European climate tech startups raise US$13.2bn in 2022

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

A recent whitepaper published by the Berlin-based World Fund gjointly with Cleantech Group describes the situation of European climate tech startups as a result. Despite record funding in the previous year, the companies' capital needs are far from being met. European climate tech startups had a record year in 2022 with $13.2 billion in investments, representing 13 percent of total venture capital funding.

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 was invested in 879 clean tech startups in Europe and Israel. In the first quarter of 2023, investors funded 270 European and Israeli startups for a total of $2.8 billion.

Funding gap despite good numbers

The analysis by Berlin-based climate tech venture capitalist World Fund shows that there is a lack of capital in Europe's climate tech sector for companies that have made it past the startup phase and now need to compete in the market. There is a significant funding gap in Europe, especially in the Series B funding round. One study shows that only 16 percent of climate financing needs have been met. To meet EU and global climate targets, climate finance would need to increase by 590 percent by 2030.

The so-called proven instruments are simply not sufficient for the scale of change needed and the speed with which the action gap must be closed.

Richard Youngman, CEO Cleantech Group

How Europe could dominate the climate tech market

Europe has all the ingredients to be a global leader in the green transformation of the world economy, according to the analysis. It has talent, technology, entrepreneurial spirit and political ambition. Nevertheless, the white paper's authors stress that simpler and more coherent regulations are needed to achieve Europe's ambitious climate goals. While the U.S. already provides clear financial incentives for climate tech investment, China has a head start with coordinated efforts and market planning certainty.

Experts agree that investing in startups with innovative climate change solutions is essential. According to the International Energy Agency (IEA), about half of the technologies still need to be developed to achieve 100 percent green energy globally by 2050. Limiting the global warming caused requires halving emissions by 2030 and achieving net zero emissions by mid-century.

The white paper

These findings come from a comprehensive review based on public and non-public data and studies. They were produced in the first whitepaper by Berlin-based climate tech venture capitalist World Fund, together with Cleantech Group, and reviewed for content by PwC, an accounting and consulting firm. World Fund is a climate venture capital fund focused 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. Click here to download the white paper.