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Image credits: Karin Henriksson
A year-long perspective from our Venture Partner Karin from Manhattan reveals how climate investing has evolved through political headwinds. While federal policy resistance has reduced climate startup participation in accelerators, experienced investors remain committed and see opportunities, with $5BN invested in early-stage U.S. climate deals in Q1 2025 (strongest quarter in 18 months).
When I landed in New York a year ago, NYC Climate Week was just kicking off. The city was buzzing with energy – full of climate-focused startups, investors, and events. It was a perfect entry point for anyone passionate about green innovation and entrepreneurship.
Since then, I’ve attended approximately 80 events – pitch nights, investor roundtables, and deep-dive workshops – mostly in NYC, but also as a panelist at the world’s first CleanAI Conference in Toronto and in Washington D.C. on the Global Electrification Forum. I’ve also had the chance to lecture at NYU on impact entrepreneurship and coach climate startups at Columbia University and ERA, NYC’s largest tech accelerator.
A shifting policy landscape
One of the biggest shifts this year has been political. There’s increased resistance from the U.S. federal government toward climate-related work – including a rollback of incentives, permits, and funding. That has had a trickle-down effect on climate startups. Take ERA’s cohorts as an example: in Summer 2025, only 2 of 15 companies were focused on climate or compliance, compared to more than double that amount just one semester earlier in Fall 2024.
Despite the policy headwinds, climate risk remains real. The wildfires in Los Angeles and other disasters are clear warnings. In 2024 alone, climate-related disasters caused $1 trillion in damages across the U.S., according to the National Oceanic and Atmospheric Administration.
Climate hype is over, but green transition is urgently needed
While the climate hype may be over for now, the investors who remain are experienced and dedicated. It’s been a thrill to get to know many of the best – including Laura Fox at Streetlife Ventures. Laura and other investors I have spoken to are seeing interesting opportunities in the green transition space currently, as the “tourist investors” are leaving, especially in the high emitting fields where Greencode is active; energy, heavy industries, transportation and the built environment.
Another observation is that the language has shifted: instead of talking about “saving the planet,” startups now highlight efficiency – cutting costs, optimizing infrastructure, and making systems smarter. This resonates with investors who invest in green transition growth opportunities and are long term drivers to decarbonization. So I see it mainly as a change in vocabulary, not in urgency.
Climate investing isn’t dead
In fact, some numbers are on the rise, as Laura Fox pointed out to me. $5B was invested in early-stage U.S. climate deals in Q1 2025 (strongest quarter in 18 months), Texas added more grid-scale battery storage than the climate pioneer state California in 2024, and 275 cities have signed on to the Paris Agreement (up from 100 during the prior Trump term).
Many of the people I’ve met this year see Europe as the global driver of sustainability – a strong democratic union with long-term and supportive regulation.
AI is everywhere – energy-efficient AI is vital
At ERA’s Summer 2025 demo day a few weeks ago, one thing stood out: 100% of the startups had AI baked into their core business models. These weren’t general-purpose AIs, but narrow, agentic tools built to help professionals in specific industries. For example one startup aiming at maximising battery storage profits with AI-powered electricity trading, and another helping insurance brokers measure climate risk through AI.
I was also lucky to meet Sasha Luccioni, AI & Climate Lead at Hugging Face, who shared a great way to think about sustainable AI – applying the 3Rs from environmental conservation to tech:
- Reduce: Use smaller models (SmolLMs), apply distillation and quantization
- Reuse: Don’t build from scratch – use open models
- Recycle: Fine-tune and adapt existing models
The U.S. market – big but lacks urgency
The U.S. market is huge. According to West Monroe (2025), U.S. climate tech VC funding reached $14.6 billion in 2024 – more than €10.8 billion in the EU. States like California and New York have ambitious climate goals.
But daily life in Manhattan tells a different story: buildings are often not energy-efficient, gasoline and diesel cars dominate the streets, traffic is heavy, public transport is underdeveloped, and single-use plastics and packaging are everywhere.
The urgency of climate change feels largely absent from everyday consumer behavior compared to Europe. All of this shows how much work there’s still to do – and how urgent it is to keep pushing forward.
Year two will test whether this market correction produces the resilient, scalable companies the green transition actually needs. From where I sit in Manhattan, watching both the policy chaos and the persistent innovation, I'm optimistic we're heading in the right direction.
Greencode Ventures is a leading European VC fund investing in early-stage startups driving the green transition with digital business models. We’ve recently closed €70M in Fund I.
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