Climate tech VC fundraising is down almost 40%, but AI is driving deals

Climate tech had a rough stretch, but AI is giving it a very different kind of attention. That was the mood at Climate Week NYC, where the talk kept circling back to one thing: data centers need electricity, and that makes energy suddenly feel urgent again.

PitchBook says fundraising for climate-specialist VC firms in 2025 is down nearly 40% from 2024. But that’s only part of the story. On the operating side, startups in energy are still drawing serious capital, and the people backing them say AI is helping put climate back on the map after years of being treated as either too buzzy or too politically awkward.

Dawn Lippert, who founded Elemental Impact and now runs Earthshot Ventures, said 90% of the companies Earthshot backs have generalist tech investors alongside them. Her point was simple: climate investors still matter on the cap table because they ask about environmental and social impact when others may not. Mike Schroepfer, a former Meta CTO and now a founding partner at Gigascale Capital, said his firm raised $250 million for a climate-focused fund announced in June, and he kept the climate name even after someone suggested turning it into an AI fund.

That tension is the whole market right now. John MacDonagh, a senior research analyst at PitchBook, called AI both a headwind and a tailwind for climate tech, but mostly a tailwind. Data center builders want power, renewables can move fast and cost less, and storage can help with intermittency. But firm power sources may fit datacenter demand even better, and those are still less mature and need a lot of money to get built.

Schroepfer described it as a tale of two cities. If the company sits in energy, critical minerals, or anything tied to supply chains, he said there is more money than he has ever seen. Climate fundraising may be down, but the parts of climate that can plug into AI’s power appetite are getting a very different reception.