Science & Technology

Total Funding Into Environment Tech Falls 5% in 2022, Keeps Declining

Having recorded its highest-ever funding of $31.6 billion in 2021, the environment tech sector saw investments fall by 5% year-on-year to $29.9 billion in 2022

environment tech funding

Tracxn Technologies, SaaS-based market intelligence platform, reported that the funding in the environment tech sector dropped 5% year-on-year to $29.9 billion in 2022. Sadly, the declining trend continues in 2023 as well.

Compared to the record-breaking 2021, when environment-related technology startups attracted $31.6 billion in funding, 2022 saw a significant decline in late-stage funding which made all the negative difference. Namely, it fell from $20.6 billion in 2021 to $18.4 billion in 2022.

The tendency being registered in 2023 so far hints at a staggering fall in funding we may witness this year. Up until May, the sector has raised only $8.3 billion, a sharp fall of 56% from $19.1 billion raised by environment tech companies in the same period last year.

Again, the main reason is the lack of investors’ interest in late-stage funding rounds, which saw a decline of 60% from $8 billion in 2022 to $3.2 billion in 2023 to date.

However, the overall “funding winter” that affected all the industries last year is also to blame. The study found that funding in other major sectors like FinTech, retail, EdTech and HealthTech saw a drop of more than 35% in 2022 year-on-year.

As for the sector’s deal activity, it remained robust despite decreased funding levels. The study observes that growth in the environment tech sector has accelerated in recent years, as governments across the globe increasingly focus on climate change.

Thus, 74 environment tech companies recorded $100 million+ funding rounds in 2022, compared with 68 in 2021. This enriched the segment with 13 more unicorns (in 2021, 16 new unicorns appeared). Besides, the sector saw 240 acquisitions in 2022, a slight decline compared to 246 in 2021.

At the same time, the number of initial public offerings (IPOs) fell sharply in 2022, with only 13 eco-friendly techs going public vs 43 IPOs registered the previous year.

Region-wise, the US led the funding charts, with $87.7 billion raised for environment tech to date. Other top countries on this list include China, India and Germany.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.