What Investors Need to Know About Climate Tech Startups

Guy Hayler, Co-founder of Blue Earth, shares his view on what investors need to know about climate tech startups.

At the confluence of escalating climate urgency and economic uncertainty, a new entrepreneur is emerging - part technologist, part visionary, part realist. Climate tech founders are building the scaffolding of a more sustainable, resilient future. But navigating this space as an investor requires more than a standard pitch-deck mindset. The climate tech sector demands long-term thinking, deep due diligence, and a clear-eyed understanding of both the technological promise and the operational pain points.

In the UK, climate tech has proven to be a quietly resilient force. While global investment in the sector declined last year, UK-based climate tech companies bucked the trend, securing a 24% increase in funding, according to PwC. It’s a signal that, even amid macroeconomic strain and political backsliding, there’s appetite, and capacity, for innovation.

Climate tech startups face unique challenges, hardware and software often co-exist uneasily, regulatory frameworks lag behind innovation, and material costs remain volatile.

Development cycles are long, and upfront capital requirements are high. For investors, the landscape can be complex, high-risk, and potentially high-reward.

As the co-founder of Blue Earth Summit, and Blue Earth Forum, I’ve spent years immersed in this evolving ecosystem. Having seen what works, what fails, and most crucially, what often goes overlooked, I have listed five critical areas investors should consider when backing climate tech in 2025.

Invest with Vision, Not Just Valuation

The most successful climate tech investors are those who look beyond the immediate financial forecast. They understand that this sector operates on different principles - longer timelines, deeper R&D cycles, and a more complex interface with policy and regulation. But they also understand that the returns, both financial and environmental, can be transformative.

In a sector shaped by scientific rigour and technical ingenuity, investors must interrogate a startup’s core health proposition early. That means examining the validity of its claims, the strength and transparency of its data, and the underlying science that supports the technology. Is the business model scalable? Does it benefit from economies of scale or rely on precarious inputs? Has it demonstrated product-market fit through robust customer feedback and real-world application?

Beyond the business mechanics lies another critical layer: founder and team culture. In a fast-moving space where technology evolves and markets shift rapidly, agility is non-negotiable. Investors should look for leadership teams that are not just technically adept but emotionally resilient, able to pivot and communicate this clearly, both internally and externally. 

Rigorous due diligence is foundational. But what separates the conventional investor from the climate investor of the future is the ability to spot and nurture potential. The next generation of unicorns will not be built on hype, they will be built on hard science, strong leadership, and an unwavering commitment to long-term impact.

Look Past the Noise 

In an era of climate fatigue and economic anxiety, the narrative around climate change has become muddled. Finger-pointing between governments, corporations, and consumers has done little to move the needle and in many ways, the urgency of planetary health is being drowned out by polarising rhetoric and public disillusionment.

But while the political discourse stalls, innovation does not. Across the UK, climate tech entrepreneurs are quietly building practical, scalable solutions to some of the most entrenched environmental challenges of our time. The danger for investors is becoming too distracted by the noise, whether it’s media sensationalism, activist burnout, or short-term policy reversals, to see the long-game potential.

Investors with foresight know better than to wait for political alignment. They’re already backing businesses capable of both systemic change and financial return. Take, for example, UrbanChain, a peer-to-peer renewable energy marketplace and Blue Earth100 finalist. In just one year, UrbanChain scaled its revenue tenfold - from £2.4 million in 2023 to £25 million in 2024. With a staggering three-year growth rate of 8,810%, it now ranks among the UK’s fastest-growing tech companies, expanding its team from 10 to 75.

This kind of growth is strategic. It’s rooted in demand, effective execution, and a clear understanding of market mechanics. UrbanChain’s rise illustrates the powerful alignment of environmental purpose with commercial viability. Investors who focus on fundamentals: customer traction, defensible IP, credible impact, will be the ones who capture the outsized returns.

Ignore the headlines. Follow the data. In climate tech, the most exciting companies are often the ones too busy scaling to shout.

The Power of Partnership

Advice I share with all investors is to look for startups that have established or are building alliances with major corporations, research institutions, or NGOs from the outset.  

Startups often operate with limited capital, infrastructure, and talent. Strategic partnerships can provide access to essential resources, such as technology, distribution channels, or skilled personnel, without large upfront cost. 

Founders can share the financial and operational burdens of product development, marketing or research with collaborators, reducing individual exposure to risk.

What’s more, working with other organisations or individuals exposes startups to new ideas, perspectives, and expertise, often leading to more innovative solutions and improved decision-making.

These allegiances can not only accelerate adoption but also create firm foundations for credibility and push open networking doors - otherwise firmly closed to founders. 

Immerse Yourself

Investors must be ready to step into the climate tech sector, find its business community events, attend meetups and networking opportunities and meet startups where they are.  Much of this is about filling vital knowledge gaps.  Innovation is widespread but data is often hard to find and influential legislation can be somewhat hidden.

For example, agritech is an exciting growth sector but not one that many investors are  looking at. Industrial farming is destroying  soil, wildlife, land quality and biodiversity. Not to mention food security. It's an urgent problem that needs resolving. 

A 2024 report from Oxford University and London School of Economics reported that if we continue business as usual, we will needlessly carry billions of avoidable costs, whereas transforming food systems could save every country trillions each year.

There are some exciting players in this space from lab grown meats to technology that can track the quality of farmland and new green sustainable chilled food transport systems. It's definitely a sector to watch.

Blue Earth has grown in popularity for business leaders, investors and founders because our events and ventures platform share thousands of insights from hundreds of expert speakers throughout the year. It's the kind of spotlight on timely data and emerging trends that is so critical for investors and innovators. 

Patience is an Asset

Speed is a natural instinct in venture capital. Investors are trained to chase rapid returns, quick exits, and fast-scaling models. But climate tech doesn’t operate on a quarterly cycle, it operates on geological and infrastructural ones. If you’re entering this space, recalibrate your expectations.

Climate solutions, particularly those involving hardware, deep tech, or fundamental systems change, require more time and capital to scale. Lengthy R&D phases, complex supply chains, and stringent regulatory approvals mean that even the most promising startups can take years to reach commercial maturity. But that patience may be precisely where the opportunity lies.

“We are on the cusp of the fastest, deepest, most consequential transformation of human civilisation in history,” write Tony Seba and James Arbib, co-founders of RethinkX.

Seen in this context, climate tech is part of a structural shift. And while it still suffers from some undercapitalisation, particularly at later growth stages, the investment fundamentals are becoming stronger by the year and startups are delivering real returns. We're seeing competitive growth rates, market demand, and increasingly sophisticated founding teams. 

The greatest barrier may not be the business models, but investor mindset. To succeed in climate tech, investors must be willing to think beyond standard return horizons, and instead focus on category-defining innovation, mission-aligned leadership, and scalable solutions for a decarbonised world.

Ones to watch?

Check out these fast growth startups already attracting significant investment. We’re proud to have supported their endeavours at Blue Earth Forum.

UrbanChain marketplace matches generators of renewable energy and consumers on a half hourly basis, including private companies, office buildings, industrial sites, local government organisations, hospitals and many more.  In 2024, they recorded a three-year growth rate of 8,810% and are currently raising £60m.

Klura  offers innovative and groundbreaking antimicrobial technology. Using real science, the business has developed a breakthrough formula that harnesses the power of plant-based, organic ingredients to deliver exceptional results.

Compare Ethics is an AI-powered platform that has been built by dedicated experts on green claims compliance. It is the only sustainability compliance technology platform that guarantees assurance on green claims

If you are a start up that has an idea for the climate tech revolution apply to the RISE Awards. Apply here: https://hubs.li/Q03t7nbv0

Blue Earth Summit is back for 2025 with an even bigger mission to transform the way the world works and support the changemakers driving positive planet transformation. 

Across private, public and the third sector, the Summit focuses on the value of nature, the power of innovation, the spirit of adventure and the impact of strong leadership from early stage to global business.

Taking place between 15 and 17 October at Woolwich Works, London, 

7,000 passionate innovators, investors, corporations, politicians, adventurers, academics, campaigners and media will gather with a view to explore, spotlight and fast fund solutions to accelerate the health of the planet and people.