Defying gravity, 2022 Climate Tech VC funding totals $70.1B, up 89% on 2021.

The Open-Source Global Climate Tech Landscape is our primary reference for a granular understanding of the trends and patterns emerging in Climate Tech. Leveraging new charts and analytics on HolonIQ's Intelligence Platform, we are now able to explore high granularity patterns and trends with 'X-Ray Charts' in HolonIQ's data analytics studio, adjusting for different time frames and geographic dimensions to see the anatomy and composition of insights over time.

Figure 3 shows an 'X-Ray Chart' to see the underlying share of each cluster of the Global Climate Tech Landscape, aligned to the sub-sectors shown in figure 2 and below colored as different columns of that chart. Within each sub-sector/column, the clusters are revealed to show their share of the 3,300+ Climate Tech Venture funding rounds that occurred through 2022.

Figure 3

From left to right across the taxonomy by sub-sector in each color and by VC deal count, we see Renewables was dominated by Solar. Alternative Resources are smaller by number although they're outsized as revealed in a 'dollars' perspective due to a lower volume of higher value investments in Nuclear, Hydrogen and Critical Minerals. In Storage and Distribution we continue to see Batteries dominate followed by Alternative Storage technologies (non Battery), Energy Grids for distribution and EV Charging all representing substantial numbers of investments.

The Biosphere sub-sector is under-represented in VC investment, although we're seeing an acceleration in solutions addressing Land Capital, Air Quality, Forest preservation and restoration, and Oceans and Water solutions. The Food System is broadly represented by upstream agricultural and alternative products, excluding retail and distribution. Alternative Meat and Seafood, Dairy and Egg, Smart Farming and technology to support Crops and Livestock mitigation and adaptation were all well funded through 2022. In the Circular Economy, investment was dominated in Sustainable Materials, followed by Recycling, Solid and Wastewater and Textiles alternatives/enhancements are also gaining share.

Carbon markets have seen a boom since 2021 levels, whether in Capture, Storage, Offsets or Accounting. We see the world evolve around Climate Data and Finance including our IoT (Internet of Things) cluster that will shortly be re-framed to capture earth observation and measurement spanning to include from smaller IoT enabled hardware in the environment to space based observation and other environmental observation, measurement and tracking devices and systems.

Construction and Transport Infrastructure dominate the built environment technologies, with Commercial and Residential buildings, Heating and Cooling solutions rounding out a well funded sub-sector. Finally in Mobility, Vehicles (cars, trucks and motorcycles) continue to be a very popular category. Micro-mobility is maturing and in emerging markets has strong continued momentum, along with innovations across electric and eVTOL aircraft, electric and hydrogen/wind powered boats and ships and next generation rolling stock and trains.

Figure 4

In figure 4, and beyond the activity levels of funding rounds, the 'X-Ray' above shows how the funding was distributed in USD (figure 3 represents share of deals, figure 4 represents share of dollars). This perspective is of course skewed by large mega-funding rounds (160+ in 2022) and as such can form a very different representation to that of funding rounds/count.

The key difference between our 'X-Ray' in figure 3 and figure 4 is clearly visible in the Storage and Mobility sub-sectors and to some extent in Data and Finance.

In storage, we see just how much of the total dollar value is being captured across that sub sector and how Batteries are really taking an outsized share of that market's investment. Another area over represented in $1 perspective versus the number of deals is in Mobility, similarly here we see vehicles taking the major share of that, aircraft attracting more dollars than deals. Conversely, the data and finance category appears to have captured a lower share of dollars than the number of deals which is representative of the asset diversity in Climate Tech, The data and finance sub-sector is principally B2B SaaS versus other more physical asset/infrastructure sub-sectors that a more capital intensive. Data and Finance is also a younger sub-sector compared to many others and as such is at an earlier stages of development.

As we look at geographic trends, we see the US continue a very strong rise in investment adding an additional six to eight billion of VC every year to Climate Tech since 2019. As previously mentioned, the US invested more venture funding into Climate Tech in 2022 alone than in the entire Clean Tech boom 1.0 (2006 to roughly 2011). At some point, mid to late 2023 and subject to investment levels through 2023, the US will have invested $100 billion since the clean tech boom 1.0.

In Europe, we've seen the fastest growth, it has more than doubled investment in 2021, reaching nearly $18 billion. Europe is arguably the most progressed market from a policy and regulatory perspective around climate technology, and that's supporting an acceleration in VC flows in the region combined with an energy crisis and major geopolitical shifts.

China, has grown significantly on 2021, adding over $4B USD in VC to Climate Tech but lost share due to state sponsored and corporate entities taking the leading role in funding innovation and technology.  

2022 marked a massive surge in India based VC funding as the region mobilizes around sustainability and transitions from a consumer focused venture capital environment now to climate tech  the preferred investment category. Indian policy makers, corporates and investors alike see the potential for India to take a leadership role in climate tech across the region and around the world.

Figure 5

Finally, when we look at all major geographic markets combined, below in figure 6, from around 2010 we see US led Climate Tech investment moderate in the wake of the 'Clean Tech 1.0' boom. Towards the middle of that decade, China starts a significant wave of investment that outpaces the US on a relative basis, ultimately making up 64% of global Climate Tech VC investment in 2017, after which China enters into a new regulatory environment and a number of major Chinese climate technologies reach a new level of maturity that are now funded by state owned enterprises and private corporates.

Since 2018/2019 all major markets have seen aggressive investment in Climate Technology, defined more broadly than its Clean Tech predecessor, and with a greater sense of urgency, government support and a more mature set of energy and environmental technologies.

Figure 6

Check back each week for more data-driven insights on the Global Climate Tech Economy.