stayed strong internationally) Over all, fewer deals, bigger impact, better capital - that's maturation, not decline. And we can all thank AI. #ai #datacenters #yearinreview #climatetech2025 #climatetech #energytech #venturecapital

I tell every climate tech founder I meet: if you want to raise millions, your solution needs to be better, faster, or cheaper than whatever came before it. Full stop. Now, more than ever, climate tech companies cannot rely on regulatory support or favorable policy environments as their competitive advantage. Your innovation needs to compete purely on its intrinsic merits — delivering superior economics, unmatched efficiency, and undeniable value for your customer. The hard truth is climate impact alone will never compensate for subpar performance. To fully grasp this reality, we must reconsider what we mean by “climate” innovation. The term itself is often misleading, implying a singular sector. In truth, climate innovation represents a full-scale industrial revolution, one that touches every industry — agriculture, transportation, construction, manufacturing, consumer goods, energy production, and beyond. The most successful climate founders adopt a mandate to reduce emissions AND rebuild entire value chains to be radically more efficient at scale. That’s the unlock. I've found Collaborative Fund's "Villain Test" to be a helpful framework to illustrate this sentiment. The test poses a critical question: Would a hypothetical ‘villain’ investor, driven purely by financial returns and self-interest, invest in your company? A dual focus, 1) irresistible, scalable economics paired with 2) purpose-driven impact, is the driving force behind climate tech superstars like Antora Energy, Twelve, and Nitricity, to name a few. This is the blueprint. If you want to lead in climate, build products that dominate on performance and deliver planetary benefits as an essential byproduct. Of course, the path from idea to reality is much easier said than done. This isn't meant to discourage but rather offer a principled approach for thinking about how to identify problems and build climate companies that endure. Start with the problem. Design for performance. Make impact inevitable. P.S. Also sharing this as an excuse to post a favorite photo from my time in Stanford Climate Ventures, where our dream team worked on extreme heat solutions that outperformed the status quo in cost and effectiveness across a variety of applications <3 #Better #Faster #Cheaper #Climate #ClimateTech #ClimateInnovation #IndustrialRevolution #VillainTest #Startups #Founders

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

#HappyEarthDay 🌍 Clean energy investment hit $2.3T globally in 2025. Climate tech raised $77B+ in equity funding. There's a lot happening in this sector. And yet the story is more complicated. Fewer startups are getting funded, early-stage is tighter, capital is concentrating into fewer, larger bets. But #climatetech isn’t disappearing. It’s maturing. We’re moving from: Ideas → infrastructure Vision → deployment Carbon narratives → energy systems And new hubs are emerging: 1. Energy and grid resilience are becoming the core constraint. Electricity demand is rising again for the first time in decades, driven by #AI and #electrification. Grid bottlenecks, interconnection delays, and transformer shortages are now defining what gets built. 2. AI isn’t just a tool; it’s reshaping the energy system itself. Data center electricity demand is surging and could double by 2030. A growing share of climate tech investment is now tied to AI-enabled solutions. 3. Data centers are becoming a major forcing function. They’re driving demand for #nuclear, storage, #hydrogen, and new #grid architectures - and in some cases, even pulling fossil fuel capacity back online to meet load. 4. Energy storage is entering a true scaling phase. #Battery capacity is expanding rapidly, costs are falling, and storage is becoming its own asset class. 5. The frontier is shifting toward physical systems. Low-carbon #fuels, hydrogen, advanced #materials, and #manufacturing are back in focus. At the same time, the geography of climate tech is evolving: 1. SF: capital, AI, and early-stage ideas (9Zero) 2. Boston: deep science and #hardware commercialization (Engine Ventures, Greentown Labs) 3. Houston/Texas: #energy infrastructure and deployment (Greentown Labs) 4. NYC: capital markets and climate finance (Newlab) It’s no longer one hub; it’s a system. The bottleneck isn’t awareness anymore, it’s execution at scale. What’s exciting right now isn’t just “climate tech” as a category, but how deeply embedded it’s becoming in everything else: #infrastructure, #compute, #defense, materials, built environment. Earth Day used to be about asking people to care. Now it’s about building systems that make this change obvious. If you’re building in this space, I’m always curious. 📍Boston #EarthDay2026

Africa and other emerging markets present significant opportunities for climate tech solutions, particularly in off-grid energy, sustainable agriculture, and water management. For decades, discussions about climate change have centered on challenges, but today, the focus is shifting toward solutions. In Africa, where over 600 million people lack access to electricity, off-grid energy innovations such as solar mini-grids and battery storage solutions are transforming rural communities. Companies are already deploying affordable, pay-as-you-go solar home systems, allowing families and businesses to generate power without relying on expensive and unreliable national grids. ➜ Sustainable agriculture is another key frontier for climate tech. With over 70% of Africans relying on agriculture for their livelihoods, the need for climate-resilient farming techniques has never been greater. Technologies like precision agriculture, drought-resistant seeds, and AI-driven weather forecasting are helping farmers adapt to changing climatic conditions while improving productivity. By digitizing supply chains and providing real-time market access through mobile platforms, smallholder farmers can reduce post-harvest losses and increase their profits. ➜ Water management is equally critical for climate resilience. Many African regions experience severe droughts and water scarcity, making efficient water use a necessity. Climate tech startups are developing smart irrigation systems, atmospheric water harvesting, and wastewater recycling solutions that maximize water efficiency. AI-powered sensors and data analytics are also being used to monitor groundwater levels and predict shortages before they become crises. The beauty of climate tech in emerging markets is that these solutions are not just mitigating climate change but also creating economic opportunities. The climate tech industry is projected to be worth over $1.5 trillion by 2030, and Africa is uniquely positioned to be at the center of this transformation. Governments, investors, and entrepreneurs must work together to scale these innovations and make them accessible to the communities that need them the most. ➜ The time to invest in climate tech for Africa and emerging markets is now. As global capital shifts toward green investments, Africa has the opportunity to leapfrog traditional, carbon-intensive models and embrace sustainable solutions. The question is no longer whether these technologies will take off, but how quickly they can scale to benefit millions. Let’s build a future where climate resilience and economic growth go hand in hand. The opportunities are limitless—who is ready to invest in Africa’s green revolution?

Climate technologies are essential to achieve the Paris Agreement's goal of a 45% reduction in global GHG emissions by 2030 and #NetZero by 2050. Innovations—including energy storage, carbon capture, low-carbon hydrogen, smart grids, and software solutions like climate modeling—are critical in tackling #ClimateChange and resource depletion. The latest report from the Capgemini Research Institute indicates that 67% of executives believe sustainability targets can't be met without these technologies, and 69% see data and digital solutions as key for adoption. Investing in climate tech is crucial for reducing emissions and optimizing resources, with 91% of leading organizations recognizing its importance for #sustainability goals. To enhance adoption, organizations should prioritize innovative business models and digital integration, supported by government assistance. For more insights, read the full report. https://ow.ly/kkiL50TtnGq