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Climate investments dominate venture capital's biggest deals in recent months

A solar concentrating installation sits in the middle of the desert, where large towers receive beams of sunlight from hundreds of mirrors reflecting the light and heat to create steam for electricity.
Image Credit: Wix/James Rathmell

Technology investors haven't cooled on backing businesses dedicated to fighting global warming.

Amid an overall slowdown in venture capital investment, climate tech companies raked in big dollars amid a market slowdown, according to data from the analytics firm CBInsights.

Most of the biggest investments made in the quarter went to climate companies, according to data from the firm.

While CBInsights didn't break out climate investment as a category many of the largest investments, totaling $3.7 billion, went to companies developing lithium extraction technologies, electric charging infrastructure, small nuclear reactors for zero emission energy, and battery manufacturing. .

Indeed, the most money raised by a single startup was by the Swedish battery manufacturing company, Northvolt, the Swedish battery manufacturer.

The six year old company is bringing large-scale battery production to Europe in a bid to onshore an industry that's been dominated by companies like CATL, LG, Panasonic, and Samsung.

Terawatt, another company that raised over $1 billion, is building out charging stations and hubs for fleets of electric vehicles and long-haul transportation, according to a company announcement.

Bill Gates’ startup that's designing and building new nuclear fission reactors raked in another $750 million. TerraPower raised the later-stage round from Gates himself and SK Group.

Commodities exchanges focused on sustainable mining and development, lithium extraction companies, insect protein cultivators and more made the cut as investors continued to back climate tech with big bucks despite the market downturn.

Companies in the climate sector are still bulking up for what could be a long economic winter as rumblings of a recession persist. But the financial headwinds that these companies are facing are somewhat offset by large pools of government cash that have been allocated for the energy transition.

Private investors are also still interested in giving venture firms pools of money to draw from to support innovative companies working on sustainable solutions.

That's in part a function of how much money needs to be spent to address greenhouse gas emissions. A recent study from McKinsey estimated that $9 trillion would need to be spent every year for the next 28 years to keep the world from warming beyond 1.5 degrees.

Another more conservative estimate puts the figure at $1.5 trillion. Either way, that's a big chunk of money that has to go into building infrastructure, developing new technologies, finding ways to efficiently deploy existing technologies, and create new consumer brands that can meet the aspects of greenhouse gas emissions reduction that energy generation can't touch.

With all of the areas where emissions reductions need to occur, and so much political capital (and literal capital) invested in the transition, investors and pension funds seem to see climate as a growth opportunity even amid gloomy macroeconomic prospects.

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