US Climate Tech Investment Surges for Six Consecutive Months: SVB
The climate tech sector is rebounding, with venture capital (VC) investments surging in energy, manufacturing, and carbon tech, as outlined in Silicon Valley Bank’s Future of Climate Tech 2025 Report. The report notes six consecutive months of U.S. climate tech investment growth, with the sector outperforming broader VC markets, achieving a 9% higher internal rate of return (IRR) for 2020-2024 fund vintages.
Key insights reveal that 57% of U.S. VC-backed climate tech firms will need to raise capital within the next 12 months, while valuations are rebounding from 2023 lows. In 2024, Series B and C+ funding rounds reached decade-high medians of $30 million and $60 million, respectively. Clean energy deals hit a record 382 transactions, totaling over $7 billion, a 15% increase from the previous year.
The report also highlights stronger profitability, particularly among software-focused climate tech companies, which reported 30% higher profit margins than hardware firms for those generating over $50 million in revenue. M&A activity has rebounded to 2020 levels, with financial buyers accounting for 40% of deals, up from 15% between mid-2023 and early 2024.
“With continued investor interest, the Climate tech sector is showing reasons for optimism this year,” said Dan Baldi, national head of SVB’s Climate Technology and Sustainability practice. “Clean fuels, dispatchable renewables and carbon tech are taking the spotlight, sparked by a shift toward electrification and ongoing goals to reduce emissions.”