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Climate tech matured in 2024 as investors favored bigger rounds, later stages
Venture investment in the climate tech sector was down 7% to $12.9 billion, $1 billion shy of 2023’s tally, according to data in a new PitchBook report. Despite this drop, new numbers reveal that round size increased and investors showed a greater willingness to back companies that had emerged from their seed round.
The report found that median deal size was $7 million, up $1 million from the year before, while median pre-money valuations soared to $44.5 million from $31.5 million the prior year. Deal count fell by 27% to 568 in 2024 compared to 2023.
Climate tech startups that have matured and demonstrated unit economics now have access to larger funding rounds, which is a significant shift from previous years where investors were focused on getting into the game early by backing seed-stage companies at lower valuations. This change reflects a maturation of the sector as it moves away from its early days.
The lull in climate tech investments comes as investors are nursing a hangover following the exuberance during the pandemic, when deal sizes, counts, and valuations all skyrocketed. Now, investors are taking a harder look at unit economics before committing to further funding rounds.
Source: techcrunch.com
