European climate tech start-ups raise 13.2 billion US dollars in 2022

Europe's climate tech startups received a record 13.2 billion dollars in funding in 2022, but there is a large funding gap to achieve climate targets and maintain global leadership.

A recently published white paper by the Berlin World Fund together with the Cleantech Group describes the situation of European climate tech start-ups. Despite record financing in the previous year, the companies' capital requirements are far from being met. European climate tech start-ups had a record year in 2022 with 13.2 billion US dollars in investments, which corresponds to 13 percent of total venture capital financing.

Europe has the potential to be at the forefront of the global climate revolution. Although we have lost a lot of time, it is not too late to avert the worst consequences of the climate crisis.

Danijel Visevic, Founding Partner World Fund

Last year, a total of 16.4 billion dollars was invested in 879 clean tech start-ups in Europe and Israel. In the first quarter of 2023, investors financed 270 European and Israeli start-ups with a total of 2.8 billion dollars.

Funding gap despite good figures

The analysis by the Berlin-based climate tech venture capitalist World Fund shows that there is a lack of capital in Europe in the climate tech sector for companies that have survived the start-up phase and now have to assert themselves on the market. There is a clear financing gap in Europe, especially in the Series B financing round. A study shows that only 16 percent of the need for climate financing is covered. In order to achieve the EU and global climate targets, climate financing would have to increase by 590 percent by 2030.

The so-called proven instruments are simply not sufficient for the scale of change required and the speed at which the action gap needs to be closed.

Richard Youngman, CEO Cleantech Group

How Europe could dominate the climate tech market

According to the analysis, Europe has all the ingredients to become a global leader in the ecological transformation of the world economy. It has talent, technology, entrepreneurial spirit and political ambition. Nevertheless, the authors of the white paper emphasize that simpler and more coherent regulations are needed to achieve Europe's ambitious climate targets. While the US already provides clear financial incentives for climate tech investments, China has a head start through coordinated efforts and market planning certainty.

Experts agree that investment in start-ups with innovative climate protection solutions is essential. According to the International Energy Agency (IEA), about half of the technologies still need to be developed to generate 100 percent green energy worldwide by 2050. Limiting global warming requires halving emissions by 2030 and achieving net zero emissions by the middle of the century.

The white paper

These findings come from a comprehensive investigation based on public and non-public data and studies. They were compiled in the first white paper by the Berlin-based climate tech venture capitalist World Fund together with the Cleantech Group and reviewed by PwC, an auditing and consulting firm. The World Fund is a climate venture capital fund with a focus on Europe and was founded by Daria Saharova, Danijel Višević, Craig Douglas and Tim Schumacher. The fund invests in various European climate technologies, from energy, food and agriculture to building materials, manufacturing and transportation. Download the whitepaper here.