Climate tech may have had a down year in 2024, but new data also shows a maturing sector with larger deal sizes.

Venture investment in the climate tech sector was down 7% to $12.9 billion, $1 billion shy of 2023’s tally, according to data in a new PitchBook report. The report found that round size increased in 2024 and investors appeared more eager to back companies that had emerged from their seed round.

For years, investors favored early stage companies, plowing significant sums into pre-seed and seed stage startups. That was due, in part, to the relative youth of climate tech. After a brief winter following clean tech’s implosion alongside the Great Recession that began in December 2007, founders and investors reworked their approach, tackling new markets and technologies.

That shift fueled early stage opportunities. As those startups have matured, they’ve started to capture larger, later stage rounds with higher valuations, PitchBook data shows.

In 2024, median deal size was $7 million, up $1 million from the year before, while median pre-money valuations soared to $44.5 million from $31.5 million the prior year. Deal count was down 27% to 568. In 2023, climate tech startups raised a total of $13.9 billion across 782 deals.

Climate tech’s numbers from last year also reflect broader market trends. Deal count was down across all sectors, though deal value edged up closer to 2023 levels largely on the strength AI-related investments in companies like Anthropic, Databricks, OpenAI, xAI, and Waymo, which collectively garnered 43.2% of all deal value in Q4.

The lull in climate tech investments comes as investors are nursing something of a hangover following exuberance during the pandemic. As venture dollars flowed into climate tech (and several other sectors), deal sizes, counts, and valuations all went up. 

Now, as some of those early stage companies look to raise again, they’re facing a harsher environment in which investors are taking a hard look at unit economics. Those startups that are struggling are finding it harder to raise, while those which have cracked the code are being rewarded with bigger deals, investors have told me.