Regardless of whispers of a downturn earlier this yr, traders proceed to specific confidence in local weather tech. Although numbers are down in contrast with 2021, a yr that many agree is an outlier within the VC world, they’re on monitor to beat 2020 because the second hottest yr for funding.
What’s extra, deal counts and values have been up within the second quarter of this yr in contrast with the primary, suggesting that the slowdown has roughly skipped local weather tech.
Although deal depend is down almost 19% in contrast with final yr, it was up 15.4% within the second quarter, in accordance with a PitchBook evaluation. Whole market deal worth, down year-over-year, was up considerably in Q2, and the typical worth per deal has held regular at $23.6 million, greater than triple what it was 5 years in the past.
In some methods, these modest numbers might be interpreted as a slight cooldown. However the sector might be simply taking a breather given its near-term potential. Simply 5 years from now, PitchBook estimates the local weather tech market will close to $1.4 trillion, representing a compound annual development charge of 8.8%.
With that sort of development coming down the pike, there are lots of completely different bets to position within the local weather tech sector, however a number of stand out for his or her early-stage potential and favorable tailwinds.