It was the best of times, it was the worst of times … I’ll spare you the rest, but the cliché Dickens line really does sum up this year’s New York Climate Week. Much of the climate tech community — like the rest of the U.S. economy — is eagerly riding the AI wave. Some have reservations about the sheer quantity of natural gas power plants being built to power AI data centers.
But because many climate tech startups are energy-focused or energy-adjacent, the buildout has been embraced as an opportunity to get companies through the valley of death. The singular focus also means some promising sectors risk being overlooked. It’s a continuation of a trend that’s emerged over the last year.
As climate tech companies struggled to get financing — either because of canceled federal grants or investor hesitancy — those that could change their pitch to match the AI mania did so. The pivot has helped many climate tech startups land fresh funding from investors. Total venture deal value has risen for four consecutive quarters, cresting the $14 billion-mark in the first quarter of this year, according to the most recent available data from PitchBook.
It’s the best fundraising environment for climate tech in the last few years, with most of the deal value driven by sectors boosted by data center construction, including the built environment, grid infrastructure, and dispatchable energy that can be turned on or off when it’s needed. It’s an opportunity few have wanted to pass up. One exchange during a panel at New York Climate Week captured the moment: Two founders, when asked whether they’d prefer the AI buildout to proceed at its current pace or at a more climate-responsible speed, said without hesitation that faster was better.
Unsurprisingly, both of their startups were in energy. I heard from several founders who felt that the data center boom was distracting from other promising segments of climate tech, including those that were meeting their targets without having to rely on AI mania. The difference today is that large companies don’t want to crow about it, mostly for fear of drawing the Trump administration’s ire.
There were also signs that the AI boom was beginning to wear thin on some. For many startups, money for scaling was hard to find three years ago, even if they were showing promising results. Now, customers are clawing their way into demos.
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