<aside> 💡 Key takeaways

• 2023 saw $13.9bn invested in Climate Hardware Solutions.
• We’ve tracked about 1,300 European Climate Hardware Companies that raised funding over the last 10 years.
• Funding is largely driven by mega rounds of companies like Northvolt and H2 Green Steel.
• Climate Exits so far have been sparse and the vast majority of exits were smaller acquisitions. </aside>

Funding for climate hardware solutions has been on the rise for the past ten years. 2022 saw a record-breaking €17bn of investment into the European Ecosystem. While climate funding has been more recession-proof than other verticals, it nevertheless experienced a significant decline in 2023.

Given the looming climate crisis and the urgency to finance solutions, it's time to unravel the ecosystem. Using data from Net Zero Insights, we crunched through over 6,000 funding announcements and tracked 1,309 Climate Hardware companies in Europe that raised funding over the last ten years. Combined, European Climate Hardware companies raised a total of >€38bn over 1,900 funding rounds (1,596 equity rounds). Let's have a closer look.

1. Countries

Sweden boasts the highest overall deal volume with about €12bn. However, this is largely driven by big success stories like H2 Green Steel and Northvolt. The UK has the highest number of funding rounds, mainly driven by the grant volume given out by Innovate UK and others.

2. Sectors

Energy is dominating the total funding amount. Not only does it account for the majority of deals (ahead of circular economy and industry) but it also accounts for 76% of all exits. The other exits happened in transport (10%), food (10%) and carbon capture (1%).

3. Investors

The number of funds investing in (at least) one climate hardware company grew almost tenfold from 2014 to 2022, peaking at 990 individual investors. This ranges from institutional investors (54%), corporates (21%), and private investors (15%) to grant agencies (6%) and public funds (4%).

Tracking the most active investors per stage, it becomes evident that corporate and strategic investors dominate later-stage funding with companies from the oil and chemicals space accounting for the majority of funding rounds.

Most active investors and funders:

4. Grants

Grant funding is a crucial part of the climate hardware funding stack. Close to €2.5bn have been given in non-dilutive funding (grants, prizes, awards) over the past 10 years. We’ve tracked around 780 unique organisations receiving funding from 435 grant givers. Innovate UK has been the single largest grant giver by number, giving out close to 400 grants. In terms of volume the European Union tops the ranking, in particular through Horizon 2020, the European Innovation Council and its Innovation Fund.

5. Exits