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Market downturn is starting to infect climate tech

Apr 3, 2023
Data: PitchBook; Chart: Axios Visuals

Venture investment in climate tech fell for the third straight quarter in Q1, per PitchBook, signaling that the sector is finally catching the chill from the broader market.

Why it matters: Climate tech dealmaking remained relatively robust even as other sectors sagged last year. No longer.

Driving the news: Deals activity fell to its lowest point in nearly three years — or, put another way, since the onset of the pandemic.

By the numbers: Q1 deal value dropped to $5.7 billion, the lowest since Q2 2020. Deal count similarly tumbled to 279 deals, per PitchBook data.

Be smart: PitchBook counts deals that are publicly announced, making the above data a lagging indicator as to how many deals were actually done in Q1.

What's happening: Investors and founders alike have told us that the funding environment has become more difficult.

  • "Valuations got so inflated in 2020 and 2021 that there's going to be a reckoning, or a repricing, there — some of which is healthy," Collaborative Fund's Sophie Bakalar told Climate Deals reporter Megan Hernbroth in January.

Between the lines: Firms are sitting on plenty of dry powder. But the broader market downturn and fears of a recession have apparently made investors of all stripes wary.

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