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PitchBook News - Climate tech's next act

Plus: Predicting the next craze, the new age data centers driving AI, PE firm survival strategies & more
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The Weekend Pitch
March 3, 2024
Presented by Masterworks
(Joey Schaffer/PitchBook News)
Climate-tech startups have quickly gained ground on the broader startup market. But what do they do for an encore?

In 2017, climate-tech startups had the worst expected returns relative to nine other emerging tech verticals. The category now has the sixth-best outlook, according to new PitchBook research that uses a novel quantitative method to assess opportunities in emerging technologies.

VC investment and valuations held up better in climate tech than in other verticals last year. These companies have grown headcount faster than their tech peers, and they have significantly increased their share of patents filed, the report found.

Within the climate category, the carbon-tech subsegment presents the most attractive opportunities for early stage investors, according to the analysis. This cohort includes carbon-capture startups and firms writing the software needed to measure and account for emissions.

A repeat performance will be hard to pull off, but not impossible. Poor post-IPO performance of climate-tech companies, uncooperative energy markets and VC scrutiny are just a few of the hurdles the sector now faces.

This is the Weekend Pitch and I'm James Thorne. You can reach me at james.thorne@pitchbook.com or on X @jamescthorne.
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Trivia
(Yuichiro Chino/Getty Images)
According to our latest report on AI and machine learning, startups remain red hot, attracting investors' attention and capital. How much money did investors pour into the vertical in Q4 2023?

A) $11.5 billion
B) $19.7 billion
C) $29.3 billion
D) $22.3 billion

Find your answer at the bottom of The Weekend Pitch!
 

Predicting the next big thing

(Olm26250/Getty Images)
AI is the hot-button topic of today. But what about a year from now?

Our latest quantitative report debuts a new series: VC Emerging Opportunities. Our cross-vertical analysis covers everything from SaaS to gaming—and includes our proprietary predictions on future returns on investment. Using our VC Exit Predictor, PitchBook's quantitative team charts the course of the next generation of startup successes.
 

AI data-center startups challenge Big Tech

(Jasmin Merdan/Getty Images)
Powering a flurry of AI and machine learning startups are AI-specific data centers, whose specialized infrastructure and operations are designed to meet the rigors of the workloads, according to our latest Emerging Tech Research.

A crop of startups are emerging in the AI data-center space, looking to challenge the likes of Google, Amazon and Microsoft. The Q4 2023 AI and Machine Learning Report highlights VC-backed companies taking on Big Tech as well as other opportunities worth a look from investors.
 

How public PE firms navigate today's volatile climate

(Zhengshun Tang/Getty Images)
How are the top seven US-listed public PE firms navigating a tough investment environment? Efforts include expanding the lineup of private markets offerings, targeting more permanent pools of investor capital and revamping compensation structures and financial targets to please shareholders.

Our Q4 2023 US Public PE and GP Deal Roundup explores their financial results and what their executives have to say.
 

Quote/Unquote
(Courtesy of Oishii)
"Ultimately, most investors agree that agriculture has to change and that vertical farming will play a big role. The biggest question they have is, who is going to be the winner?"

—Hiroki Koga, co-founder and CEO of indoor vertical farming startup Oishii, speaking to PitchBook News after raising $134 million.
 

Stay tuned
Keep an eye out for these insights and research reports coming out this week:
  • February 2024 Global Markets Snapshot
  • Q4 2023 Infrastructure SaaS Report
  • Q4 2023 Biopharma Report
  • Analyst Note: 2024 IPO Pipeline
  • 2023 Annual Global Private Market Fundraising Report
  • Q4 2023 Germany Snapshot
 

Trivia
Answer: D)

Across 1,665 deals, VCs invested $22.3 billion into AI and machine learning startups in Q4 2023. You can read more about trends within the space and select companies in the report.

This edition of The Weekend Pitch was written by James Thorne, Rosie Bradbury, Madeline Shi and Jacob Robbins. It was edited by Ron Prichard.

Were you forwarded The Weekend Pitch? Sign up at pitchbook.com/subscribe.
 
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