Europe raised over $50bn for new climate tech funds in 2025 – roughly half the global total

European climate tech investors closed more than half of all new climate-focused funds globally in 2025, helping push total fundraising past $100bn, according to a new report from Sightline Climate.

The data suggests European LPs and fund managers accounted for 54% of the $103bn raised last year, giving the region a rare lead in a market that has typically been dominated by US capital.

By contrast, US-based funds made up just 16% of the total, as political uncertainty and a pullback from explicit climate mandates appeared to weigh on fundraising appetite.

Europe the best place to raise a new climate fund

Sightline Climate said Europe’s outperformance likely reflects stronger policy-driven demand for clean energy and infrastructure, alongside a broader base of climate-focused institutional investors. Canada also played an outsized role, largely via large generalist infrastructure funds that include renewables and clean mobility within wider mandates.

While the headline number points to renewed confidence in climate-related assets, only around 60% of targeted capital was actually secured in 2025, with roughly $69bn still in progress. That could either spill into a front-loaded 2026 or force fund managers to revise down their ambitions, the authors note.

Climate tech investment rebounds – led by growth

The fundraising surge came alongside a modest rebound in climate tech investment more broadly. Global venture and growth investment reached $40.5bn in 2025, up 8% year-on-year, even as the number of deals fell 18%. The pattern reflects a market that is consolidating around fewer, larger bets, with capital increasingly concentrated in later-stage and growth rounds.

Growth investment jumped 78% compared to 2024, driven by a handful of mega-deals in areas such as nuclear energy, grid-scale storage, and low-carbon data centres. Early-stage funding, by contrast, declined across Seed and Series A, suggesting investors are becoming more selective as the sector matures.

Energy emerged as the dominant vertical, accounting for 36% of total climate investment in 2025 and reaching a three-year high. Sightline points to rising electricity demand – particularly from AI data centres – as a key driver, with investors prioritising technologies that promise speed to power, resilience, and energy security over pure decarbonisation plays.

US still leads overall

Geographically, the US still led in startup funding, with investment into US-based climate companies rising 27% year-on-year. Europe, despite its fundraising strength, saw venture investment into startups fall 13% to $10.1bn, the lowest level since 2020, weighed down by high-profile bankruptcies and softer momentum in hard-to-abate sectors.

Taken together, the figures suggest a climate tech market that is far from retreating – but one that is being reshaped around infrastructure, energy demand, and scale, with Europe increasingly setting the pace when it comes to raising the capital to fund it.