Climate tech projects are dominating global venture capital (VC) investment, accounting for approximately 70% of total VC investment in 2023 and achieving a total of $11.8bn. 

A new report by A/O, a European venture capital company, found that climate tech investment remains “resilient” despite a decline in the total number of dollars going into the clean technology sector. 

Building energy efficiency saw one of the biggest increases in investment, with investments growing over 73%.  

A/O also found that European early stage investment into climate tech projects is catching up to US levels in both deal frequency and value. This year is the first year that investments from pre-seed to series B investments in Europe outnumbered the US, attaining a value of nearly $3bn. 

Germany displaced the UK as the second largest market for VC investment behind the US, valued at approximately $1.4bn. 

However, the US continued to dominate the VC market, recording almost four times the amount of investment as Germany. The US market was valued at over $5bn with the report finding that the US alone accounted for 80% of eco building materials funding in 2023. 

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By GlobalData

A/O’s founder and managing partner Gregory Dewerpe stated that it was an exciting moment for Europe’s investment ecosystem. 

“It’s great to see Europe’s ecosystem continue to grow with early-stage investment in Europe on par with North America for the first time, showcasing that some of the most exciting innovation is coming out of the continent,” he said. 

Corporate environmental, social and governance concerns (ESG) are becoming a higher priority in the rush to decarbonise. 

During COP28, the UK’s Prime Minister Rishi Sunak pledged £316m towards green energy and technology. 

GlobalData’s 2023 thematic intelligence report into ESG 2.0 identified the US Inflation Reduction Act (IRA) as a major catalyst for investment and growth within the US’ green tech sector. 

The IRA directed $400bn towards clean energy solutions and provided subsidies for green technology and energy solutions. 

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