Climate tech startups have raised a record $32 billion in 2021

Climate tech startups have raised more money in 2021 than in any year before—and nearly five times more than in 2016, just after the Paris climate agreement was signed. This year, so far, climate-focused startups have raised $32 billion, according to a new report from Dealroom and London & Partners.

Northvolt, a Stockholm-based company that uses clean energy to make batteries, raised $2.8 billion in growth equity. Rivian, a U.S.-based electric vehicle manufacturer making delivery vans for Amazon, raised $2.5 billion. SVolt, a Chinese EV battery manufacturer, raised $1.4 billion. Goodleap, an American residential-solar finance company, raised $800 million in VC funding. Redwood Materials, a battery-recycling company launched by Tesla cofounder JB Straubel, raised $775 million in a Series-C round. And the list goes on.

There are three main drivers behind the surge in climate investments, says Stephen Feline, the North America director for London & Partners. First, “we know there’s growing consumer demand for more sustainable technologies in areas, such as electric vehicles or renewable energy, leading to a significant increase in the number of startups and companies that are developing technologies in this area,” he says. “Secondly, there’s a lot more funding available to these startups by venture capital investors [who] want to focus on backing impact-driven companies which they know will resonate with customers.” Last, he says, the global climate conference beginning on October 31, COP26, has also helped mobilize action.

The report looked at 5,100 startups. More than 80% of the funding is going to energy and transportation startups, though a growing chunk is also going to food companies. (Food and agriculture are responsible for a large portion of global greenhouse gas emissions—between 20% and 40% of the global total, according to one recent study, if you count everything from fertilizer to food waste.) A much smaller amount of funding goes to startups focused on the circular economy or enterprise software.

Investment is likely to continue to quickly grow, Feline says: “2021 has already seen record levels of investment into climate tech, with hubs like the Bay Area and London driving much of this growth. Next year, we can expect lots more opportunities for climate tech startups to attract funding and support from both policy makers and investors because they are increasingly recognizing the importance of technology and innovation in helping to tackle the global climate crisis.”

Correction: We’ve updated this article to reflect that Redwood Material raised, $775 million, not $700 million.