US Climate Tech Investment Achieves Six Straight Months of Growth; Silicon Valley Bank Releases Annual Report

Core Insights - The climate tech sector is experiencing a recovery with increased venture capital investment in energy, manufacturing, and carbon technology, outperforming overall VC with a 9% higher internal rate of return (IRR) for the 2020-2024 fund vintage [1][2] Fundraising Landscape - 57% of US VC-backed climate tech companies need to raise funds within the next twelve months, despite over half reducing their burn year-over-year [5] - Early-stage investment remains resilient compared to later-stage activity, indicating a healthy pipeline for future growth [5] Sector Trends - By 2030, it is projected that half of electricity generation will come from renewable resources, with climate tech solutions expected to transform the energy and power sector [5] - Climate tech valuations have risen after bottoming out in 2023, with Series B and C+ rounds reaching decade highs of $30 million and$60 million respectively in 2024 [5] Financial Performance - Climate tech hardware companies saw revenue growth rates decline from a median of 58% at the end of 2021 to 19% by the end of 2023, while climate tech software companies achieved a 30% higher profit margin in 2024 [5] - Clean energy and power companies closed 382 deals, surpassing $7 billion in investment in 2024, marking a 15% year-over-year increase and more than a threefold rise over pre-COVID levels [5] M&A Activity - Mergers and acquisitions (M&A) activity has returned to 2020 levels, with financial buyers increasing their share of transactions from 15% to 40% between mid-2023 and early 2024 [5]