Fundraising for climate-specialist venture firms in 2025 fell nearly 40 percent from 2024, according to PitchBook. Climate tech VC investment in the first half of 2026 reached $26 billion, up 55 percent year on year, its best half since 2022.
Both are true. The reconciliation is the story.
Fewer firms are raising funds with climate in the name. Meanwhile enormous sums are flowing into renewables, energy storage, grid technology, critical minerals and supply chains, because data centre developers need power and need it fast. John MacDonagh, a senior research analyst at PitchBook, called AI both a headwind and a tailwind for the space but more tailwind than headwind: developers are looking for energy sources, and climate tech holds core technologies like renewables that deploy quickly and relatively cheaply, with intermittency then addressed by storage.
Dawn Lippert, who runs Earthshot Ventures and founded Elemental Impact, gave the number that explains the whole picture. Ninety percent of the companies Earthshot backs have generalist technology investors as co-investors.
So the capital did not disappear. It stopped arriving through a door marked climate and started arriving through a door marked AI infrastructure, into many of the same companies.
That is a repositioning, and it is the most valuable manoeuvre available to any small business, precisely because it costs nothing to execute and almost nobody attempts it.
The same room, the same machine, the same product can be sold as an indulgence in one decade and a productivity tool in the next. Speciality coffee spent fifteen years being marketed as a treat, which is a category that shrinks the moment household budgets tighten, and roughly the same cup is now routinely sold as the thing that makes the morning work. Nothing about the beans changed. What changed was which budget line the customer pays from, and a necessity line survives a bad year that a luxury line does not.
The discipline is to notice when the money in your market has quietly relabelled itself and to relabel with it, rather than waiting for the old category to come back into fashion. Climate-focused funds spent four years being told the regulatory environment was hostile and that limited partners had stopped asking. The firms that survived that stretch did not argue about it. They went and stood next to the energy demand.
The concentration underneath these numbers is worth stating plainly. Deal count in the first half of 2026 fell 25 percent year on year to a five-year low, the ten biggest deals took 42 percent of all funding, and Series C’s share of capital reached 40 percent from 16 a year earlier. Carbon management and low-carbon fuels lost ground while energy and minerals gained.
Lippert raised $250 million for a climate-focused fund in June, in a market where that stands out.
The work is the same work. The sign on the door is new.
Source: Fortune, “Climate tech VC fundraising is down almost 40%, but AI is driving deals”
