After a heady few years marked by record-breaking capital raises and lofty promises of a carbon-free future, the climate tech sector is bracing for a period of readjustment. As 2024’s tumult gave way to caution and the first signs of market rebalancing, four leading investors have weighed in on what 2025 might hold for the industry. Their insights suggest that the coming year will see a sharper focus on scalable, commercially viable solutions—and a move away from models that rely on a “green premium.”
Nicolas Milerioux, Head of Venture Capital at Encevo
“2025 will continue many of the trends we witnessed in 2024. There will still be plenty of buzz around AI, and we expect an even greater focus on AI applications in climate and sustainability—especially in the realm of grid solutions. However, the recent collapse of Northvolt has exposed a structural challenge: Europe’s market structure isn’t well suited for commercial scale-up.
The high costs associated with photovoltaic (PV) installations mean that, in many parts of Europe, PV might simply be too expensive to compete with conventional energy sources. On top of that, the integration of electric vehicles (EVs) is facing a major hurdle—a severe shortage of charging infrastructure. This gap is likely to spark creative, much-needed solutions. And when it comes to funding, we foresee an increase in bridge rounds and fundraising failures. With investors managing portfolios of 50 or more companies, it simply won’t be feasible to bail out every underperformer. Founders, therefore, will need to decide early on whether to pivot or cut their losses.”
Beau-Anne Chilla – Partner at FORWARD.one
“Over the past few years, we’ve seen an enormous influx of capital into climate tech. Many business models were built on the assumption that customers or policymakers would pay a green premium for cleaner, more efficient solutions. However, as we’re beginning to see now, that premium is evaporating. The large sums raised for climate tech have pushed valuations to unsustainable levels, and it’s becoming increasingly clear that only those deals that can stand on their own commercially will survive.
For instance, take the electrification of industrial processes. Not only is it cleaner, but it can also be cheaper and more efficient than traditional fossil-fuel–based methods. That’s a huge opportunity—but only if the underlying business model doesn’t rely on a crutch of excessive, dedicated climate capital.”
Louis Millon, Principal at Systemiq Capital
“My main prediction is that ‘core sustainability tech’—by which I mean solutions whose demand is predicated solely on governments or corporates voluntary commitments to climate and sustainability—will face a significant downturn in 2025. Look at the political backdrop: a Trump-style administration, coupled with an EU struggling with competitiveness in green industries (as Northvolt’s failure so dramatically demonstrated), means that investor fatigue is setting in.
This isn’t a pessimistic forecast; it’s a recalibration. The market is shifting away from technologies that exist purely to meet sustainability targets and is instead favouring climate solutions that prove their commercial merit. In other words, the winners in 2025 will be the companies that can deliver both environmental impact and robust financial returns.”
Lena Thiede, Co-founder/General Partner at Planet A Ventures
“Spurred by the Draghi report, a new cross-party political consensus is emerging across the EU in support of strategic clean technologies. One key development on the horizon is the New Clean Industrial Deal, expected to be announced 26th February 2025, which aims to enhance European competitiveness. The European Investment Bank is also stepping in with a €500 million counter-guarantee instrument for cleantech in 2025—this financial reinforcement is exactly what the sector needs right now.
On the transatlantic front, while a divided U.S. government might complicate global climate diplomacy, a more deal-friendly administration could stimulate a wave of IPOs and M&A activity, unlocking liquidity for startups. With climate tech investors currently holding an estimated $86 billion in dry powder, bold investments in transformative technologies are on the horizon. Key growth areas to watch include the intersection of AI and climate, advanced power management systems, earth observation for mining and biodiversity monitoring, and adaptation technologies such as wildfire detection and energy storage—solutions that not only address climate change but also bolster national security.”
Looking Ahead
The experts we interviewed agree: 2025 is poised to be a watershed year for climate tech. After years of riding the high of massive capital inflows and the promise of a green revolution, the industry is now set to refocus on what matters most—scalable, commercially viable solutions. While the era of relying on a green premium may be drawing to a close, the underlying demand for efficient, cost-effective climate solutions remains as strong as ever. Investors and founders alike will need to navigate a landscape where the ability to demonstrate both environmental and economic returns is the ultimate test of success.
Expert Bios
Nicolas Milerioux, Head of Venture Capital at Encevo
Nicolas leads the Venture Capital efforts at Encevo. As such, he is responsible of scouting and selecting innovative solutions for their business units across the entire Encevo Group as well as, when relevant, conducting a number of hand-picked equity in early stage companies on the European market and preferably at Series A stage.
Beau-Anne Chilla – Partner at FORWARD.one
After co-founding the Young Advisory Group during her Masters, Beau started her career in a commercial role in the early days of Adyen (AMS: ADYEN). Interested in the energy transition and with a real passion for innovations that can help shape our society she joined DOEN Participaties, an impact focussed Venture Capital firm where she fulfilled a role as Investment Principal. She joined FORWARD.one in 2022 to help grow their climate tech activities. She brings a deep industry knowledge about Climate Tech and extensive expertise in venture capital.
Louis Millon, Principal at Systemiq CapitalLouis has launched multiple businesses across AI, IoT, and climate, and is leveraging this operator experience to invest into era-defining early-stage climate ventures, and to support the exceptional founders that are leading them.
His cross-disciplinary engineering background allows him to evaluate the potential of transformative technologies that are bringing about a climate- and nature-positive economy, across software and hardware.
His current areas of focus are Sustainable Built Environment, Deep Industrial Decarbonization, and the pricing in of physical and transitional climate risk.
Lena Thiede, Co-founder/General Partner at Planet A VenturesLena is co-founding partner at Planet A Ventures, a Green Tech VC supporting European startups. At Planet A, she is in charge of the scientific impact assessment.
Lena worked as a senior government official at the German Ministry for Economic Cooperation and Development (BMZ) with a focus on international sustainable finance.
She currently advises the Exist Program of the German Ministry for Economic Affairs and Climate Action. Lena holds an MA in Political Science.
For more insights into the evolving landscape of climate tech contact Ollie Smith, Head of our CleanTech practice at Sheffield Haworth, or follow our updates on LinkedIn.
