According to the latest Crunchbase report, global investment in sustainability is hitting a four-year low. To be more precise, this was a year of lull for cleantech equity funding with dropping deal counts. All data and analysis indicated a slowdown across the board.
However, the story isn’t all grim.
While major sectors like batteries, wind, and solar took big hits, others gained momentum. Carbon capture, storage, and reuse saw strong growth. Hydrogen startups also continued to attract significant funding. This shift reflects a strategic focus on areas and specific sectors with high long-term sustainability potential. Notably, investors are doubling down on what they believe will drive future climate solutions.
So, let’s dive deeper into this report…
Big Equity Bets Amid Overall Funding Dip
On a brighter note, even though the overall equity funding has weakened, mega-rounds show cleantech is still attracting major investments. Several companies secured large financings across sectors like fusion energy, carbon capture, energy storage, and electric vehicles (EVs).
These deals show a strong focus on innovative solutions for clean energy and sustainability. Here are the top players grabbing massive cleantech deals.
Pacific Fusion
Pacific Fusion, a Fremont, California-based startup, grabbed headlines with a massive $900 million Series A in October. Led by General Catalyst, the investment is a stellar example of high confidence in the company’s ambitious goals. Pacific Fusion is pioneering pulsed magnetic inertial fusion, a technology it claims could deliver “limitless, clean, on-demand power.” This groundbreaking approach has all the potential to transform it into a leader in the race for next-generation energy.
Intersect Power
This month, Intersect Power, a developer of clean energy projects, raised over $800 million. The financing round was led by TPG Rise Climate Fund and Google. Notably, Google has teamed up with Intersect Power and TPG Rise Climate to launch a $20 billion partnership that promises to transform the energy source for data centers. The company’s success is an example of the growing appeal of integrated clean energy projects that directly address large-scale energy needs.
Form Energy
In the energy storage sector, Form Energy secured a $405 million Series F in October, led by T. Rowe Price. The Massachusetts-based company is developing low-cost, long-duration battery systems designed to stabilize renewable energy grids. These advanced systems aim to ensure a reliable power supply even as renewables like wind and solar become more prevalent.
Apart from these mega players other cleantech innovators also secured substantial investments. Crunchbase named carbon transformation company Twelve, battery materials maker Sila, and EV charging provider Electra in their list.
These standout deals demonstrate that, despite a broader funding decline, transformative technologies in cleantech continue to draw significant capital. Investors are betting big on innovations that promise a sustainable future.
Debt Financing Gains Ground in Cleantech
Another interesting aspect is the rise of debt financing for the cleantech sector this year. It’s a stark contrast to the projected slowdown of equity funding. Crunchbase highlighted that in 2024, at least five debt deals surpassed $1 billion, totaling over $14 billion. This figure represents nearly half the year’s equity funding which shows the emergence of debt financing in cleantech growth.
This surge in debt financing reflects a shift in how companies fund their expansion. Infrastructure-heavy cleantech firms, particularly those reaching maturity, are turning to debt for a more sustainable alternative. These companies use their assets and revenue to secure debt which helps them to grow without diluting shares. This approach also attracts investors looking for safer options.
Climate-Focused Investors Dominate
This year climate-focused funds and strategic investors dominated the cleantech funding space. While general venture and growth firms played a role, most deals were driven by funds and companies with a clear focus on sustainability. Crunchbase data revealed Lowercarbon Capital and Breakthrough Energy Ventures, led the pack, and each involved in at least 34 deals.
Lowercarbon, co-founded by Chris Sacca, the early investor in Twitter and Uber, made waves as a frequent lead investor. One prominent deal was its recent $150 million Series B co-led for Heirloom, a company pioneering in direct air capture technology.
Breakthrough Energy Ventures had a strong year, supporting major funding rounds for Pacific Fusion and Form Energy. The fund also focused on seed and early-stage startups which showcased its commitment to innovation.
TPG Rise, another big player, took part in seven deals but made massive investments in companies like Intersect Power and Twelve.
Crunhbase also included Chevron and Shell. The former participated in eight deals through its Chevron Technology Ventures and Chevron New Energies divisions. Shell and its venture arm, Shell Ventures, were involved in seven investment deals.
In conclusion, this report shows that while overall cleantech funding declined in 2024, some sectors experienced growth. Last but not least, experts believe that a balance of debt and equity funding is essential to keep the cleantech market thriving in the future.