Europe’s Series B funding gap is widening at an alarming rate
World Fund has 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, Innovate UK and Tesi. 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 $2.4 billion more per year.
Achieving this goal will not be easy. In the US, 1.9% of pension assets are in venture, while in the EU the figure is just 0.018% – 100X less. In the US, 72% of venture capital fundraising comes from institutional investors vs 30% in Europe. The report argues that European scaleups still depend far too heavily on foreign capital and public investment – and that Europe now risks losing economic value and strategic autonomy as a result.
The new report also highlights regional differences when it comes to the Series B funding gap.
Germany and France have comparatively mature growth ecosystems, while the Nordics, Netherlands, and Denmark remain constrained by smaller funds and dependence on foreign syndicates. Notably, Germany is the strongest European performer on most indicators, with Series B rounds averaging $52.7M, the highest in Europe. However, even in Germany, as in every European country, a Series B financing shortfall persists, limiting the availability of climate-specific growth capital.
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, 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 only 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. If we fail to do this now, the next generation of climate technologies will be scale elsewhere. Closing the Series B gap will determine whether Europe leads the clean industrial revolution.”
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 shows 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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