Tracxn Environment Tech Report 2024- Funding Drops, But Share Improves

Startup Research firm Tracxn released a special Environment funding report on World Environment Day last week.

A Key Finding was the rise of Equity funding for Environment Tech companies in proportion to global tech funding. In 2024, close to 10% of all equity funding has gone into startups in the environment tech sector. A significant chunk of this funding in the sector comes from VCs who contribute close to 60% of all equity funding. While that might seem a positive, it also takes the argument back on just how seriously the world is taking challenges and urgency of climate change, if VC level return expectations  are what will drive innovation in the sector.
While the USA, Europe and India are investing heavily in Environment Tech, USA’s market share has gone down from 62% in 2018 to less than 40% in 2023.
Electric vehicles and its auxiliary sectors remain the highest funded sectors within Environment Tech raising more than $60 billion over the last 5 years.

VCs contribute 60% of all Environment Tech Funding Source-Tracxn

Interestingly, there has been a lot of funding in Indian startups tackling drought resilience through wastewater management, with over $35 million going in this year till date; which is significantly more than its annual investment each year over the past five years

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Please find below some insights from the report: 

• India’s funding jumped from $225 million in 2018 to $1.5 billion in 2023, marking a compounded annual growth rate of 140%.

• In 2018, the USA accounted for 60% of environmental tech funding, but this has dropped to under 40%. Meanwhile, contributions from Europe and India have significantly increased over the past five years.

  

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• While the USA, Europe and India are investing heavily in Environment Tech, USA’s market share has gone down from 62% in 2018 to less than 40% in 2023.

• In India, startups are emerging in Solar Energy Technology, Hydrogen Production and Storage, and EVs. Carbon Capture ($42M+) and Offset and Solar Energy Technology ($161M+) have attracted the most funding in the last 5 years.

• There has been a lot of funding in Indian startups tackling drought resilience through wastewater management, with over $35 million going in this year till date; which is significantly more than its annual investment each year over the past five years.

• The total number of funding received in geo-green scorecards in India is $6.55B, with 2024 having received $372M till date.

• The total number of unicorns and soonicorns till date in India stand at 1 and 26 respectively.

The landscape of Environment Tech startups is evolving, says Tracxn, with shifts in funding and innovation patterns across regions and sectors. As the world grapples with climate change, the role of startups in developing sustainable solutions is more critical than ever. Whole any funding is welcome, the fact remains that environment tech needs a different level of approach to make the kind of impact the world needs, instead of being hostage to ROI calculations.