The hottest sectors in climate tech? Follow the VC money

illuminem summarizes for you the essential news of the day. Read the full piece on The Wall Street Journal or enjoy below:

🗞️ Driving the news: Venture capital investment in climate-tech startups has slowed in recent years, but certain areas like battery storage and electric grid infrastructure continue to attract significant funding
• In the first half of 2024, venture capitalists invested $19 billion in 1,235 climate-tech deals globally, with $6.7 billion of that in the U.S., despite a general decline in investment

🔭 The context: Higher interest rates and uncertainty about government climate policies have led to a decline in overall climate-tech funding since its peak in 2021
• Nevertheless, sectors such as grid infrastructure, low-emission hydrogen, and low-carbon mobility still see robust investment, driven by the rising demand for electricity and the push for greener technologies

🌍 Why it matters for the planet: Continued investment in climate-tech sectors is essential for advancing innovations that can reduce greenhouse gas emissions and improve energy efficiency
• Technologies that bolster the electric grid and support low-carbon transportation are critical for managing the increased electricity demand from electric vehicles and AI data centers

⏭️ What's next: As venture capitalists seek less capital-intensive startups, investments are likely to focus on companies that can partner with established multinationals
• Areas like hydrogen production, battery technology, and efficient grid management are expected to see ongoing funding due to their potential for high impact and scalability

💬 One quote: “VC investment in electric-grid infrastructure is on pace to surpass all of last year’s level of $4.37 billion,” says John MacDonagh, senior analyst at PitchBook

📈 One stat: Startups focused on grid infrastructure raised $2.73 billion globally in the first six months of 2024, with nearly half of that amount coming from U.S. deals

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