Climate tech wrapped a strong Q3, landing three of the top four equity deals, including the whopping $1 billion Series A raised by fleet-charging startup TeraWatt.
While the broader market might be cooling, climate tech continues to be a hot ticket, with investment figures for top deals in Q3 outpacing the two previous quarters this year. In total, five climate tech startups made CB Insights’ top 10 equity deals list in Q3, pulling in a combined $3.7 billion. That far exceeds last quarter’s $2.5 billion across eight top startups and Q1’s $1.4 billion across five top startups.
Top climate tech investments continued to diversify, too, showing just how deeply it’s becoming embedded into the economy.
The top deal last quarter was a $1.1 billion convertible note issued by Northvolt, the Swedish battery manufacturer. Founded in 2016, the company seeks to be a European counter to Asian battery giants like Japan’s Panasonic, China’s CATL and South Korea’s Samsung and LG.
While that may seem like a large sum, it’s only the company’s third largest. Northvolt’s previous raise was a remarkable $2.75 billion Series E that closed in June 2021, and before that, it issued $1.6 billion in debt in 2020. Those amounts may seem outsized, but they’re in line with what’s required to prop up a giga-scale battery manufacturing company.
Next up was TeraWatt Infrastructure with that $1 billion Series A led by Vision Ridge Partners, the largest Series A of the quarter for any sector. The company, founded by ex-Googler Neha Palmer, told my TechCrunch colleague Rebecca Bellan that it will soon be announcing the “largest and most ambitious charging project to date for the electrification of long-haul transportation along a major highway corridor.” Between that and a doubling of headcount, TeraWatt seems to have firm plans for what to do with that billion — or at least a big chunk of it.
Following TeraWatt is Bill Gates’ nuclear startup TerraPower with a $750 million later-stage round led by Gates himself and SK Group. The company has been working on a range of fission-based reactor designs, including fast reactors cooled by molten sodium metal, molten salt reactors that use liquid salt as a fuel and coolant, and traveling wave reactors that use a small amount of enriched uranium to create more fuel within the reactor from depleted uranium, a process that can power the reactor for decades without refueling.
A bit farther down the list, lithium extraction startup EnergyX raised $450 million from Global Emerging Markets in a private equity growth round, while ESG-centric commodity exchange platform Xpansiv raised $400 million from Blackstone. Among Series Cs, alternative meat company Meati Foods raised $150 million in a round led by Revolution Growth, and enhanced geothermal startup Fervo Energy raised $138 million in a round led by DCVC.
Rounding out the list are insect-protein company InnovaFeed, with a $250 million equity-and-debt Series D led by Qatar Investment Authority; fusion company TAE Technologies, with a $250 million Series G led by Chevron and Google; and low-carbon power generator startup Mainspring Energy, which raised a $140 million Series E led by Lightrock.
Not only are there climate tech companies at almost every stage, from early to late, but there’s also a broad range of sectors represented, from batteries and charging infrastructure to nuclear power, alternative proteins and software platforms.
For decades, scientists have pressed investors to put money into climate tech that would help the world mitigate and adapt to the worst of climate change. And for a long time, those entreaties were dismissed by many (though not all) investors and governments — climate-related investments were frequently regarded as a drain on economic growth. The narrative has changed in recent years, and investors are starting to crowd into climate tech.
It’s possible that the sector could fall on hard times once more, but the Inflation Reduction Act, coupled with the very real need for solutions, suggests that continued growth is a more likely outcome. Given climate tech’s showing over the last few quarters, it’s pretty clear that investors agree.
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