The Future of Climate Tech

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The Future of Climate Tech is Silicon Valley Bank’s annual climate tech report examining venture capital investment, startup funding and innovation trends across the climate tech industry. Backed by SVB proprietary data and our unique vantage point in the innovation economy, the report explores a pivotal moment for the sector: while climate tech companies navigate a constrained funding environment by focusing on profitability, the long-term demand for their solutions has become undeniable. Our analysis shows how rising climate costs, better unit economics and the massive energy needs of AI and electrification make climate tech essential to future economic growth.

This marks the third-highest year on record, behind 2021 and 2022 — led by investments in clean energy amid slower deal activity in most climate tech subsectors.

Pullbacks in funding, research, permitting and staffing are delaying projects and causing heightened uncertainty.

Founders remain focused on improving unit economics and building profitable, efficient businesses.

Get insights on the emerging trends shaping innovation around climate tech

The data

This year’s report examines the latest trends shaping climate tech innovation, exploring the disconnect between a skeptical market and the physical-world demand driven by electrification, improving unit economics and climate disruptions.

US climate tech VC investment reached $29B in 2025 — the third-highest year ever behind 2021 and 2022..

This near-record funding doesn’t reflect the reality for most climate tech companies. Capital was concentrated in a handful of large, late-stage deals 10 of which captured 28% of all investment. 

Source: PitchBook Data, Inc. and SVB analysis.

Since 2025, federal support has eroded through decreased funding, weaker research capacity, adverse permitting policy and fewer tax incentives.

For founders and investors, this policy shift has constrained access to programs, slowed project deployment and injected significant uncertainty into the climate tech market.

Source: US Supreme Court, White House, Reuters, US EPA, NOAA, Utility Dive, American Institute of Physics, Bureau of Ocean Energy Management, US Department of Energy, US Department of the Treasury and SVB analysis.

Climate tech companies are boosting gross margins by focusing on core unit economics by shedding weaker production lines and designing for manufacturing efficiency.

This new operational discipline is working: a record 52% of VC-backed climate tech companies reduced their net burn YoY, prioritizing resilience over growth-at-all-costs.

Climate Tech Gross Margins Trending Up chart

Source: SVB proprietary data and SVB analysis.

More about the authors

Jordan Kanis

Managing Director, Climate Tech and Sustainability

Eli Oftedal

Principal Researcher, Market Insights

Josh Pherigo

Principal Researcher, Market Insights

Andrew Pardo

Principal Researcher, Market Insights

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The Future of Climate Tech

Key takeaways

$29B

Total US VC investment in climate tech in 2025.

50+

Federal actions since 2024 have raised headwinds for climate tech.

52%

Of climate tech companies have reduced net burn YoY as gross margins improved.

Explore the Future of Climate Tech report

The data

Investment is up; deals are down

Policy is creating new friction for founders

The pivot to profitability pays off

More about the authors

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