Climate startups on track for fewer deals in Q2 – Axios

Data: PitchBook; Chart: Jacque Schrag/Axios
Data: PitchBook; Chart: Jacque Schrag/Axios

Climate tech startups saw record-shattering fundraising totals in 2021, but it is becoming less likely that 2022 will be able to match it in either number of deals or total amount raised.

Why it matters: Winter may be coming for private climate technology companies as investors push profitability and burn rates over growth and development.

By the numbers: Roughly halfway through Q2, the industry is on track to just surpass the amount raised year-over-year, albeit through far fewer deals than in 2021.

  • Q2 2021 saw a record-breaking number of deals, with 163 completed between April and June across all stages of venture capital.
  • Through May 10, climate tech startups have only completed 38 venture capital deals, putting the industry on track to complete roughly 76 deals if the current pace holds.
  • That would be the fewest number of completed deals since Q2 2020 — when the pandemic was rattling private and public markets — which saw just 64 completed deals, according to PitchBook data provided exclusively to Axios.

Yes, but: Deal amount is holding steady, indicating that the deals that are getting done are larger than last year’s onslaught.

  • If the quarter’s pace holds steady, the industry will lock in $4.6 billion in venture capital before the end of June.
  • That’s an increase from Q1, which brought in $3.7 billion, and more than Q2 2021, which topped out with $4.2 billion.

The intrigue: Last summer’s slowdown never materialized as founders took increasing advantage of cheap and abundant venture capital.

  • That may not be the case this year amid the pressure to conserve resources on both the founder and investor sides.

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