2023 was a transitional year amid a shifting macroeconomic landscape, with Clean Tech and Climate Tech emerging as the bright spots for VCs, albeit at a lower level than in 2022. Major European deals like Verkor’s $2.3B raise and Field’s $253M round demonstrated continued investor appetite for innovative startups in the space. At the innovative earlier stage segment of the market, we at Stakeholderz are delighted to have introduced a dozen sustainability-focused growth businesses as opportunities to our investment community with a strong pipeline for 2024.
Key to this momentum was the overall supportive policy environment, focusing on carbon emissions targets and renewable energy. Governments provided clarity and incentives, catalysing a diverse array of clean tech deals, spanning smart grids, circular economy solutions, sustainable agriculture and carbon-reduction technologies.
The COP28 summit built upon these foundations, recognising the critical role of fossil fuels in climate change and emphasising the need for a transition. With over 150 countries committed to reducing emissions, the conference showcased significant global efforts in climate action. However, challenges such as the failure to establish a central carbon offset system and the absence of clear financial commitments for adaptation highlighted ongoing gaps in climate governance.
Opportunities are likely to arise from coupling clean tech innovations with AI, capturing and synthesising massive amounts of data from climate tech innovations can generate new revenue streams and opportunities for both hardware and software companies, leading to a more diverse cohort of climate tech innovation. The investor landscape has shifted, with corporate venture capital and green funds taking the lead, showcasing the evolving diversity within the sustainability sector.
As we look ahead into 2024, governments remain committed to climate goals and increasing consumer demand for eco-friendly products and positive environmental impact will further propel the sector. With $2 trillion in undeployed private capital available, the stage seems set for substantial VC investments into companies tackling SDGs including healthcare, wellness, education and the circular economy alongside clean tech and climate tech.
2024 may prove a pivotal year where collaborative efforts between investors and startups bear fruit in moving towards a greener, more sustainable future. This should be supported by a modest reopening of the IPO markets, allowing an improvement in capital flows through the year.
What trends did you observe in 2023, and what is your outlook in 2024?
