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Venture investors at Climate Week NYC this week looked for anything to talk about other than data centers.

Why it matters: Funders are waiting for a shakeout in the overheated sector.

Inside the room: Data centers dominated virtually every panel and happy hour, as countless founders and funders hoped to capitalize on the sector's insatiable energy and water demand.

Yes, but: "The returns just aren't there," investor Grant Allen tells Axios Pro. 

Zoom in: Some venture firms are simply pulling back from the sector.

"I will not be investing in anything around data centers for the foreseeable future, too many companies," one climate-focused funder says, asking not to be named because their firm is still accepting some data center pitches.

Others are limiting investments to "adjacent tech" that might find traction with data centers but isn't dependent on them.

"Grid tech, load management, power electronics —  whether there's 20% data center growth or 500%, the technologies still make sense," DCVC partner Rachel Slaybaugh tells Axios Pro.

Visa jitters: "It's going to have a massively negative impact on attracting the best talent to the U.S.," Collaborative Fund managing partner Craig Shapiro says, "which could lead to more ambitious climate projects in other geographies."

Early-stage freeze: Nascent carbon-removal startups are going to have a hard time finding any funders, an investor says, as U.S. policy retrenchment and sluggish carbon-credit markets undercut the sector's economics.  

Funding silence: There were few fundraising announcements, the latest indication that it's taking longer to raise money, especially as cautious LPs stick to established fund managers. 

Foreign recruitment: European LPs, which have traditionally used Climate Week to simply scope U.S. firms and startups, instead spent time trying to lure American firms to invest in Europe.

Editor's note: This story was corrected to say DCVC partner Rachel Slaybaugh referred to potential data center growth of 500% (not 5%).

Heard at Climate Week: Anything but data centers

Climate-focused investors are avoiding the ultra-hot sector.

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Venture investors at Climate Week NYC this week looked for anything to talk about other than data centers.Why it matters: Funders are waiting for a shakeout in the overheated sector.

Heard at Climate Week: Anything but data centers

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