🌏 $40.5bn and 8% uptick as power demand drives ’25 investment

Happy 2026 🎉 A new year brings perspective, and that’s exactly what we’ve got in our latest report: Sightline’s 2025 Climate Tech Investment Trends report, out now.

It’s our fifth year publishing this report, and we’ve seen the climate capital stack widen and mature over the past half-decade (!). Still, venture and growth capital do a lot of the heavy lifting, helping fund the jump from lab to deployment. This report breaks down exactly how much capital did that work last year.

The 2025 Climate Tech Investment Trends report covers funding and deal activity by stage, vertical, and product type. Sightline Climate clients can access a deeper layer of analysis, from predictions and sector-specific trends to notable deals and exits and investor activity breakdowns, alongside the full underlying data set, on the platform here. If you’re interested in becoming a client, talk to our team here.

📊 So what do the numbers actually say? Even though politics and pullbacks dominated the narrative in the first half of 2025, the market certainty everyone was waiting for took hold in H2 as AI took over. For the first time since the boom years, climate tech investment rose, particularly driven by gains in Growth and Series B funding. That’s despite slowing deal activity and early-stage investment. Fewer, but bigger, checks came in amid a “feast-or-famine” vibe shift. Investors have made their bets in crowded markets and are doubling down on a small cohort of category leaders: the emerging winners with proven tech, viable business models, and credible paths to deployment, rather than new entrants.

At the same time, the demand signal has changed. Climate tech investment is increasingly anchored to electrons, not emissions. Rapid growth in energy demand, led by buzzy AI and data centers, is pulling capital toward gridtech, virtual power plants, and flexibility solutions that can deploy quickly, while renewables, batteries, and nuclear scale on longer timelines. Together, these forces reward scale, certainty, and execution. The open question is durability. If AI demand falters, there is no obvious replacement waiting behind it.

Below is the report's highlight reel. The full public version offers the extended cut, with more charts and commentary, available here.

And if you want to press pause and unpack it properly, join our webinar on January 15, at 11 am EST. Hear firsthand from Sightline co-founders, Kim Zou and Mark Taylor; Sightline research director, Julia Attwood; and CTVC co-founder, Sophie Purdom. Sign up here.

Highlights

💰 2025 investment: Climate tech venture and growth investment totaled $40.5bn in 2025, up 8% from 2024. 

🤝 Deal count: Meanwhile, deal count fell 18% in 2025, reflecting market consolidation into fewer select bets.

📉 Early: Seed and Series A investment totals fell 20% and 7% respectively, but Series A deal counts fell by 22%, pushing deal sizes up to 2021 levels. Series B investment ticked up slightly (7%) off the back of a few mega-deals and is starting to look a lot more like late-stage funding. 

📈 Late: Series C is the new valley of death, as deal counts hit an all-time low, with investment down 32%. Growth investment was the clear standout, jumping 78% in investment compared to 2024, and 41% in deal count, as average deal size rose as well. 

⚡Verticals: Energy stayed at the top, making up 36% of 2025’s total. It grew 31% to $14.4bn, reaching a three-year high. Transportation managed to reverse three years of drops with a modest 4% increase.

🌎 Regions: The US blew past all other regions to grow 27%, while Europe dropped 13%. Mega-deals continued to bolster US investment, but low-carbon data centers are now tipping the balance in other regions.

💤 Fewer investors: Total climate investors across all stages fell 11% in 2025. But government and corporate investors made an appearance in our updated top investors list. Fewer deals by just about everyone meant the number of specialist investors dropped, and the number of investors by stage fell across the board.

🚪 Exits: Exits dropped 5% overall in 2025, mostly driven by a small decline in acquisitions, which made up 89% of all exits. It continues to be a buyer’s market, with larger companies picking up smaller players in (or adjacent to) their core markets for access to their capacity and projects.

🎉 Cumulative investment: Cumulative investment since 2020 increased by 19% to $255bn in 2025, similar to the 2023-2024 increase of 21%, but nowhere near the double-digit quarterly growth of the 2020-2023 boom period.

A note on methodology: This funding report captures only Venture Capital and Growth Equity deals that have been publicly announced through regulatory filings or press releases as of December 11, 2025. Read more about methodology and definitions in the report.

The 2025 Update: TLDR

Climate tech funding rose 8% in 2025, even as deal count fell to a four-year low

• A modest rebound in the new normal. Total climate tech venture and growth investment rose to $40.5bn in 2025, up 8% year-on-year. The uptick looks more like stabilization than a true resurgence, with investors still measured and selective compared to the frenetic pace of 2021–2022.

Growth is slow, but steady

• Cumulative investment hit $255bn by Q4’25, up 19% YoY. Annual funding has clearly shifted into a slower, stabilizing phase. Quarterly growth remained in the double digits through to Q3’23, but hasn’t risen above 5% since then. This linear rate of growth shows that the climate tech market is entering its maturation phase – gone are the high growth days.

Mega-deals cluster around energy security and system resilience

• Out of $10.1bn in mega-deals, $7.2bn and six out of the ten deals focused on energy security and resilience. Renewables deployment has enabled massive amounts of cheap power, but balancing it has much higher costs. The energy sector’s attention is turning to firm power, drawing nuclear into the spotlight. At the same time, a lack of reliable electricity and spiking prices is making distributed systems like Base Power’s residential batteries and EelPower’s grid battery systems crucial to bolstering the grid today
• Several large deals closed after our 11 December 2025 data cutoff, excluding them from 2025 totals but showing strong late-year momentum across AI infrastructure, utility software, and nuclear. Standouts include Google’s $4.75bn acquisition of Intersect Power, Kraken’s $1bn raise at an $8.65bn valuation, and multiple record-setting financings for US and European microreactor companies.

In a reversal, Growth rebounds in 2025, while early-stage declines

• Early-stage now in decline, marking climate tech’s maturation phase. While Seed and Series A activity initially stabilized post 2022’s “new normal”, 2025 marked the first clear contraction as investors largely finished placing bets in crowded sectors such as EVs or carbon removal. Rather than underwriting new entrants in the same categories, capital shifted toward more seasoned bets that hopefully will emerge to be category winners.

Deal count fell 18% in 2025, Series C hit all-time low

• Deal activity pulled back in 2025. Total deals fell to 1,545, down 18% from 2024, to the lowest levels since 2020. Seed remained the largest stage by count, but both Seed and Series A declined, down 19% and 22% respectively, as investors shied away from riskier bets on new entrants. 

Transport remains the largest share, but Energy is closing the gap at 25% of total investment since 2020

• Energy hit $14.4bn, its strongest level in three years, even as deal count fell 16% to 394, still the most active sector with 26% of all deals. Capital concentrated heavily in mega-rounds: fusion and fission alone captured 44% of funding, both at all-time highs, while DERs and storage together made up 24% of energy funding. 
• Transportation’s new normal levels out. Autos and their related sectors (batteries and charging) fell, with the decline offset by rises in micromobility and trucking. Overall, the vertical’s total investment remained basically flat (+4%), but with 23% fewer deals.

Vertical

Energy and Built Environment lead resurgence, up more than 20%

• The data center buildout funneled investment to Built Environment and Energy. AI is hungry for infrastructure and power, pushing funding into clean firm, backup systems, and the developers promising clean(er) capacity. Built Environment funding has marched steadily upwards, rising 67% in 2024 and 23% in 2025. Energy had an even higher jump in 2025 (31%) off the back of large grid and nuclear deals.

Region

Huge H2’25 supercharged the US, double Europe’s funding

• Startups headquartered in the US received the most funding of any region, by far. US funding was up 27% driven by mega-deals in data centers, nuclear, and EVs, reinforcing its role as the sector’s global hub. Europe slid to $10.1bn, its lowest level since 2020, while India held steady, MENA and LatAm declined sharply, and Singapore surged on the back of a single $325m low-carbon data center deal.

Exits

Exits stayed high on acquisitions, SPAC route continued to shrink

• It’s still a buyer’s market, with 2025 the second highest year for exits, only a 5% dip from 2024’s record. Acquisitions made up the vast majority, accounting for 89% of all exits. IPOs inched up in 2025, rising 17% YoY, while SPACs continued to fall, shrinking 22% to make up only 4% of total exits in 2025, down from 42% in 2021. Most of the factors driving elevated acquisitions — and muted IPOs and SPACs — in 2024 were still present in 2025. 

Oil and gas majors slow their buying spree in 2025, but still lead

• Oil majors made no startup acquisitions in 2025, signaling a pullback as renewed fossil support pushed capital back toward core businesses. M&A shifted to smaller bolt-ons, led by NextPower with three solar optimization deals, while incumbents like Schneider Electric, Blink Charging, and Xpansiv focused on targeted add-ons to expand digital and operational capabilities.

Tighter competition in mature sectors led to bankruptcies

• Bankruptcies fell sharply in 2025, dropping nearly 50% to 20 cases, signaling improving market health. Energy and transportation still led failures, while Food and Land Use pulled back from costly diet-shift bets toward more pragmatic models after multiple high-profile collapses.

Fewer specialists as investors curtail their deal counts

Investor participation fell 19% YoY in 2025 across all climate verticals, with the steepest pullbacks in Carbon (-47%) and Transportation (-31%). Specialist investors retreated faster than generalists, signaling fewer, more selective bets rather than an exit from the space.

Corporates and governments broke into the top investors in 2025

Climate-focused investors still led deal activity, with dedicated firms like Breakthrough Energy, Lowercarbon Capital, and Climate Investment topping the rankings. But the investor mix is shifting, as some climate funds broaden their mandate toward AI, robotics, or food security, while corporates and governments step into growth-stage deals once dominated by traditional investors.

Funds

Confidence in renewables stays high as funds cross $100bn

New climate funds raised $103bn in 2025, led by Europe at 54% of capital, while the US contributed just 16% amid weaker climate mandates. Only 60% of targeted capital closed, leaving $69bn potentially in the pipeline, with fundraising toughest outside Europe and Canada, especially in APAC and the US.

Methodology

For a detailed explanation of the methodology, please download the report and refer to the methodology section at the end.

NOTE: You may notice that some of our numbers are larger in this update than previous editions. We constantly update the dataset to have the most accurate data possible, including adding post-dated deals.

🎁 Now that’s a wrap on the TLDR! If you’ve got this far in the email and haven’t yet clicked, get the full report here.

Have a different take on what’s driving these trends? Or questions about our analysis? Drop us a note at [email protected] if you’re looking to dig deeper into the 2025 investment numbers.