By: David Schatsky, Global Leader, GreenSpace Research & Insights Managing Director, Deloitte

The response to climate change often starts with data and dialogue, but can’t come to life without technology. We should focus on designing and implementing technologies—some newer than others— that can help the systems we use to generate energy, produce food, manufacture goods, construct and operate buildings, and move people and materials to reduce greenhouse gas emissions.

This imperative, and the commercial opportunity it represents, has contributed to a recent surge of investment in technologies for tackling climate change, also known as climate tech. According to new research from Deloitte, from 2000 to 2022, approximately 2,400 climate tech companies were founded, 9,000 funding deals were made, and US$148 billion was invested, with activity picking up markedly after 2013. (See the full report for a description of the research methodology.) And while watchers of venture capital have observed overall investment activity declining over the last 12 months, the change in climate tech investment has been less pronounced, suggesting that while this more nascent market is in flux, it is strong.[1]

The research found that the geography of climate tech entrepreneurship and investment is shifting as well. The United States has been the center of the climate tech entrepreneurship for decades, but recently that geography has begun to diversify. From 2000 to 2004, the US, Canada, and China accounted for two-thirds of climate tech company formations.[2] Then, from 2020 to 2023, six countries accounted for a similar share – the US, Canada, China, the UK, Australia, and India.[3]

Today, eight countries – the US, Canada, China, UK, Australia, Germany, France, and India – are home to around three-quarters of global climate tech firms.[4] The US still leads, as home to more than one-third of them, but its share in the amount of venture funding has declined from 2000-2004 through 2020-2023 while activity in the rest of the world has increased.[5] This trend matches the “rise of the rest” seen in overall startup activity and may also reflect the unique need for climate tech that matches the needs of smaller ecosystems and communities.[6]

In the US, five states – California, Colorado, Massachusetts, New York, and Texas – are home to more than half of US-based climate tech companies.[7] California leads by far, though its share is falling as new policies, regulations and talent pools are emerging in places like Massachusetts and Colorado.[8]

The geographic diversification of climate tech entrepreneurship should be a good thing. While companies can foster knowledge exchange and accelerated innovation if they cluster near one another, geographic diversity can offer new options for investors with varying risk/reward appetites. Entrepreneurs can also take advantage of diverse markets for talent and for customers. Geographic diversity can encourage the development of climate tech solutions that are tailored to local conditions. Finally, the rise of climate tech entrepreneurship in less-developed countries could help attract capital those countries sorely in need.

Enterprises, entrepreneurs, investors, and others with an interest in climate tech should familiarize themselves with the shifting geographic patterns of climate tech entrepreneurship and investment. Enterprises that wish to source a particular decarbonization technology, for instance, may wish to consider geographies that have fostered entrepreneurship and investment in that technology. Information exchange and competition may enrich their options. And climate tech entrepreneurs and investors may want to consider where clusters of similar or complementary technologies are located as they make founding or investment decisions. The challenge of climate change is global, and the knowledge to tackle it is spread far and wide. It makes sense for technology that makes a difference to take on a global profile too.

This article contains general information only and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this article.

About Deloitte 

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[1] Crunchbase, “Alarming Decline In Startup Creation Presents Challenges And Opportunities For Entrepreneurs,” July 24, 2023. Dealroom, “Guide: Global – The State of Global VC,” accessed October 3, 2023. Harri Weber, “Making sense of the latest climate tech funding trend stories,” TechCrunch, July 13, 2023. Dealroom, “Guide: Climate tech,” accessed October 3, 2023. According to Deloitte’s analysis of PitchBook global data, 46% fewer companies were founded and 28% less venture capital (VC) was invested in 2022 than in 2021. In comparison, climate tech company founding fell by 63% and funding decreased by 19% from 2021 to 2022.

[2] Pitchbook, GreenSpace Navigator/Deloitte analysis

[3] Pitchbook, GreenSpace Navigator/Deloitte analysis

[4] Pitchbook, GreenSpace Navigator/Deloitte analysis

[5] Pitchbook, GreenSpace Navigator/Deloitte analysis

[6] Richard Florida, “America Is Losing Its Edge for Startups,” Bloomberg, October 9, 2018.

[7] Pitchbook, GreenSpace Navigator/Deloitte analysis

[8] Boston Business Journal, “Viewpoint: Mass. climate-tech ecosystem is here to stay,” February 21, 2023. United States Office of Energy Efficiency and Renewable Energy, “Incubators and Accelerators,” accessed October 3, 2023. Stephanie Copeland, “How Colorado became a global tech hub,” World Finance, accessed October 3, 2023. Gary Polakovic, “Colorado’s emergence as a tech hub has CSU hosting major federal research conference Aug. 30-31,” Colorado State University, August 15, 2022. Christopher Wood, “Study: ‘Colorado Clean Range’ ranks No. 5 nationwide,” BizWest, August 28, 2022.