Industry overview: climatetech
Climatetech, an important sector in the startup ecosystem that is working to help improve the climate crisis, has had a rocky couple of years, with investment down, and multiple climatetech startups closing or filing for bankruptcy. However, with sustainability targets and deadlines looming, such as environmental sustainability reporting, and The Ecodesign for Sustainable Products Regulation, startups in the sector are now seeing an uptick in interest and investment.
In its Climate Tech Investment Trends: 2025 Report, Sightline Climate found that climatetech venture and growth investment totalled $40.5 billion in 2025, up 8% from 2024. However, deal count fell by 18%, reflecting a cautious market, where investors are taking less risks by focusing on a set number of companies to invest in.
The industry may be remaining cautious, but the innovations within the industry are still on a mission to change, and save, the world as we know it. The climate crisis remains one of the biggest issues today, and with the increasing number of AI data centres across the world and plans of many more to come, climate solutions are desperately needed. AI data centres are significantly impacting the climate through their massive energy consumption, driving electricity demand and greenhouse gas emissions, while also straining local water resources. Solutions that combat these problems will see themselves in a very favourable position.
AI AND CLIMATETECH
Whilst AI is having a massive impact on the environment, climatetech startups are harnessing the technology to accelerate the development and deployment of new innovative solutions by improving innovation, data analysis, faster prototyping, and assessing risks.
According to Sustainable Ventures’ report: Advancing AI’s Potential for Climate Innovation – Adoption Insights from the Frontline of UK Climate Tech, 9.7% of UK climatetech startups are AI-related, a rate that is double the UK high-growth startup average (4.6%). The proportion of AI-relevant climate startups has increased by 17% per year on average over the past five years, underscoring AI’s rising prominence as a core enabler of climate innovation.
In 2024, 40% of all UK climatetech funding went to AI-related startups, up from 20% in 2022, while investment in non-AI ventures plateaued with growth of just 0.5%.
The energy and mobility sectors together accounted for 88% of AI-related climatetech investment in 2024 (£1.2 billion of £1.4 billion) and now make up 64% of all climatetech funding (£6.2 billion of £9.7 billion).
LISBETH KAUFMANN TALKS CLIMATETECH STARTUPS
Lisbeth Kaufmann is the Head of Climate Tech Startups at Amazon Web Services (AWS). Prior to this role, she founded and ran her own venture-backed startup.
“I’ve been in the shoes of these founders that we’re working with. I also have a background in climate. I have worked in climate policy, so energy, environment, and agriculture in the US Senate,” she said. “I’ve combined those two things to set up this climatetech team and to create our fellowship programme, The Compute for Climate Fellowship, which is our flagship programme to support climatetech startups.”
At AWS, Kaufmann leads a team that works with thousands of climatetech startups that are building with AWS’ Cloud technology. It also has various resources to help these startups succeed at addressing the climate crisis and becoming really big, successful businesses.
I had the opportunity to interview Kaufmann about the trends in the industry, the challenges that climatetech startups are facing, and how AWS supports these startups.
A current attitude in the industry is how important speed is. Climatetech startups are using AI to speed up innovation and iteration, and this need for speed is something seen across the board.
“With the climate crisis, speed is so critical, and we need to move as quickly as possible. The world needs to move as quickly as possible to address the climate crisis. One thing I get really excited about is that AI is very good at speeding things up. We can help these startups leverage Generative AI and high performance computing. We can help them move more quickly, and then they can address the climate crisis more quickly.”
WHAT ARE THE MAIN CHALLENGES THAT CLIMATETECH STARTUPS ARE CURRENTLY FACING?
After a downturn in investment in 2025, a lot of climatetech startups are struggling, especially as research and development requires funds.
“There’s an evergreen challenge [for climatetech startups] of needing to do a lot of R&D, and that’s because these startups are addressing such huge challenges related to the climate crisis. They’re inventing new science, new engineering, new technology, and so they have to spend a lot of time doing that R&D. That’s one of the reasons we created this Compute for Climate Fellowship Programme to help them accelerate and do that R&D faster.”
TRENDS FOR CLIMATETECH STARTUPS IN 2026
There is one trend that Kaufmann has been tracking, and sees carrying over to 2026 with more prevalence.
“One trend that I’ve been tracking and I think is going to expand in 2026 is climatetech startups building verticalised, Generative AI foundation models, addressing very specific problems in the climate space.
“There’s a really cool startup from the UK, called Matnex, they are inventing new sustainable materials. They have built a proprietary data set, trained a Gen AI foundation model on that data set, and now they can invent new, more sustainable materials for their customers. So, for example, they invented a replacement for critical minerals in magnets, which addresses both the environmental challenge with critical minerals and the supply chain challenges. If you can just make your own critical minerals, you don’t have to mine them.
“I think we’re going to see more Gen AI models that are verticalised and addressing very specific challenges in the climate space”.
HOW AWS SUPPORTS CLIMATETECH STARTUPS
AWS has three prongs of support for climatetech startups.
There is the technical support, go-to-market support, and the funding programme.
Specifically, the Compute for Climate Fellowship, in partnership with the International Research Centre on Artificial Intelligence (IRCAI), under the auspices of UNESCO, is an R&D grant funding programme for climatetech startups who are building with AWS’ most advanced Cloud computing services like Generative AI and high performance computing.
“Together, we bring technical support and grant funding in the form of AWS Cloud Credits, and a tonne of visibility opportunities as well,” Kaufmann explained. “The goal of the programme is to help these companies with their R&D, which includes expanding, experimenting, and iterating.”
One of the other ways AWS funds startups is via AWS Activate, its flagship startup programme. Since its inception, the programme has given out over $7 billion in free AWS credits to startups, with a large chunk of the money having gone to climatetech startups.
Alongside this monetary support, AWS provides true support and guidance. Jason Bennett, Global VP of Startups and Venture Capital, AWS, explained:
“It’s really important to note that it isn’t just that we provided credits and support. We also brought a lot of our resources. We have a number of teams inside of AWS. If you look at our startup business inside of AWS, you will actually find a number of founders, CTOs, a number of folks that have lived the experience of being at a startup, and we bring that to our customers, we bring that support and insight.”
AWS ensures the right people are supporting founders at every stage of their journey, and with Kaufmann’s team, that comes with climatetech knowledge, and industry experience.
This article originally appeared in the January/February 2026 issue of Startups Magazine. Click here to subscribe
