But only 21% of climate tech venture funding goes to adaptation tech startups

NEW YORK, Dec. 12, 2024 — The advisory and investment firm Tailwind (www.tailwindclimate.com) has released the Adaptation & Resilience Innovation Playbook, a market report on the state of supply, demand, and investment capital available in the climate adaptation innovation space.

Adaptation and resilience solutions are products and services that predict, prevent, mitigate and enable recovery from climate impacts like floods, heatwaves, storms, and wildfires. Despite receiving less attention and less capital than traditional climate mitigation solutions, Tailwind’s research findings show promising trends for companies commercializing these solutions.

Key Findings:

• Government demand: $737B globally in 2023, including $290B in the US
• Consumer demand for adaptation: $647B globally in 2023
• Disclosed corporate spend on adaptation of at least $58B, well below what is needed to address trillions of dollars of assets at risk.
• Over 1800 startups with adaptation and resilience solutions in the US received USD32 B in investments in 2019-2023, barely 21% of total climate tech investments in that time
• 71% of investments into pure play adaptation companies going into software and data as opposed to physical risk reduction solutions.

“Accelerating climate impacts have led to a quick rise in governments and consumers spend in adaptation, with a focus on flood mitigation, water scarcity, and hardening against extreme weather events,” said Tailwind Co-Founder and Managing Partner Emilie Mazzacurati. “Corporations are still trying to figure out how they’re going to address their risks, but we expect that market to grow explosively over the next 3 to 5 years.”

“We see a growing number of startups offering adaptation and resilience products, but they struggle to get funding from investors, who don’t realize how large the market is, said Katie MacDonald, Co-Founder and Managing Partner of Tailwind. “Adaptation tech founders have a hard time getting capital at the early stages. We need philanthropic and government funders to step up and fill the pre-seed to seed stage capital gap so we can build a capital stack that allows solutions to reach the communities and customers who need them,” said MacDonald.

The analysis of adaptation tech startups was developed in partnership with data analytics firm Vibrant Data Labs.

Tailwind released the Playbook with financial support from Autodesk Foundation, Breakthrough Energy Fellows, Battelle, Shockwave Foundation, and Lyda Hill Philanthropies. Other partners on the project include C2ES and ForsMarsh.

SOURCE Tailwind