The headline numbers — which look strong at first glance — help obscure that reality. Sightline Climate’s Dry Powder and New Funds report, for instance, shows investors raising a record $92 billion in new climate-focused capital across 179 funds last year. But 77% of that total was concentrated among the largest players, institutional heavyweights like Brookfield Asset Management, Copenhagen Infrastructure Partners, and Energy Capital Partners, which tend to back proven technologies such as utility-scale solar, wind, and battery projects.
“A lot of infrastructure funds are very comfortable saying, Yeah, I’m going to do wind and solar. I know how that works. I can see the project finance there. All good,” Julia Attwood, Sightline’s head of research, said on a webinar about the firm’s report.
Meanwhile, the proportion of U.S. investment going to seed and Series A companies fell for the first time in about a decade, according to Silicon Valley Bank’s Future of Climate Tech report, bad news for less mature but critical technologies like carbon capture, green steel, low-carbon cement, and agricultural decarbonization. These remain the domain of more risk-tolerant early-stage venture investors, whose share of total funding raised is similarly shrinking, dropping from about 20% in 2021 to under 8% last year, according to Sightline. That’s due to both a decline in VC fundraising — the average fund size dropped from $174 million in 2024 to $160 million in 2025 — as well as infrastructure’s share of the pie growing as the industry matures.
Capital concentration also shows up within early-stage venture itself. While Silicon Valley Bank’s topline numbers show startup valuations increasing at every stage from seed to Series C and beyond, “there’s clearly a story behind that where the top performers are doing really well and a lot of the longer tail are still scraping to keep up,” Jordan Kanis, Silicon Valley Bank’s managing director of climate technology, told me. “There’s still money flowing into early stage companies. I think there’s more selectivity. It’s a higher bar.”
That selectivity has become a necessity, as investors struggle to raise fresh capital from their limited partners in a politically volatile environment, in which affordability and energy security have become the name of the game and the word “climate” is all but forbidden. Even before Trump’s second term, LPs were facing a liquidity crunch, as infrastructure-heavy climate tech companies often take a decade or more to exit and return capital to investors. So until those IPOs or acquisitions accelerate, many LPs will likely remain cautious about ponying up additional capital.
This year could be a turning point on that front, however, with nuclear startup X-energy going public last month at a valuation of nearly $12 billion, and geothermal unicorn Fervo Energy gearing up for its pending IPO. “Nothing gets this fired up more than some really good exits,” Andrew Beebe, managing director at Obvious Ventures, told me, referring to the climate tech ecosystem at large. “That’s going to get people talking a lot about the opportunities in the space.”
Obvious, which invests in climate tech companies but also those focused on “human health” and “economic health,” is one of the few venture investors to bring in fresh capital recently, raising about $360 million in January for its fifth fund. Last year, only 39% of climate-focused VC funds that were actively raising were able to close, according to Sightline Climate’s data, compared to 73% of mature infrastructure funds and 60% of growth funds.
Beebe said that for a well-known firm like Obvious, which has been investing in this space for over a decade, “we did not find it that hard” to raise, explaining that “LPs today are favoring experienced teams with track records.” The firm’s diversification beyond climate also might have been a boon, he said. And there’s always the possibility that “there were just too many funds, and we’re going to see a thinning of the field” in both climate and the venture landscape at large.
Indeed, the broader venture market mirrors many of these trends, indicating there’s more than just political sentiment — or even climate industry maturation — driving capital concentration at the top. For one, the entire venture industry contracted after 2022, as post-pandemic interest rates rose, money got more expensive, and valuations plummeted across the board. That’s led investors across all categories to hold off until companies demonstrate significant proof of traction.
“When we look at tech firms and look at how much revenue the median Series A company has in 2021 and compare that to what they had in 2025, it’s double,” Eli Oftedal, a principal researcher at Silicon Valley Bank, told me, meaning Series A companies are bringing in much more revenue than they were five years ago. “Investor expectations are higher across the board, not just in climate, and that’s a pretty clear indication of the whole ecosystem changing to request a higher level from founders.”
At the same time, revenue growth rates have slowed, elongating the time it takes startups to move from one round to the next. This environment has LPs and investors placing big bets on a few prosperous industries that seem almost guaranteed to generate returns, whether it’s solar and wind or artificial intelligence companies. For instance, OpenAI and Anthropic raised $40 billion and $13 billion last year, respectively, accounting for 14% of total global venture investment in 2025.
That type of focused hype is redirecting attention from generalist investors — who might have otherwise funded climate tech — toward more AI-centric bets. But the AI boom and the accompanying data center buildout are also behind many of today’s strongest climate tech deals, with surging electricity demand fueling investment in clean energy and gridtech startups as hyperscalers look to meet their ambitious — and perhaps impractical — climate targets.
“If you’re investing in the clean baseload energy and power part of climate tech, there’s so many dollars that need to be deployed to bring these companies to scale, and they’re viable today,” Robert Keepers, head of climate tech at J.P. Morgan Commercial Banking, told me. “Funds that are focusing on that part of the sector are doing really well.”
But the result is also a dynamic that disproportionately favors the energy sector, the most mature segment of the climate tech ecosystem. Last year, three quarters of new capital raised by climate-focused funds was earmarked for energy investments, leaving sectors including transportation, industry, and agriculture increasingly cut off from capital
If the trend continues, it could create a pipeline problem. Infrastructure investors would keep scaling solar and wind farms alongside politically favored tech like nuclear and geothermal, while a dwindling supply of venture capital leaves fewer next-generation companies able to graduate into that queue. “If they don’t have VC commercializing and providing [first-of-a-kind] funding for a bunch of the new tech then you’re just going to see more and more concentration in a few technologies, and you won’t really have that growth of a brand new market,” Attwood explained on the call.
As of now, however, that’s just speculation. As Attwood noted, Sightline’s data is based on climate tech funds that have already closed. “There’s another $200 billion out there that has not closed yet,” she emphasized. “So if all of that money is still in the pipeline, is still moving through, and could reach close fairly soon, that’s a huge indicator that there is still appetite to fund climate.”
With the historic level of electricity demand growth, Keepers told me “there’s never been this much momentum in the space.” And the climate issue certainly isn’t going away anytime soon. As Silicon Valley Bank’s report notes, over the past decade, billion-dollar climate and weather disasters alone have caused $1.5 trillion in direct damages — a figure that excludes smaller disasters and doesn’t even begin to capture the catastrophes’ broader economic ripple effects.
“We’re tackling a problem that some people still don’t really see, and we see with great clarity. So that’s where you make a lot of money,” Beebe told me. “Unlike some other cycles like blockchain, or crypto, or even enterprise SaaS, this cycle doesn’t come and go. It is a one way street. It will continue to become a bigger and bigger opportunity.”
Quarterly coal exports, on the rise on the Biden administration, are now plunging. EIA
Not chasing road runners. Carolyn Cole / Los Angeles Times via Getty Images
