What the numbers say:Climate prediction startups secured $266M in venture funding in 2022, per Crunchbase. VC funding deployment halved in 2022 compared to $541M deployed in the previous year.
What happened:The overall climate tech sector initially showed resilience to the venture funding pullback. However, VC funding deployment tapered towards the end of last year as the industry succumbed to the funding retrenchment trend. In Q1 2023, VC funding for the overall climate tech sector slumped36% QoQto $5.7B.
What next: Despite the drop, investors are confident about the sector's potential, especially considering the wide use cases for climate prediction and weather analytic startups. Several sectors, including vacation rental, proptech, and supply chain startups, are leveraging climate prediction startups' services to predict weather's impact on vacation rentals, analyze the risk of flood or fire risks on new properties, and de-risk the impact of weather on supply chains. The broad scope of the sector, coupled with the scaling potential of climate prediction startups — due to its low product expenses and platform-as-a-service business model — are the key reasons why VCs are investing in the sector.