Climate startups button up for a post-election freezehttps://pitchbook.com/news/articles/climate-startups-election-trump-inflation-reduction-actFor the climate tech startups now navigating this stage, it’s going to be a rough six months. As the industry adjusts to a new energy policy regime under President-elect Donald Trump, there’ll be a chill in the air for project financing and major fundraising for companies in the line of fire.
Potentially on the chopping block are key provisions of the US Inflation Reduction Act, the budget of the Department of Energy and Treasury guidelines on tax credits. Offshore wind and hydrogen projects are two areas that are thought by VCs to be especially precarious.
And despite Trump’s cozy relationship with Tesla founder Elon Musk, the transition team is already planning to scrap a $7,500 EV tax credit for American consumers, according to Reuters.
“It’s going to be challenging,” said Abe Yokell, managing partner at Congruent Ventures. “My general advice is, make sure you aren’t raising right now.”
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In the eight years since Trump’s first victory, early-stage investing in climate tech has become mainstream, as specialists like Breakthrough Energy Ventures and Lowercarbon Capital made their names on Sand Hill Road, bringing generalists along with them into climate rounds.
Huge amounts of capital have flowed into infrastructure funds dedicated to the energy transition, driven by pressure from pension holders and students as well as a belief that the energy transition is a lucrative investment.
“Most new infrastructure is clean infrastructure now,” said Yokell. Energy transition infrastructure funds raised $33.5 billion in 2024, compared to $9.5 billion for non-energy transition infrastructure funds, according to PitchBook research.
Institutional investors think in decades, not in single election cycles.
Plus, much of the climate policy cemented by the Biden administration has bipartisan support: namely, creating more resilient supply chains, nearshoring critical minerals production and creating clean-energy jobs in battleground states.
Trump’s calls to deregulate and reduce permitting roadblocks may help clean energy projects in the long run, especially for new nuclear technologies that have been bogged down in red tape.
For Yokell, there’s a strong case to stay bullish on climate-friendly projects:
“There will be some collateral damage environmentally, which I’m not excited about, but the lack of regulations will in fact allow for a lot of clean infrastructure to be built.”