In a significant upswing, climate tech companies have experienced a staggering $16.6 billion influx of investments in the third quarter of 2023, a new BloombergNEF report shows. This marks an impressive 63% increase compared to the previous quarter’s $10.2 billion.
For climate tech companies, it also marks the “best quarter for fundraising in almost two years,” Bloomberg says.
However, as Bloomberg finds, this surge in financial support coincided with a record-low deal volume, totaling a modest 241 investments in the third quarter of this year. Bloomberg explains that this trend suggests a growing cautiousness among climate-tech investors.
Mark Daly, co-author of the report and BNEF’s head of technology and innovation, says that “[t]his quarter’s funding total was really bolstered by a small number of deals in the high hundreds of millions and even billions,” adding that the high total “obscured the relatively low number of deals that actually happened.”
Among the sectors, energy emerged as the most heavily funded, securing a substantial $7.4 billion from July to September. Following closely behind were the transport and industry sectors, which attracted $4.6 billion and $2.9 billion in investments, respectively.
In the third quarter of 2023, climate tech investors showed less enthusiasm for low-carbon agriculture, with the quarterly investments in this sector plummeting by 23% compared to the rolling four-quarter average, amounting to a total of $482 million.
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Notably, the report highlighted a significant 84% surge in deal value within companies focused on decarbonizing heavy industry, attributing it largely to the increasing investor interest in sustainable steel production.
The report also revealed notable geographic transformations. China — having raised $4.5 billion across 25 deals — now leads the world’s climate tech market in terms of funding.
The US is now second in the global climate tech market in terms of funding but remains the leader when looking at the number of deals.
Interestingly, Sweden this quarter ranked as the third-largest climate tech market in terms of funding, recording a 224% increase in investment value in Q3 of 2023 compared to its four-quarter rolling average. Bloomberg attributes this rise to substantial funding rounds secured by two Swedish startups: battery manufacturer Northvolt and H2 Green Steel, which recently signed a deal with Porsche to supply the luxury carmaker with significant amounts of low-carbon steel to be used in their vehicles.
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