Clean tech and energy Startups Venture

Funding Slowdown? Not For Climate And Clean Energy Software

Illustration of polar bear on a shrinking iceberg. [Dom Guzman]

Discouraging news on the climate front is easy to find. Atmospheric carbon dioxide levels continue to rise. The “Doomsday Glacier” is disintegrating faster than predicted. And climate change is contributing to extinction risk for thousands of species.

Positive indicators are scarcer. That’s why it’s encouraging to see at least one small sign of positive momentum coming from the startup sector. It comes in the form of more money.

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In recent quarters we’ve seen unprecedented sums going to software startups focused on tracking and reducing carbon emissions, and on speeding up the shift to cleaner energy sources. The funding surge comes amid a broader rise in funding to climate-focused startups of all stripes.

A sampling of top funding recipients for climate and clean energy software shows at least $1.68 billion in capital raised since the beginning of 2022, per Crunchbase data. For a sense of where the money is going, we chart out 34 of the most recently or heavily funded companies below:


Consumer is out, enterprise is in

The most heavily funded companies are an enterprise-focused bunch, with many of the largest rounds going to those selling technologies to energy industry customers.

Washington, D.C.-based Arcadia, a climate software and data startup focused on decarbonizing the electric grid, is a perennial top fundraiser in this space. The company closed on $325 million in the past year alone, in rounds led by Magnetar Capital and J.P. Morgan, bringing total funding to over $495 million.

Aurora Solar, a platform for designing and cost-estimating solar power installations, is also up there, with $523 million in funding to date, including a $200 million Series D a year ago. It’s currently posting annual revenue over $100 million while still growing over 50% per year, according to John Tough, managing partner at backer Energize Ventures.

But Aurora isn’t the only company in the space with significant revenue that’s scaling fast. Since launching early-stage-focused Energize seven years ago, Tough said he’s seen revenue at climate- and clean energy-focused software companies rising alongside venture investment.

“When we launched in 2016, there probably wasn’t a single (software-focused) company in the solar or wind space with more than $25 million in revenue,” he said. “Now there are a dozen.”

Tough sees the likelihood of further growth given that companies in the energy industry have historically spent less on software than those in other sectors. One analysis his firm conducted estimated that energy companies spent only about 1% of their budgets on software — roughly half the Fortune 2000 average.

A maturing startup pipeline

The pipeline of funded climate and clean energy software startups is also maturing at a rapid clip.

In an initial Crunchbase roundup of climate software deals, published in October 2021, virtually all the cited companies were seed or Series A funded at the time. Since then, a majority have raised subsequent rounds and a number have moved on to Series B.

Clean energy-focused software companies, meanwhile, are also moving to later stage, with the largest funding recipients mostly at Series B and beyond. Per Tough, there are also a handful with metrics suitable for a public offering should the IPO window open further.

That could be in the cards. This week, Silicon Valley-based Nextracker, a provider of software and hardware for solar tracker systems, raised $638 million in its IPO after raising its price per share to $24. The higher-than-expected demand for its offering bodes well for other clean energy- and climate-focused offerings.

Impact of broader slowdown to be seen

Still, the resilience of climate and clean energy software funding comes against a backdrop of falling venture investment across most other industries. As tech valuations flatten and the biggest growth investors scale back the pace and size of deals, it’s not unlikely this space will see some impacts too.

For now, though, it looks like this corner of the space continues to heat up — but in a good way.

Illustration: Dom Guzman

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