Venture capital (VC) investment in clean energy startups declined globally last year for the first time since alternative energy technologies began to attract “serious” funding in 2015, Oliver Wyman has reported. In this year’s ‘Clean Energy Startup Radar’, the global consulting firm found that investment in clean energy startups totalled US$11.6 billion in 2023, down from US$12.3 billion in 2022 — a “high point” for investment in the sector – representing a 6% dip. This drop, however, was minimal compared with the 38% “plunge” in total global VC investment across all sectors as high interest rates, inflation, and slowing economic growth took their toll on market liquidity. “By comparison, AI attracted a stunning US$50 billion last year, soaking up much of the limited capital available,” Oliver Wyman said. “The drop in clean energy investments mirrors a similar decline in the corporate sense of urgency around climate, despite new regulations and mounting weather events related to a changing climate.” Alongside challenging economic conditions, the lure of AI startups dampened the fervour for sustainable energy among VC investors – especially in North America and Europe, where funding dropped 21% and 29%, respectively. In contrast, VC investment across the Asia-Pacific – in China, particularly – doubled last year compared to 2022 levels. Oliver Wyman’s startup radar is based on analysis of early-stage investment data from tech platform Crunchbase, and tracks VC investment in the sector to identify trends, promising innovations, and new business models, as well as opportunities and risks.
