In 2024, the climate tech sector witnessed significant shifts as investors favored larger rounds and later-stage companies. The median deal size reached $7 million, marking an increase of $1 million from the previous year. Despite this growth, the sector experienced a 27% decline in deal count, with 568 deals recorded. This downturn in deal numbers reflected broader market trends, as venture investment in climate tech fell by 7% to $12.9 billion, a notable decrease from the $13.9 billion raised across 782 deals in 2023.
The year also saw a remarkable rise in median pre-money valuations, which soared to $44.5 million from $31.5 million the year prior. This increase underscores the growing confidence among investors in more matured companies that have progressed beyond their initial seed rounds. As a result, 2024 marked a shift toward larger, more substantial investments, with round sizes continuing to climb.
For years, the focus was on early-stage companies, with significant investments funneled into pre-seed and seed-stage startups. However, as these startups matured, they started attracting larger funding rounds with higher valuations. This trend highlights a maturing sector where investors demonstrated a willingness to back companies that had successfully navigated their seed rounds.
Interestingly, climate tech's performance aligned with broader market dynamics. In particular, AI-related investments captured substantial attention in Q4, with companies like Anthropic, Databricks, OpenAI, xAI, and Waymo collectively securing 43.2% of all deal value. This surge in AI investments underscores the evolving landscape of climate tech, where technology-driven solutions are gaining traction.
While the sector faced a decline in overall investment and deal count, the data also indicated its maturation. Larger deal sizes and higher valuations suggest that climate tech is moving toward a more established phase, where later-stage companies are capturing investor interest.
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