Climate startups on track for fewer deals in Q2

Data: PitchBook;  Graphic: Jacques Schrag/Axios
Data: PitchBook; Graphic: Jacques Schrag/Axios

Climate tech startups posted record fundraising totals in 2021, but 2022 is increasingly unlikely to match it in number of deals or total amount raised.

Why is it important: Winter could be coming for private climate tech companies, with investors prioritizing profitability and burnout rates over growth and development.

By the numbers: About halfway through the second quarter, the industry is on track to narrowly exceed the amount raised year-over-year, albeit through far fewer deals than in 2021.

  • The second quarter of 2021 saw a record number of deals, with 163 closed between April and June across all venture capital stages.
  • Through May 10, climate tech startups closed just 38 venture capital deals, putting the industry on track to close around 76 deals if the current pace continues.
  • It would be the lowest number of deals closed since the second quarter of 2020 – when the pandemic rocked private and public markets – which saw just 64 deals closed, according to data from PitchBook. provided exclusively to Axios.

Yes, but: The amount of transactions is holding steady, indicating that ongoing transactions are larger than last year.

  • If the quarter’s pace continues, the industry will lock in $4.6 billion in venture capital before the end of June.
  • That’s up from the first quarter, which brought in $3.7 billion, and more than the second quarter of 2021, which peaked at $4.2 billion.

The plot: Last summer’s downturn never materialized as founders increasingly took advantage of cheap and plentiful venture capital.

  • That may not be the case this year amid pressure to conserve resources from both the founders and investors side.

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