Co-Head Climate & Sustainability Europe and Member Global Leadership Team Energy & Natural Resources
This week we launched the second edition of Oliver Wyman’s Clean Energy Startups Radar. Last year’s findings revealed that global VC funding for clean energy startups skyrocketed – with a sixfold increase from $1.9 billion in 2019 to $12.3 billion in 2022. However, this year’s findings show a global decline in VC investment for clean energy startups for the first time since 2015. Some insights from this year’s radar: 👉 Clean Energy Rounds Shrink: Global VC investment in clean energy startups experienced its first decline since 2015, dropping 6% in 2023. This downturn, primarily driven by challenging economic conditions, has resulted in smaller funding rounds, with the average investment per round falling by 36%. Along with economic conditions, the lure of AI startups also dampened the fervour for sustainable energy among VC investors – with AI attracting $50 billion last year and soaking up much of the limited capital available. 👉Asia fuels VC Growth: Current VC investment growth is largely driven by Asia Pacific, particularly in China where startups have doubled their funding since 2022, while North American and European funding declined by 21% and 29% respectively. 👉Areas of funding affected: Low-carbon hydrogen and battery storage experienced significant growth, with low-carbon hydrogen technology investments growing more than two-fold from 2022 to 2023. However, investments in long-term, riskier categories such as carbon capture and storage witnessed a significant decrease, likely due to high capital expenditure requirements and longer-term investment horizons. 👉The opportunity: The decline in clean energy startup valuations presents a prime opportunity for established companies to leverage lower valuations to form strategic partnerships - integrating disruptive innovations with their existing operational scale and financial strength. More insight can be found here: https://lnkd.in/ehEit-A4 #OWEnergy #EnergyTransition #Sustainability Dr. Matthias Witzemann Dr. Leopold Zangemeister Joerg Staeglich
