Abstract
In this study, I investigate climate-tech startup financing of venture capital (VC) and private equity (PE) investments across different sectors around the world for the 2022-2024 period. Cross-sectional analysis suggests that start-ups in sectors with higher dynamism (proxied by deal activity) received larger funding. The findings reveal a sectoral-clustering in climate-tech and the VC/PE financing across various sectors of climate-tech is not uniformly distributed. Total funding provided to climate-tech start-ups and the number of deals vary significantly across countries and sectors. I discuss the potential reasons of sectoral clustering in climate-tech and provide recommendations for policymakers. This paper contributes to the broader understanding of capital flows within the climate-tech ecosystem, offering insights for policymakers aiming to ensure efficient capital allocation for various climate solutions and accelerate the transition to a sustainable economy.
