Europe’s climate tech funding gap is widening at an alarming rate, new report reveals

New report based on World Fund analysis of industry data from Dealroom and CleanTech Group outlines the worsening climate tech funding gap, regional disparities, and how to solve the problem

• A new report from World Fund, The Series B Funding Gap in European Climate Tech: Key Market Insights, quantifies Europe’s climate tech Series B funding gap and outlines clear solutions. 
• The report’s data analysis shows that Europe faces a persistent funding gap averaging 20% below equivalent US round sizes ($35.2m vs $45.5m) – and European climate techs faced a Series B funding gap of $13.5 billion between 2020 and 2024, compared to the US, an annual shortfall of $2.7 billion.
• Europe invested $34 billion into early-stage companies from 2020 to 2024, only to watch too many fail at Series B. The problem is deepening as the number of climate tech startups reaching Series B surges. The solution requires mobilising institutional investors, more mid-sized European funds, and regulatory reform to deliver long-term capital.   

The report is available to read here: Link

Berlin, January 28 2025: World Fund today released a timely report that highlights the extent and damaging impact of the Series B funding gap in European climate tech, and outlines the solutions necessary to address this deepening problem. 

The report, The Series B Funding Gap in European Climate Tech: Key Market Insights, is based on World Fund analysis of industry data from Dealroom and CleanTech Group, with contributions from Almi Investi, EIF, EIFO, CleanTech for Europe, Cleantech Scandinavia, Innovate UK and Tesi, with Pitchbook data sets used under license. It outlines how, at the crucial Series B stage where next-gen technologies move from prototype to production, Europe faces a persistent funding gap averaging 20% below US round sizes. 

As the report highlights, in 2020-2024, just 15% of European climate techs graduated from Seed to Series B, vs 25% in the US. However, increasing access to early-stage funding means more are reaching Series B today. But, with few European funds able to write tickets between $25-100 million, the report reveals that climate techs face a $13.5 billion funding gap compared to the US.  To match US graduation rates and round sizes, Europe will need to deliver an additional $2.4 billion per year.

The report authors argue that to close this worsening Series B funding gap, Europe must build the financial infrastructure to match its climate ambition. That means: 

• Mobilising institutional capital through regulatory reform and clear incentives for pension funds, insurers, and banks.
• Creating larger, mid-sized indigenous funds capable of leading $25–100m growth rounds.
• Expanding blended-finance models that combine public catalytic funding with private institutional capital to de-risk investment at scale. 

Key report findings include: 

• Between 2020 and 2024, the European average Series B round is $35.2m - around 20% lower than the US average of $45.5m.
• In 2020-2024, just 15% of European climate techs graduated from Seed to Series B, vs 25% in the US.
• The European climate tech Series B funding gap stands at $13.5 billion between 2020 and 2024, compared to the US.
• By Series B, only three-quarters of funding still comes from European sources, and at $250m+, nearly half of all capital is foreign. 
• The US saw 29 funds over $500m launch in 2020-2025, while Europe raised 11. As a result, less than 20% of active European climate tech funds pursue a growth-stage strategy
• In the US, 72% of venture capital fundraising comes from private institutional sources; in Europe, just 30%. The gap is filled by public entities such as the EIF, which accounts for 31% of all European VC, compared with just 4% in the US. 

Craig Douglas, Founding  Partner at World Fund, said: “We urgently need to see systemic alignment between policymakers, institutional investors seeking sustainable returns, and fund managers building vehicles that can bridge early-stage ingenuity with industrial deployment. This approach would enable Europe to lead the clean industrial revolution and secure the enormous economic and societal benefits it will deliver. Closing the Series B gap would unquestionably help ensure long-term European sovereignty, and it must happen now.” 

Adelaide Cracco, Head of Climate, Environmental and Social Impact Investments at EIF, said: “Without dedicated funds focused on growth and scaling, and with sufficient critical mass, we risk losing our most promising solutions to regions with deeper capital pools or worse yet, failing to support the deployment of game-changing innovations that could radically enhance our energy security, climate resilience and environmental sustainability."

Jules Besnainou, Executive Director, Cleantech for Europe, said:  “Scaling clean technologies is a top political priority for Europe, but institutional capital is missing in action. Policymakers should enable and actively encourage insurance companies, pension funds and banks to invest. Examples such as the Tibi initiative in France show it can be done. We need to see similar initiatives across the continent.”

Lorenzo Chiavarini, Head of Research at Dealroom, said:  "Europe is home to the largest early-stage climate tech startup scene globally, with over 6k venture-backed companies, but their growth is hindered by the lack of scale-up capital at Series B and onwards. EIF and other public institutions have partially stepped in to fill the gap in private institutional capital, but we need to quickly mobilise the large capital pools of pension funds, insurances, and banks if we want these European companies to lead in this critical sector."

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About World Fund 

World Fund is a leading European venture capital fund investing in climate tech companies with significant decarbonisation potential. Its portfolio spans key sectors, including energy, industry, the built environment, transportation, food, agriculture, and biotech. The fund has backed prominent companies such as cylib, Vaeridion, Planet A Foods, IQM and Space Forge. The firm manages a €300m fund and focuses on bridging the financing gap in the early growth stage.