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Report: Climate tech is hitting peak maturity

Illustration of the earth on a large pile of money

Illustration: Eniola Odetunde/Axios

Climate tech has seen the biggest gain since its last run-up and subsequent bust in the early 2000s, according to a new report Silicon Valley Bank provided exclusively to Axios.

Why it matters: If the industry can maintain this level of activity without buckling under its own weight, long-term growth could have wide-ranging impacts on climate change initiatives.

Details: Silicon Valley Bank's report found that VC investment in 2021 was roughly eight times higher than the industry's previous peak, in 2008.

  • VCs invested $56 billion in 2021, according to the report, and $7 billion in 2008.

By the numbers: Investments in later-stage companies (Series C and D) rose at the fastest rate in 2021 compared to the prior year — 138% and 128%, respectively.

  • But the early-stage market is most crowded with the highest concentration of experienced investors writing seed and Series A checks.
  • The report found just 84 experienced investors at the Series C and Series D stages compared to 476 early-stage investors.
  • The share of deals over $100 million has grown from 2% in 2017 to 8% in 2021, driven mostly by large generalist investors like Tiger Global and Temasek Holdings.
  • Electric vehicle innovation is projected to peak within the next two years, and has outraised its cohort of maturing industries to the tune of $25 billion since 2017.

Between the lines: The biggest funding deals are often going to companies whose technology was proven in the first cleantech wave, such as solar companies or EV makers.

  • There remains a large — and growing — early-stage cohort this time around with hyped areas like direct air capture and other carbon removal technologies.
  • Many of these technologies haven't yet reached the proof-of-concept phase at scale.
  • Silicon Valley Bank broke out a "hype curve" for climate technologies based on the projected time to widespread adoption.
  • Advanced nuclear and carbon capture were both in the furthest-out group at more than 10 years to widespread adoption.

Yes, but: Margins are also closing in for transportation and logistics startups and agriculture startups.

  • The report didn't identify whether the companies had higher burn rates to achieve growth projections in earlier stages or whether they had harder times finding additional capital to extend their runways.

What's next: Join Megan Hernbroth at 1pm ET/10am PT today for a panel discussion about the report's findings and hear from SVB on what's next for the industry. You can RSVP for the virtual discussion here: https://bit.svb.com/3M3FU3l

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