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European venture capital rebounds fueled by 'mega' deals in energy startups amidst a surge in clean tech investment, reports Dealroom.
The clean energy transition catalyzed a resurgence in European venture capital (VC) activity in the year's first quarter, with early-stage investors channeling more funds into startups tackling the climate crisis.
According to Dealroom's Europe Q1 report, energy emerged as the dominant sector for VC deals in Europe, attracting a staggering $3.1bn in investments during the first three months of 2024.
Key highlights include:
Several "mega investments" in energy startups.
Propelling the sector to surpass fintech as Europe's top-performing industry for VC investments.
Maintaining its lead for the fourth consecutive quarter.
Standout deals featured a $330m investment in Paris-based electric vehicle charging firm Electra, $325m for Sweden's H2 Green Steel, and $253m for London-based cloud computing firm Deep Green. Additional transactions exceeding $200m involved German clean tech pioneers Sunfire and Envira, rounding off Dealroom's top five energy sector deals.
Notably, energy sector funding outpaced health and fintech, which secured $2.8bn each, transport at $1.7bn, and enterprise software firms at $1.6bn.
Furthermore, investment in cross-sector climate tech remained robust, with firms raising $3.5bn, constituting over a quarter of all VC investment during the period.
Dealroom asserts that sustained funding in the energy sector underpinned a broader recovery in European venture capital investment, defying concerns of a global slowdown in support for early-stage companies. Overall, VC investment in Europe saw a five percent year-on-year increase, reaching $13.7bn for the quarter.
"Despite the backdrop of a downturn in the wider VC sector, climate tech continues to shine as one of the leading investment areas in Europe for good reason," said Jamie Vollbracht, founding partner at cleantech venture investor Kiko.
"It's encouraging to see companies like Electra and H2 Green Steel raising the necessary funding to scale up their critical work in the energy sector, which will enable a more sustainable future for the planet."
Gregory Dewerpe, founder of proptech firm A/O, said new regulations and incentives across Europe were helping to attract investors to the energy and climate tech sectors.
"However, addressing energy is just one side of the equation," he said. "We urgently need to use technology and software to curb emissions and increase the resiliency of the infrastructure we rely on, as our built world becomes more prone to earthquakes and flooding as a consequence of our warming planet."
Dealroom's recent findings affirm the UK's continued dominance as the top destination for VC investment in the first quarter of the year.
These results echo the sentiments expressed in the latest annual industry progress report from the Cleantech for UK initiative, supported by investors. The report hailed the UK as a "standout performer" in the global clean tech market.
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