Axios Pro: Climate Deals

January 03, 2023

Axios Pro Exclusive Content

🥳 Happy Tuesday, and welcome to 2023! We hope you had a relaxing few weeks with minimal travel headaches.

1 big thing: Climate tech funding holds strong

Global VC deal activity for robotics and smart field equipment
Data: PitchBook; Table: Axios Visuals

PitchBook predicts private investment in climate tech startups will increase in 2023.

Why it matters: In an otherwise rocky private funding environment, investing in this space remains resilient, Megan writes.

State of play: VCs invested roughly the same amount in climate tech in 2022 as in 2021, per a PitchBook report. The report highlights that 2021 was a "particularly strong" fundraising year for the sector.

Of note: That compares with a steep drop in a range of sectors where funding evaporated (fintech, as one example).

  • Also, private funding figures have not yet accounted for the Inflation Reduction Act — which set aside roughly $370 billion for climate technologies — because it was signed in Q3, the report says.

Yes, but: "While we still think there's a massive economic opportunity — and food is inevitably a big part of the climate story — 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 said in an interview.

  • "There also aren't as many deals getting done, but all the dry powder in climate has led to a flight-to-quality where the very best companies are getting even more interest."

View archive