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Big climate growth rounds top weak VC numbers

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Oct 18, 2023
Illustration of the Earth being covered in hundred dollar bills.

Illustration: Aïda Amer/Axios

As global VC funding slumped in Q3, climate-tech deals fell less sharply, and companies making EVs and batteries dominated the top deal list, according to two new reports.

Why it matters: Climate tech is providing a bright spot amid the broader macroeconomic turmoil, but the sector is not immune.

Driving the news: Consultancy KPMG released a report that found that six of the 10 largest global financings in Q3 2023 were for climate tech, in particular batteries and EVs.

  • The top climate-tech deals included French battery maker Verkor, Swedish green steel maker H2 Green Steel, Chinese EV maker Rox Motor, Nevada-based battery-recycling company Redwood Materials, Chinese EV maker Neta Auto, and Chinese EV maker Farizon.
  • The report writes that the Verkor and H2 Green Steel deals "highlight the incredible strength of the cleantech market in terms of attracting large VC investments."

Meanwhile: A new report from consultancy PwC finds that global investment in climate-tech startups fell 40% in Q3 alongside other sectors, but it fell less steeply than the broader 50% decline, writes Ben Geman in Generate.

  • The PwC report says the share of funding going to climate tech continued to rise, accounting for more than 10% of private market startup investments in 2023.

Big picture: It'll be a relief to startups' ears that there's still capital for growth deals.

  • The first half of 2023 saw growth climate deals drop off a cliff, but the KPMG report adds to the growing evidence that there is capital out there for large rounds for leading companies.
  • Three of the top 10 largest deals were for Chinese EV makers, highlighting the huge amount of capital the Chinese government is funneling into EVs and the growing domestic Chinese EV market.
  • Batteries and EVs globally are receiving unprecedented investment as government support like the Inflation Reduction Act continue to spark manufacturing dollars.

What's next: Will climate tech continue to outperform the broader deals landscape?

  • "So far AI has dominated the headlines in 2023, but as we head into Q4 '23, will Cleantech begin to rival AI?" said Jonathan Lavender, global head of KPMG Private Enterprise at KPMG International, in a statement.
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