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Carbon and emissions tech secures record $17.7B in 2023 VC investments

Carbon and emissions tech secures record $17.7B in 2023 VC investments

Tech Investments

In 2023, the carbon and emissions technology sector showed remarkable resilience and growth, securing a record $17.7 billion in venture capital (VC) investments, according to an industry overview published by financial data provider PitchBook’s Institutional Research Group. However, the VC deal value for Q1 2024 was $2.7 billion, marking the lowest quarterly value since Q1 2021. First quarters are usually slower than the following ones, revealing the latest trends, technological advancements, and market dynamics shaping the carbon and emissions tech landscape.

The 2023 investments were spread across 1,133 deals, surpassing 2022 and highlighting growing investor confidence and the critical importance of sustainable technologies in addressing climate change. The technological landscape is categorized into several key areas: Direct Air Capture (DAC), Point Source Carbon Capture, Biological Carbon Capture, Carbon Utilization, Carbon Accounting & Analytics, Voluntary Carbon Market (VCM) Infrastructure, and Carbon Fintech & Consumer Tech. These categories reflect the diverse approaches and innovative solutions being developed to tackle carbon emissions.

Carbon and emissions investments trends

Median pre-money valuations for companies remained stable, varying between $13.6 million and $15.0 million from 2021 to 2023. The Q1 2024 median deal size was $4.2 million, indicating continued investor interest.

Exit activity peaked at $3.8 billion in 2021 but declined to $1.9 billion in 2023, reflecting overall market conditions and the cyclical nature of VC investments and exits. Key drivers of carbon capture, utilization, and storage (CCUS) technology investment include tax incentives, government funding, and market shifts toward high-integrity carbon credits. The report also details sector segmentation and investment trends, focusing on carbon tech, industry applications, built environment, and land use.

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The top VC investors in the carbon and emissions tech sector since 2018 include Climate Capital, Lowercarbon Capital, and SOSV. The detailed report is available on the PitchBook platform.

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