Climate tech VC fundraising is down almost 40%, but AI is driving deals

AI has changed the climate conversation.

I had no doubt about that as I sat down onstage yesterday, under the lights at The Nest Campus, the Climate Week NYC bonanza at the North Javits Center. It feels a bit like a mini-climate-focused CES, complete with EVs inside the conference center. 

I was talking to Dawn Lippert, Elemental Impact founder and CEO and Earthshot Ventures GP, and Mike Schroepfer, founding partner of VC firm Gigascale Capital, about the future climate-focused VCs are investing towards—and what it actually means to balance speed and climate concerns. 

It’s an interesting time: Over the last 15 years or so, climate tech has gone from sexy to unsayable to today, where it’s heating up again in the age of AI. As the conversation about what it takes to power data centers ramps up—and concerns about the grid become unavoidable—sustainable energy and the U.S. industrial base is more or less hot again. 

“AI I think is both a headwind and tailwind for the space, but more a tailwind than a headwind,” said John MacDonagh, PitchBook senior research analyst, via email. “Data center developers are looking for energy sources to support their projects, and the climate tech space has core technologies like renewables, which can be fast to deploy and relatively low-cost, but also face intermittency challenges that can then be addressed by energy storage technologies. Firm power sources are potentially better suited to datacenter applications, but are less mature, and require substantial funding to develop and commercialize.”

In short, AI has brought about a lot of opportunities for those building and backing climate tech, a notable turn given some of the numbers coming out of the last couple years: Recent PitchBook data showed that fundraising for climate-specialist VCs in 2025 was down nearly 40% from 2024. Simultaneously, it appears that startups, especially in energy, are commanding massive amounts of capital. I asked Lippert and Schroepfer about this onstage. 

“90% of the companies that Earthshot backs have generalist tech investors as our co-investors,” said Lippert. “We think........

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