Cleantech Funding in Q3 2024: Navigating a Challenging Landscape

Q3 2024 has been another tough quarter for cleantech funding, mirroring the trends we’ve been experiencing at Hyperion Executive Search. Investment into climate tech has remained sluggish, with equity deals continuing their downward trajectory. However, despite the overall challenges, there are positive signs, particularly in sectors like energy storage, batteries and grid, also in transportation and emobility, where innovation continues to attract investors. Fortunately both key subsectors for Hyperion. You can read more about these specialisms on our new website here . What does this mean for founders and CEO’s raising, and how does it tie with our experience with leadership hiring in the space?

The Funding Landscape: A Mixed Picture

According to the Net Zero Insights report, while the global investment in cleantech is set to surpass 2023 levels, it’s far from a full recovery. Equity deals, which have traditionally been a major driver of growth, are down, and the market is still feeling the effects of economic uncertainty and cautious investor sentiment. This is reflected in the hiring landscape, where leadership roles are taking longer to fill, and we’re seeing more direct involvement from VC investors, which often slows down the process for founders.

However as said, ?it's not all doom and gloom. There are bright spots in the market. Energy, transport, and the circular economy continue to be the top sectors attracting significant investment, particularly for later-stage companies with proven traction. This mirrors our own experience—startups with sound growth plans and solid investor backing are still hiring, especially as they look to scale into new markets.

Key Sectors Driving Investment

1. Energy: The energy sector continues to lead in terms of total investment, with $43.5 billion raised globally. Innovations in renewable energy sources, energy storage, and grid infrastructure remain a focal point for investors. We’ve seen leadership hires in these areas, particularly as companies prepare to scale operations internationally. It's a challenging market, but those with a clear path to commercializing new technologies are securing the capital and talent they need to grow.
2. Transport: Another sector showing resilience is transport, which raised $27.3 billion in Q3. With the push towards electrification and the development of supporting infrastructure, later-stage deals are helping companies scale globally. In our work, we’ve seen steady hiring for leadership roles in companies focused on EV infrastructure and next-generation mobility solutions, in particular some key Board and Commercial roles.
3. Circular Economy: As companies and investors focus more on sustainability, the circular economy is gaining traction. This sector attracted $17.6 billion in Q3, driven by innovations in recycling, sustainable materials, and industrial processes. The push for efficiency and reducing waste is not just a trend—it’s becoming a core component of business models. We have been hiring in this space, though hiring can be slow as investors scrutinize scalability.

Leadership Hiring Trends: Slower, More Involved Processes

From a talent perspective, leadership hiring in cleantech has mirrored the broader funding landscape. The number of hires has decreased, and the time to fill positions has lengthened. Ona few occasions we’ve seen more involvement from VC investors in the hiring process, which can often slow things down, especially when there are many investors on the Cap table that want an input. For founders, this creates an additional layer of complexity, as they balance investor expectations with the need to bring in the right talent to scale their business.

However, despite these challenges, companies that have traction in the market and a clear path to growth are still pressing forward with key hires. The focus is increasingly on scaling, both in home markets and through international expansion. As we look to the end of the year, I expect this trend to continue, with a cautious but steady approach to leadership recruitment. Some companies are seeking to cut costs by trying to recruit themselves, with mixed results as you would expect. Does anyone factor time costs into these decisions, or mis-hire costs?!

Non-Dilutive Funding on the Rise

Interestingly, one area that has seen growth is non-dilutive funding, which now makes up a third of deals. This includes debt and grants, and while it’s not a perfect substitute for equity investment, it’s a useful tool for companies looking to sustain operations and continue growing in a tough market. We’ve seen some of our clients leverage this type of funding to support their expansion plans, especially when equity rounds have been harder to close.

The Road Ahead

As we move into the final quarter of 2024, the cleantech sector remains at a crossroads. Investors are more cautious, but they’re not sitting on the sidelines. They’re looking for companies with proven models, strong leadership, and the ability to scale. For founders and leadership teams, the message is clear: now is the time to double down on strategy, build on existing traction, and ensure your business is ready for growth when the market rebounds.

However, there’s an added layer of uncertainty as the US election approaches in November. The awful possibility of a Trump return, given his strong links with the oil and gas industry and his vocal anti-environmental stance, has many in the cleantech sector feeling uneasy, or should I say queasy! ?Trump’s protectionist agenda could further complicate international expansions and impact cross-border funding and innovation partnerships. Investors are watching closely to see how this plays out, and the outcome could significantly influence the direction of cleantech policy and investment, especially in North America.

At Hyperion, we’re continuing to work with clients who are navigating these challenges, helping them find the leadership talent they need to scale. The market might be slower, but the fundamentals of strong leadership and sound business planning are more important than ever.

Let me know your thoughts—how has your business been navigating these challenges? Are you seeing similar trends in hiring or funding?