What the numbers say: North American startups accounted for 58% of the total global climate-tech VC deal value so far this year, per Pitchbook. The deal value share for the region increased from 43% in 2022. The introduction of the Inflation Reduction Act (IRA) has rekindled investors' interest in the domain, especially hydrogen energy production and biofuels. What happened: Climate-tech funding has shown signs of revival after dealmaking fell to a three-year low in Q1 2023. Deals took a further hit following the collapse of Silicon Valley Bank in March. However, the sector soon recovered, with sustainable infrastructure startup Generate and carbon offset trading platform Xpansiv nabbing $880M and $525M funding rounds, respectively. Where to see the impact: Looking at the IRA's success in driving investments, other regions, including Europe and the U.K., are looking to pass similar policies. The EU announced new tax breaks for green companies in February. The region will need to introduce additional policies if it intends to reverse the drop in VC funding for the climate tech sector after its market share dropped from 29% in 2022 to 22% this year. Asia's share in climate-tech financing has also steadily declined year-on-year from 47% in 2017 to 16% in 2023. |
