Venture capital investment in climate technology startups is ‘losing momentum’ in Germany, a new report by KfW Research has suggested.
According to KfW, last year, startups focused on climate protection technologies represented the highest-volume segment on the German venture capital market, raising twice as much money from investors as they did five years previously.
However, this year is expected to be a bit more challenging for the climate tech sector, with volumes to date in 2025 indicating that other technology sectors have outpaced it.
Climate priorities
“On the one hand, a certain market saturation could be emerging here,” commented Dr. Steffen Viete, venture capital expert at KfW Research. “On the other, the economic policy environment has changed – climate goals are in greater competition with other priorities than a few years ago.
“Startups with this focus could therefore have a harder time obtaining capital.”
Growth opportunities
Research was undertaken by the German Venture Capital Barometer, a joint initiative of KfW Research, the German Venture Capital Association (BVK), and the Deutsche Börse Venture Network, which notes that investors see strong growth opportunities in cybersecurity, AI, and defence technology.
Deal volumes in cybersecurity are 65% higher than they were in 2019, while AI-focused startups have seen a rise of 127% over the same period, the research found. Defence technology, while having ‘little significance’ for venture capitalists a few years ago, is also showing positive growth potential.
Other sectors, however, such as mobility, logistics, food and agriculture, and online retail, have lower growth expectations.
“For many years, start-ups with a focus on online retail were one of the most important and dynamic areas for venture capital investments,” Viete added. “In recent years, however, the sector has moved into a mature phase. In 2024, over €1 billion was invested here in Germany, but compared to 2019, this was a decline of 67%.” Read more here.
