Overview of Sightline Climate report findings

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.

👉 Innovation is a driver of transformation and climate tech is essential for a clean energy transition. ✍ Sightline Climate (CTVC) in the report - The Climate Capital Stack and New Funds - highlights climate tech capitalization trends in in 2024 👉 It reports on – who’s raising funds, where capital is concentrated, and tracks the following: • The state of climate funds – the capital raised to invest in climate tech and fundraising trends to understand sentiment around climate tech. • Dry Powder – the undeployed capital looking for the right opportunity- ready-to-go capital for early or late-stage climate solutions. • The Climate Capital Stack – those who have raised the funds and want to put it to work - the types of capital available, at what stage, from whom. ✍ Highlights: - $164bn of private AUM across 334 new VC, Corporate VC, Growth, infra, and private equity funds with a full or partial climate focus closed since January 2021. -96 new funds have been raised in 2024 so far – down 6% from 2023’s record, but still maintaining momentum and exceeding 2021 and 2022 - $47bn in fresh capital closed YTD – up 20% from 2023, when new funds raised $39bn. - $86bn of dry powder ready to deploy for climate (down 8% from 2023’s high of $93bn) from VC, Growth and infra funds. Newly-included infrastructure funds making up the bulk of the powder ($56bn). - 21 mega-funds (≥$500m) so far this year – down 19% from 2023 but playing an increasingly important role, accounting for 80% of all new AUM. - - 23% increase in mid-sized funds ($125-500m). 38 funds have closed in this bracket, up from 31 funds last year. Funds in this mid-sized AUM bracket have been on a steady rise YoY since 2021.  👉 Read detailed insights in the report. High-Level Climate Champions Mahmoud Mohieldin Sagarika Chatterjee

Sightline Climate (CTVC) is back with another data-packed 2024 trends report. Here are my highlights: 💰 Investment Cooling, But Not Crashing: $30bn was invested in venture and growth investments last year. That's something to celebrate. Growth is shifting from exponential to linear. ⚡ Mega-Deals Shift to Data Centers & Clean Firm Power: Clean energy and data centers are trending. Specialist technologies like small modular reactors (SMRs) or long-duration energy storage (LDES) are attracting significant investment. See IM Motors Scala Data Centers and Crusoe. 📉 Growth Stage Funding Takes a Hit: Large growth-stage deals plummeted 38%, impacting overall investment. Early-stage (Seed) investment remains stable, while Series B saw some large, outlier deals. We've been seeing a lot of bridge rounds. 💥 Nuclear & Energy Storage Rebound: After a dip, nuclear and energy storage investments have surged, reclaiming a significant portion of total energy investment. 🔋 Batteries, solar and industry saw a massive drop. Solar bankruptcies increased due to changes in net-metering policies. High-profile bankruptcies in the transportation sector also impacted investor confidence, and Northvolt is still in limbo. ✈️ Transportation Shake-Up: While auto investment remained relatively stable, battery investments plummeted, and aviation saw substantial growth. 🤝🏻 Exits Surge, Primarily Acquisitions: Exits more than doubled, driven by acquisitions (92% of all exits). IPOs increased slightly, but SPACs have significantly declined. Many acquisitions were undisclosed, suggesting smaller outcomes. 🛢️ Oil Majors Active Acquirers: Oil and gas companies continue to acquire renewable energy and energy transition companies, though their long-term strategy remains unclear as they keep backpedaling their climate commitments in parallel. Ending on a happy note - - Since the start of 2020, ~3,900 climate tech companies have raised $182bn+ of venture funding across over 6,200 deals. 🌱 Well done to all the hardworking climate tech entrepreneurs out there - and to the Sightline team: Kim Zou Sophie Purdom John Tan Mark Taylor

The report prepared by Sightline Climate (CTVC), with the support of HSBC, provides a comprehensive analysis of the #climatetech #capitalizationtrends, focusing on “dry powder” and fund formation dynamics in 2024. The report outlines the growing role of #investmentcapital in the #climatetechnology sector and explores how emerging funds are being structured to address both #financial and #environmental #goals. It emphasizes the evolving nature of capital flows in the sector, with a particular focus on funds that remain unallocated, referred to as ‘dry powder,’ which are poised to influence future investment decisions in the climate tech space. This analysis dives into the investment patterns and the strategies employed by fund managers to navigate the increasingly complex #climatetechecosystem. It highlights the importance of capital flow into early-stage technologies and the innovation-driven projects that are essential for achieving #globalclimatetargets. In 2024, there is a clear shift toward more diversified funds with varied #risk profiles, signifying a broader and more inclusive approach to financing climate solutions. Alongside this, the report underscores the necessity for greater transparency and regulation within the fund formation process, as both investors and stakeholders seek to ensure that investments align with sustainable and long-term climate goals. The funding landscape for climate technology has evolved, with a marked increase in interest from investors who prioritize not only financial returns but also the environmental impact of their investments. This shift toward sustainability requires that fund managers adopt long-term strategies that integrate climate risks and regulatory changes. Early-stage investments, in particular, are seen as critical to driving the next wave of climate innovation, with fund managers expected to focus on scaling these technologies in line with both market needs and regulatory pressures. In conclusion, this report illustrates the transformative dynamics of the climate tech sector in 2024, detailing the shifts in capital allocation and fund structuring that are shaping the future of climate investment. As the fight against climate change intensifies, the report emphasizes the dual role of financial returns and environmental impact in shaping investment strategies. The evolving trends in climate tech capitalization suggest that both fund managers and investors must adopt a forward-thinking, flexible approach to navigate the complexities of this fast-growing sector. In conclusion, the capital flows and fund formation trends in the climate technology sector are set to accelerate the global transition toward sustainability, underpinned by more diversified, transparent, and innovation-driven investments.