Ian Thomas, managing director, Turquoise International, maps out the more discerning climate tech landscape of 2026
Climate tech investors are entering 2026 with a noticeably different mindset than the one held in the peak deployment years that defined the early 2020s. After a period marked by relative capital abundance, an urgency to invest remains, but the playbook has tailored itself to the current circumstances.
This article explores how investors are reasserting control, backing fewer companies and focusing on founders who can navigate the current market conditions – and what this means for the next wave of innovation.
Survival of the fittest
The sector is undergoing a period of correction. Start-ups are shutting down or merging, valuations have dropped from peak levels, and business models are being tested against real economic conditions. Investors increasingly want clear routes to profitability – bigger cheques, fewer bets, predicted the publication Trellis in its 2025 climate tech round-up.[1]
Increasingly, climate tech investors are becoming more selective and cautious when it comes to investment. Venture capital is shifting towards later stage businesses. Early stage experimental technologies are taking longer to fund, and funds, meanwhile, are prioritising capital efficiency and realistic timelines.
Investors are still committed, but risk evaluation is more prevalent than ever. Broad or trend-led investing is no longer viable, criteria are tightening and conviction-based investing is rising. Funds are still flowing, if the investment is right, but weaker projects are struggling to woo investors. In recent news, for example, Octopus Energy, the UK’s largest energy provider, has committed almost $1bn to a number of Californian clean energy companies.
The UK is becoming noticeably more attractive to US climate tech investors, thanks to the policy uncertainty created by Trump’s retreat from climate action, said the head of Barclays Climate Ventures in a recent interview, with investors increasingly keen to target UK climate tech start-ups.[2]
A competitive landscape
The climate tech ecosystem is maturing too. There are now multiple players addressing similar problems across energy storage, grid software, sustainable materials and mobility. In this environment, differentiation is critical. Investors are scrutinising whether a company has defensible intellectual property or structural advantage. A business narrative alone is no longer enough.
Founders are expected to show disciplined cost management, credible timelines to profitability and a practical understanding of supply chain constraints. It’s no longer just about growth – it’s about proof too. Sharper positioning and clearer articulation of value are absolutely key, as is the ability to navigate a more crowded funding environment.
A period of refinement
For emerging founders, the message is clear: realism is an asset. Investors want leaders who acknowledge market constraints, who understand customer buying behaviour, and who build scalable operations deliberately rather than reactively. They should also be aware that market shifts don’t signal a slowdown in appetite for climate innovation, rather a period of refinement. The technologies that survive this tougher funding environment are likely to be robust, commercially grounded and better equipped to scale sustainably.
However, growth is still very much achievable. We were delighted to see our Low Carbon Innovation Fund 2 portfolio company Adaptavate recently selected for a €2.5m grant by the European Innovation Council (EIC) Accelerator. This support will accelerate the launch of Adaptavate’s global licensing programme, helping partners around the world access practical climate-positive construction solutions. Adaptavate’s products are made from renewable feedstocks, install like conventional materials and deliver high performance, while reducing or removing CO₂ emissions by up to 4kg of CO₂ per m². Being selected for the EIC Accelerator confirms that Adaptavate’s work aligns with Europe’s vision for decarbonisation and a more sustainable built environment.
Intentional progress
As 2026 continues to unfold, climate tech investment will be increasingly defined by balancing ambition with execution, a necessary step towards durable impact.
[1] https://trellis.net/article/climate-tech-investment-2026-ai-wave/
[2] https://www.thebanker.com/content/396ac4bc-0b27-4b2b-8286-c731484f5bd8