Climate tech funding is recovering. Here's what investors think – and 19 deals you should know

VC funding for European climate tech made a modest recovery in Q1 after a period of near-constant decline.

Climate tech startups raised $1.9bn in Q1, up from $1.5bn in the same quarter a year earlier, per Dealroom data.

It marks the first increase in VC funding for the sector in years – after a series of bankruptcies, broader geopolitical shifts, and a capital flight toward AI and defence coincided with an almost unbroken drop in investment.

"Climate tech is seeing a due revival now, driven by the realisation across stakeholders about how fragile the fossil-based economy actually is," Fabian Heilemann, founder and CEO of AENU, tells Impact Loop in an email.

"The revival we're witnessing is driven by a strong commercial lens, with focus on price parity and feature parity to legacy solutions. It's about delivering green discounts to customers instead of asking green premiums."

Energy tech leads the way

Geographically, the UK leads on total deal volume at $451m, followed by France at $337.5m and Switzerland at $264.9m.

Sector-wise, energy tech dominates, accounting for $931.7m across 74 deals – nearly half of all capital in the dataset.

Food and agriculture comes second at $418.5m across 34 deals (22%), and enterprise software third at $178.8m across 10 deals (9%).

Till Stenzel, partner at SET Ventures, isn't surprised that energy tech leads the way.

"We have seen interest in energy tech throughout last year, so I am not surprised that this is now also reflected in a funding uptick in Q1," he tells Impact Loop. "The funding environment remains very competitive for the top companies in Europe, especially as more generalist firms enter the sector."

A solar farm in Romania. Credit: AP Photo/Vadim Ghirda via TT

Stenzel points to shifting geopolitics as a structural tailwind for renewable energy.

"While the Iran war will not have had an impact on funding amounts yet, it has also brought back to people's mind that a shift to a renewables-based energy system is not just about sustainability – it's equally about reducing insecurity, volatility, and geopolitical dependency on fossil fuels," he said.

Lorenzo Fabritius, investor at Verve Ventures echoes the sentiment. "We expect current geopolitical events to drive more capital into companies in the space, provided their fundamentals are solid," he said in a text message.

Which opportunities are overlooked?

While energy tech is leading the way, other corners of climate tech remain underfunded.

Julian Klaiber, principal at Berlin-based climate investor GET Fund, thinks one of the most overlooked areas right now is software that actually controls how a factory or building uses energy and materials.

“Climate tech solutions that actually touch operations, not dashboards, but operational and control layers that turn energy, materials, and maintenance into a measurable P&L advantage," he explains. "It’s under appreciated because it looks ‘unsexy,’ but the ROI is immediate and the rollout can scale fast across multi-site industries.”

Jonathan Piquet, partner at Paris-based Citizen Capital, pointed to an ongoing structural challenge in funding for climate tech.

"It is still split between VC players on the one hand and infrastructure investors on the other," he tells Impact Loop via email. "It is quite hard to finance companies that are 'in-between'."

The dealflow

While state-backed funds anchored many of the climate tech deals so far this year, private capital from VCs, family offices, and pension funds mades up the bulk.

Here's our breakdown of the top 19 deals you should know – with links to our previous coverage if we covered the investment.

1. terralayr – €192m

Backed by Eurazeo, Creandum, Earlybird, Norrsken VC, Picus Capital, and Rive Private Investment, the Zug-based company develops and operates grid-scale battery energy storage systems across Germany, supported by its LAYR platform, which virtualises battery assets and provides a route-to-market solution for both its own and third-party assets.

Read more.

2. Tropic Biosciences – $105m

Co-led by Forbion and Corteva, with Temasek, IQ Capital, ABN AMRO, and Invest International among the backers, Norwich-based Tropic is the global leader in gene-edited tropical crops.

3. osapiens – $100m

Osapiens provides enterprise software that enables companies to manage regulatory compliance, sustainability, and operational efficiency across their entire value chain. The round was led by Decarbonisation Partners, the BlackRock-Temasek joint venture, with Goldman Sachs Alternatives and Armira as existing backers.

Read more.

4. tem – $75m

Joe McDonald, co-founder and CEO at tem (left) with Paul Murphy, partner at Lightspeed Venture Partners. Image supplied

UK-based tem has built an energy transaction engine that relies on AI to cut prices relative to other energy traders. The oversubscribed Series B was led by Lightspeed Venture Partners, with strategic follow-on from Hitachi Ventures, Voyager Ventures, Schroders Capital, and Allianz, alongside existing investors AlbionVC, Atomico, and Revent Capital.

Read more.

5. RIFT – €66.5m

RIFT, a Dutch energy scale-up building energy storage tech using "iron fuel", secured €66.5m in a Series B round led by pension fund PGGM Investments, with participation from BOM, Rubio Impact Ventures, Oost NL, Invest-NL, and Energy Transition Fund Rotterdam.

Read more.

6. Hydrosat – $60m

Backed by Truffle Capital, Statkraft Ventures, OTB Ventures, and Hartree Partners among others in a Series B, Luxembourg-based Hydrosat sits at the intersection of satellite data and agricultural monitoring.

7. Cloover – $22m equity + $1.2bn debt

Led by MMC Ventures and QED Investors, with Lowercarbon Capital and Bosch Ventures also participating, the Berlin-based climate fintech allows consumers to rent renewable energy technology at a reduced risk.

8. Candela – €30m

Backed by EQT Ventures, SEB Private Equity, and a new €8m contribution from the IFC, Candela is rapidly scaling production of its electric hydrofoil ferry.

Read more about the round here and our exclusive interview with Candela's founder Gustav Hasselskog here.

9. Standing Ovation – €30m

The Paris-based precision fermentation startup produces casein from dairy waste streams. The round was co-led by Crédit Mutuel Innovation and Bpifrance's Ecotechnologies 2 fund, with Bel Group, Astanor, Danone Ventures, Angelor, and Newtree among the backers.

10. constellr – €37m

Led by Alpine Space Ventures and Lakestar, with Semapa Next and Cardumen Capital also participating, the Munich-based spinout raised €37m through a Series A to scale its satellite-based thermal intelligence tech.

11. Metafuels – $24m

Metafuels CEO and co-founder Saurabh Kapoor. Press photo

Led by UVC Partners, with Energy Impact Partners, Contrarian Ventures, and Fortescue among the backers, the Zurich-based aviation technology company is converting renewable methanol into drop-in jet fuel using its proprietary aerobrew technology, delivering up to 90% lower lifecycle emissions than fossil kerosene. Its first commercial facility is planned for the Port of Rotterdam.

Read more.

12. SatVu – £30m

Led by the NATO Innovation Fund, with Molten Ventures, Lockheed Martin, and the British Business Bank participating, SatVu's satellites use compact infrared sensors to collect data globally, processed into analytical imagery and video, enabling detection of activity inside and around buildings, industrial output, power generation, oil storage, and environmental changes.

The firm is scaling from a single demonstration satellite to a multi-satellite constellation with HotSat-2 through HotSat-6 planned for deployment by 2026.

13. Verley – €30m

Backed by Alven, Founders Future, Sofinnova Investments, Blast.Club, and Sparkfood in a Series A, Verley is a Paris-based foodtech company that uses precision fermentation to make dairy alternatives.

14. Hades Mining – €15m

Co-led by HV Capital and Headline, with Project A and Visionaries Tomorrow also participating, Munich-based Hades is developing a laser-based drilling system to make it faster and cheaper for Europe to access minerals and geothermal energy.

The financing values the company at approximately €67.5m and comes less than six months after a €5.5m pre-seed, bringing total capital raised to more than €20m within a year.

Read more.

15. XFuel – $20m

Spain-based XFuel closed a $20m Series A to push waste-based drop-in bunkers from lab to commercial scale, with shipping giants NYK Line and Stolt-Nielsen taking direct stakes alongside Wagner Carbon, Audacy, Future Planet Capital, and existing backers Union Square Ventures, AENU, and SOSV.

The company uses feedstock from sustainable waste sources in manufacturing, construction, forestry and agriculture, converting it into synthetic fuels.

16. Epoch Biodesign – $12m

Backed by Lululemon, Extantia, Happiness Capital, Kompas VC, and Leitmotif, the new investment brings the company's total funding to over $50m. Epoch is focused on advancing circularity in materials by enabling the recycling of nylon 6,6 without the need for virgin feedstock.

17. Wildsense – $13.9m

Backed by AENU and noa, Wildsense is a UK-based nature and biodiversity monitoring company sitting at the intersection of two emerging themes in the dataset: growing appetite for nature-positive investment and the rise of data-driven environmental intelligence.

18. Renasens – €10m

Jade Bouledjouidja, founder of Renasens. Image supplied

Led by Extantia, with Course Corrected VC and Norrsken Launcher co-investing, the Stockholm-based company has developed a platform using modified supercritical CO2 to separate and de-colour blended textiles, recovering intact fibres without the use of water or toxic chemicals.

Read more.

19. Foreverland – €6m

With follow-on from Kost Capital and Maia Ventures, and new backing from CDP Venture Capital and Newtree Impact, the company operates a production facility in Puglia with an annual capacity of 500 tonnes, a scale that distinguishes it from many early-stage cocoa alternative ventures still operating at pilot level. Milan and Puglia-based Foreverland is scaling its cocoa-free chocolate alternative Choruba across Europe.

Read more about the company here.

Pictured top: Kelly Kilpatrick (SOSV), Philipp Man (Terralayr), Sam Staincliffe (Uplift360), Till Stenzel (SET Ventures), Fabian Heilemann (Founder & CEO, AENU), Lauren Lentz (Reevent), Jade Bouledjouidj (Renasens), Claire Hae-Min Gusko (One.Five), Jacob Nathan (Epoch Biodesign), Massimo Sabatini (Foreverland), Carlota Ochoa Neven Du Mont (Extantia), Max Werner (Hades Mining), Emily Sheridan (Level Nine), Thiri Shwesin Aung (Nyxium), Thong Le Hoang (Visionaries Tomorrow), Joe McDonald (TEM).