Cleantech Funding Weakened In 2024

Overall, 2024 was a comparatively weak year for cleantech equity funding.

Global investment in sustainability-related categories 1 looks set to hit its lowest point in four years, per Crunchbase data. Deal counts are also down, as shown in the chart below.

But while topline numbers are lower, the picture is more nuanced in individual sectors.

Several areas are down markedly. Most prominent is the battery sector, which was further riven by last month’s bankruptcy filing by Sweden’s Northvolt, one of the most heavily funded players. Wind- and solar power-related funding also fell.

Other spaces are on the upswing. For instance, we continue to see robust funding around carbon capture, storage and reuse. Hydrogen startup funding also continues to boom.

Largest equity rounds of 2024

Mega-rounds are also still getting done. Even as overall funding dipped, a number of cleantech companies did manage to secure some very large investments.

To illustrate, we used Crunchbase data to put together a list of standouts, in sectors including fusion, carbon capture, energy storage and electric vehicles.

The largest financing went to Fremont, California-based Pacific Fusion, which raised a $900 million Series A in October led by General Catalyst. The year-old startup says its technology could help pave the way to “limitless, clean, on-demand power” through a process called pulsed magnetic inertial fusion.

Another massive funding came just this month for Intersect Power, a developer of clean energy projects co-located with power-hungry facilities like data centers and industrial sites. The company picked up more than $800 in financing led by TPG Rise Climate Fund and Google.

In the energy storage space, meanwhile, Form Energy secured a $405 million Series F in October led by T. Rowe Price. The Massachusetts startup is working on low-cost battery systems for renewable power-supported electric grids.

Beyond these three lead fundraisers, we also saw large financings for carbon transformation company Twelve, battery materials maker Sila, and EV charging provider Electra.

Climate-focused funds and strategic investors dominate

Cleantech’s most active investors also stayed quite active.

While many generalist venture and growth firms do invest in cleantech startups, industry observers see more dealmaking carried out by climate-focused funds and strategic investors. This was the case in 2024, with familiar cleantech names filling out the ranks of most-active and spendiest investors in the space.

Leading by deal count are Lowercarbon Capital and Breakthrough Energy Ventures, which each invested in at least 34 known financings this year, per Crunchbase data.

Lowercarbon, the sustainability-focused fund co-founded by early Twitter and Uber investor Chris Sacca, was also a frequent lead investor. That includes one of its most recent rounds, a co-led investment in this month’s $150 million Series B for direct air capture company Heirloom.

Breakthrough Energy Ventures also had a powerhouse year, backing massive rounds for Pacific Fusion and Form Energy as well as a host of seed- and early-stage deals. Meanwhile, fellow heavyweight TPG Rise had just seven rounds this year, but that included some of the largest, such as those to Intersect and Twelve.

Among strategics, Chevron kept busy in 2024, backing eight deals including its venture arms Chevron Technology Ventures and Chevron New Energies. Rival Shell and its Shell Ventures arm, meanwhile, participated in seven investments.

Debt deals

While equity investment was down for cleantech, that was counterbalanced by some large debt financings for companies in the space.

Per Crunchbase data, there were at least five debt financings valued at $1 billion or more in 2024. The deals, listed below, collectively brought in over $14 billion — close to half of the cleantech equity funding total for the year.

Infrastructure-heavy cleantech companies commonly turn to debt financing as they scale. As such, a shift from equity rounds to project finance may be an indication of a maturing startup pipeline.

Looking forward with optimism and also concern

As we look ahead to 2025, cleantech investors are girding for policy changes that could affect their portfolios and funding decisions. That’s most pronounced in the U.S. with a second Donald Trump administration incoming.

For now, however, we’re still in wait-and-see mode regarding actual policy details.

“I don’t think anything’s been clarified,” said Dan Connell, managing director and member of the real assets and sustainability team at CF Private Equity, regarding potential changes affecting electric vehicles, grid modernization and other areas of interest for cleantech investors.

Connell said with power demand on the rise he continues to see promise for growth-stage investment around energy efficiency and grid power optimization. He also cited sensor-driven upgrades to water and irrigation systems as an area ripe for investment.

Startup activity around fusion energy and other nuclear technology could also see a boost, said Andrew Sparks, co-chair of the climate technology practice at Goodwin. He described it as an area where there’s “some political confluence of support” from both left and right.

As for the broader cleantech space, from a purely follow-the-numbers viewpoint, the direction looks positive. In particular, we saw that investor support for large rounds was much stronger in the second half of this year than the first. The year’s three largest rounds — Pacific Fusion, Intersect Power and Form Energy — all closed in the fourth quarter.

Of course, that doesn’t tell us what will happen in 2025, but at least the momentum appears favorable.