In the 2000s, cleantech was riding high. It was the new El Dorado for investors, after the dot-com bubble burst in the early 2000s. The term broadly referred to all technologies aimed at improving environmental sustainability: renewable energy, of course (solar, wind), but also water purification, energy efficiency, waste management, etc. It was a vast investment landscape, often very industrial.
The release of Al Gore's film, An Inconvenient Truth in 2006, clearly illustrates the massive enthusiasm for cleantech between 2005 and 2011, a period marked by billions of dollars invested by leading funds and celebrities.
But from 2011 onwards, the enthusiasm began to wane. The returns from cleantech startups proved to be much lower than those of the previous internet wave: cleantech required building factories, photovoltaic power plants, or wind farms, leading to very heavy capital intensity. The technological risk remained high, while the collapse of gas prices made business models fragile. This resulted in a massive exodus of capital between 2012 and 2015.
The Paris Agreement in 2015 put climate back at the center of concerns. The climate emergency gave new impetus to environmental investments. It was at this point that cleantech began to rise from its ashes under a new name: climate tech. Unlike its predecessor, climate tech specifically targets climate issues with a strong technological dimension and often focuses on less capital-intensive models.
In this article, we will see how the first wave of cleantech laid the foundations for the rise of climate tech, and why we are now entering a new phase of transition.
The Tumultuous History of Clean Tech
The Cleantech Frenzy of 2005 - 2011
From 2005, cleantech massively attracted venture capital investors, particularly in Silicon Valley. High oil and gas prices, public incentives (subsidies, tax credits, notably in the United States with the ARRA - American Recovery and Reinvestment Act program), and climate awareness fueled by Al Gore's An Inconvenient Truth created a favorable environment. Furthermore, after the dot-com bubble burst, institutional investors and venture capital funds were looking for new growth horizons. Cleantech appeared as the perfect opportunity: to combat climate change, promote the energy transition, and create the industrial giants of the 21st century.
Funds relied on an analogy: having seen spectacular successes in tech and biotech, they believed they could apply the same model to energy technologies. John Doerr (Kleiner Perkins) even declared in 2007: "Green is bigger than the Internet." An MIT post-mortem study, published in 2016, indicates that between 2005 and 2011, more than $25 billion was invested in clean tech. At that time, cleantech was perceived as inevitable: it embodied economic progress, energy sovereignty, and the fight against global warming.
However, cleantech technologies (solar, batteries, biofuels) differ profoundly from software: they require more capital, more time, and heavy infrastructure to reach industrial scale. This involves the production of renewable energies, electric vehicles, or battery systems. Behind the euphoria, the flaws in the model began to appear.
The Solyndra Bankruptcy: The Turning Point
In 2011, the resounding bankruptcy of Solyndra, a solar energy startup that had raised over $500 million in public funds, became the symbol of the model's failures. It sent shockwaves throughout the sector.
The fall of Solyndra revealed several structural problems in the first wave of cleantech:
- Production costs were too high compared to Asian (especially Chinese) competition, which flooded the market with low-priced photovoltaic panels.
- High technological risk: technologies that looked promising on paper but were unable to withstand the test of the market. A large proportion of the funded companies were developing materials, chemical processes, or technologies never tested on an industrial scale.
- Dependence on public subsidies, the sustainability of which is uncertain during times of economic crisis.
- The fall in natural gas prices thanks to (or because of) the shale gas revolution, which drastically lowered fossil fuel prices.
As a symbol of an overvalued bubble, Solyndra's bankruptcy undermined the sector's credibility with traditional investors. Many abruptly revised their ambitions downwards, fearing new "innovation graveyards" with exorbitant costs. Unlike software startups, few cleantech companies found a buyer before achieving industrial profitability. Large energy companies, instead of acquiring innovative startups as in pharma or tech, withdrew from the sector (Shell abandoned solar and wind in 2009, BP exited solar in 2011). Only half of the €25 billion invested during the period was returned to investors.
The Wilderness Years Until 2015
After 2011, cleantech entered a severe downturn. From 2012 to 2015, VC funding in cleantech fell by more than half. The number of startups created in the sector collapsed. Investors learned several lessons, which would form the foundation of Climate Tech.
- The "Silicon Valley" model of rapid investment does not work for heavy technologies requiring 10 years or more to industrialize and become profitable.
- The technological risk (new materials, new processes) is far too high to hope for returns compatible with fund requirements.
- The lack of industrial buyers blocks exits.
The most fragile startups disappeared. Only a few rare companies, well-capitalized or having managed to pivot to lighter models, managed to survive. This "desert" was deep but salutary: it forced the ecosystem to rethink climate innovation strategies.
It was not until the Paris Agreement in 2015 and the emergence of players like the Breakthrough Energy Coalition led by Bill Gates, as well as the technological stabilization of certain sectors (notably solar and wind) and a return of climate momentum, that a new generation of players emerged, this time under a different banner: Climate Tech.
Why the First Cleantech Wave Failed - an MIT Post-Mortem Analysis
In a landmark study published in 2016, the MIT Energy Initiative identified four main reasons for the massive failure of cleantech between 2006 and 2011:
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Innovation cycles were too long
Cleantech startups often took 10 to 15 years to reach industrial maturity, well beyond the classic profitability horizon of VC funds (3–5 years).
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A colossal need for capital
Developing new materials, processes, or factories required hundreds of millions of dollars even before commercialization, while VCs hoped to finance lighter companies.
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An ultra-competitive market with low margins
Cleantech technologies had to compete with very cheap fossil fuels (gas, oil) or with massively subsidized Chinese solar panels.
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A lack of industrial buyers
Unlike healthcare or digital, few large energy groups bought risky startups. The near absence of lucrative exits penalized returns.
Result: more than 90% of cleantech startups funded after 2007 did not even recover the initial capital. And only half of the $25 billion invested was returned to investors.
The Renaissance: From Cleantech to Climate Tech
The Emergence of a New Approach After 2015
The Paris Agreement in 2015 marked a turning point: for the first time, all the world's states formally committed to limiting global warming to +2°C, or even +1.5°C. This breathed new life into climate-related investments. Between 2015 and 2025, the growth of investments in technology startups in the climate and sustainable development sector has been systematic and massive.
But the lesson of the cleantech crash was learned: it is no longer simply a matter of funding any "green" innovation.
Two major developments appeared in the new wave:
- A refocus on measurable climate impact with a strong technological dimension: Climate Tech directly targets the mitigation or adaptation to global warming. Also, a large part of Climate Tech concerns the reduction of greenhouse gas emissions, which is more easily quantifiable and demonstrable.
- The emergence of “patient capital”: investors like the Breakthrough Energy Coalition (created by Bill Gates and 20 other billionaires) accept that climate projects require more capital, more time, and more risk.
Thus, Climate Tech is based on a conviction: changing the global energy and industrial structure will not happen with traditional 3 to 5-year VC cycles and a few million euros of investments.
What Differentiates Climate Tech from Clean Tech?
| Cleantech (2005–2011) |
Climate Tech (post-2015) |
| Large environmental scope (energy, water, recycling, efficiency) |
Focused specifically on climate change mitigation or adaptation |
| Traditional VC model (seeking quick exits) |
"Patient capital" model with long-term support |
| Capital-intensive projects with poor market/policy alignment |
Better market (electrification, storage, carbon capture, EVs) and policy alignment (Green Deals) |
| Low industrial acceptance (few buyers) |
Better industrial integration due to net-zero commitments from large corporations |
| High technological risks, uncertain market potential |
Clearer target markets (electricity, batteries, mobility, climate resilience) |
A New Ecosystem Has Built Up Around Climate Tech
Today, the Climate Tech ecosystem is radically different from the Clean Tech ecosystem twenty years ago:
- Specialized funds have been established, such as Breakthrough Energy Ventures, Lowercarbon Capital, Pale Blue Dot, and so on.
- Large companies like EDF in France, Amazon, or Microsoft are investing directly in climate startups to meet their own net-zero targets.
- Massive public policies are being put in place: the Inflation Reduction Act in the United States, the European Green Deal, the National Low Carbon Strategy in France.
Climate Tech funding is also more diversified:
- Traditional VCs on "climate software" verticals (monitoring, energy efficiency)
- Private equity to support growth
- Infrastructure funds to build gigafactories, hydrogen networks, electric vehicles, or carbon capture units
- Massive public funding to help breakthrough technologies cross the industrial "valley of death".
In short, Climate Tech has learned the lessons of Clean Tech. It operates in a political, economic, and societal context infinitely more favorable to its success. However, the bankruptcy of Northvolt in early 2025 is a frightening repetition of Solyndra's bankruptcy 15 years earlier, and may herald a new phase of transition.
Climate Tech Today: Early Warning Signs
Since 2020, Climate Tech has experienced spectacular acceleration, especially in Europe. Fundraising has reached historic highs, innovations have multiplied in key sectors — batteries, carbon capture, green hydrogen, carbon management software — and the "net zero" commitments of large companies have offered unprecedented industrial momentum. For many, climate is no longer just a CSR or activism issue, but a strategic pillar for our future. However, the first signs of an inflection are appearing. In the first quarter of 2025, investments in "climate tech" startups are at their lowest level in five years, far from the euphoria of 2023.
The Northvolt Bankruptcy: A Repeat of the Solyndra Story?
The bankruptcy of Northvolt in early 2025, once considered the future European champion of electric batteries, painfully recalls the Solyndra episode of 2011. Northvolt had managed to capture the collective imagination and massive investments on the promise of European energy sovereignty. But, like Solyndra, the young company eventually succumbed to the weight of high industrial costs, execution delays, and exacerbated price competition — especially against Asia. This failure highlights the persistent difficulty in rapidly and profitably industrializing complex technologies, even in a context of strong political support.
The Reversal of Political Support Embodied by Trump
On the geopolitical front, the winds are also much less favorable. In the United States, the Inflation Reduction Act, considered the most ambitious climate plan ever passed, is now weakened. Upon taking office, Donald Trump signed the Unleash American Energy Act executive order, reducing climate ambition to favor local fossil fuel production. This rapid reversal illustrates the high volatility of climate policies, particularly in tense electoral contexts. Our newsletter analyzes, in two parts, the impacts of Trump's policy on the climate (1, 2).
In Europe, the situation is no simpler. While the European Green Deal initially displayed historic ambitions, budgetary and geopolitical realities have caught up with the rhetoric. In a world now marked by the war in Ukraine, the pressure to increase defense budgets, support strategic reindustrialization (semiconductors, low-carbon steel, hydrogen), and control public deficits makes the massive funding of the climate transition much more complex. Climate remains an official priority for Europe, but it now competes directly with other vital imperatives: security, defense, industrial sovereignty, social stability. However, in Europe and France, sovereignty also depends on mastering energy production and therefore not on a massive electrification of uses. In this case, climate and sovereignty go hand in hand.
Investment Funds' Fatigue Turning Towards AI
Finally, in the financial markets, the euphoric mood around Climate Tech has cooled significantly. After the exuberance of 2021–2023, market conditions have become more austere in all regions of the world, including France and Europe. Generative artificial intelligence has captured the attention of investors and the media, absorbing a significant share of the capital available for technology startups. In a context where rapid profitability has once again become a strong requirement, many generalist venture capital funds have slowed down, or even suspended, their investments in climate projects, deemed longer, riskier, and more dependent on public policies.
Thus, while we are not reliving the brutal collapse of cleantech in the 2010s, Climate Tech is clearly entering a new phase of transition: tougher, more political, more industrial. A phase where the alignment of private capital, states, and industrialists will be essential to transform technological promises into economic realities, and where access to resources (capital, infrastructure, talent) will become the real battle of the 2030s. The transformation of these promises will be essential to ensure a sustainable future, with growth compatible with environmental management.
That's why, at Homaio, we are mobilizing private capital to continue to increase the funding of solutions that have a real impact on mitigating and adapting to climate change.
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