Canadian Climate Funding Recap: 2025

Hey there,

Today we’re sharing our annual recap on climate tech funding in Canada. Every January, we look back at all of the deals we tracked throughout the year to see how the funding landscape has changed. Where capital’s flowing, slowing, or changing.

It’s been a rocky year to say the least, as climate tech companies navigated tariffs and trade wars, a surge in AI-driven energy plays, high-profile bankruptcies and more. Top-level funding may have ticked down this yea, but early-stage innovation and growth ventures both offer signs of progress.

In this recap:

• Just over $1.1B raised across 65 deals

• Growth equity thrives alongside an active and evolving early stage

• The late stage gap grows with just 2 Series C+ deals

• Energy and minerals continue to lead all verticals

• How sovereignty and compute are changing the landscape - and how Canada’s responding (or not)

A quick note: We're a one-person operation, and these annual reports take many hours of time and effort to put out. We make it freely available because transparency strengthens the entire ecosystem: when founders and investors have better market intelligence, everyone benefits.

If you find this valuable, the best way to support our work is by sharing it with your network or becoming a paid subscriber.

Canadian climate tech companies raised $1.11 billion across 65 deals in 2025, down 13% from 2024's $1.38 billion. While deal volume held steady, average deal size grew slightly (4%) reflecting an active - but selective - market.

The funding landscape continues to fall into a barbell structure: active and diverse Seed-stage activity (27 deals, 41% of activity) and concentrated Growth Equity ($597M across 9 deals and 54% of capital). The bar to graduate continue to be raised, as Series A+ deal shrink and late stage Series C+ all but dries up.

Key Takeaways:

• Growth equity dominated as investors double-down on companies with product-market fit

• Early stage is active but evolving with a mix of traditional rounds and alternative structures

• Late stage gap: Only 2 Series C+ deals completed

• Energy and minerals continue to lead all verticals

• Deal sizes grew slightly but stay compressed: $22M average (up 4%)

Stage

Pre-Seed and Seed activity remained strong as investors continued placing early stage bets across a range of sectors and technologies.

With 27 deals representing 41% of all activity, the seed market demonstrates that appetite for climate innovation hasn't disappeared, but it’s more measured.

Seed deals spanned all sectors, including FeX Energy (energy storage), Enurgen (solar optimization), CURA (low-carbon cement) and Dispersa (chemicals).

The early stage, Series A-B market continues to shrink - a trend we first started to see last year. 19 companies raised just over $391M through a mix of traditional rounds and strategic financing like Mangrove Lithium ($50M) and Summit Nanotech ($36M).

• Companies are pulling in capital outside of conventional series rounds in order to keep building - particularly for capital-intensive commercial-scale plants.

Where we’re seeing the greatest pullback is Series C+. Only two late stage deals closed in 2025: Orennia (undisclosed) and Corinex ($42M, all European investors).

A small number of companies can hit the Series A mark, raising $10-30M, but getting from $30M to $50 or $100M is rare. Today’s early stage companies will need Series C capital in 2-3 years, but that pipeline is struggling.

Growth Equity was the clear winner in 2025, attracting 54% of all capital across 9 deals.

Top growth deals:

• Hydrostor ($200M): Energy storage developer backed by Canada Growth Fund, Goldman Sachs, and CPP Investments

• Eavor ($138M): Geothermal technology scaling commercially in Germany

• dcbel ($79M): Home energy management platform expanding across North America

• GoodLeaf Farms ($52M): Vertical farming reaching commercial scale

• General Fusion ($51.5M): Nuclear fusion continuing R&D after earlier funding challenges

Institutional capital will back companies with proven technology and clear paths to revenue. Government funds like the Canada Growth Fund acted as kingmaker in multiple deals.

Scale is achievable in Canadian climate tech and strong companies are breaking out in their markets, but the bar is high.

New here? Sign up below for our weekly briefing

Get the latest deals, market insights, job postings and more

Deal Size

Deal size stayed compressed in 2025:

• Average deal size: $22M, up 4% from $21M in 2024*

• Median deal size: $5.8M, down from $6.5M in 2024

The Series A compression is particularly notable. Deals are roughly half the size they were two years ago.

*This bump is due to previously announced rounds closing in 2025.

Sector

Energy led all verticals in 2025, with more than $627M allocated across geothermal, fusion, storage, and demand response.

Energy saw a healthy mix across stages:

• Seed: FeX Energy, Aslan Renewables, Enurgen

• Series A: AlumaPower, Moment Energy, Blumind

• Growth: Hydrostor, dcbel, Eavor

Mining and minerals also stayed strong in 2025, with notable rounds from GeologicAI ($60M), pH7 Technologies ($26M) and Mangrove Lithium ($50.4M).

Exits

We tracked seven acquisitions in 2025:

• BrainBox AI acquired by Trane

• Bopaq acquired by Tricentris

• Hyperlume acquired by US-based Credo

• Lion Electric (bankruptcy sale)

• Li-Cycle (acquired by Glencore out of bankruptcy)

Global Context

Globally, climate tech investment grew for the first time, up 8% from 2024 for a total of $40.5B according to CTVC.

• US investment was propped up by AI/data centre demand

• The EU market was hit by policy pullback and high-profile bankruptcies

• China expands more mature solar, EV and battery manufacturing sectors while pushing ahead on fusion and nuclear

Canada's trajectory more closely tracked Europe (down 13%) than the AI-fuelled US market.

Takeaways

1) Path to growth

Today’s seed stage companies need a path to growth capital in the next 1-2 years. This could mean non-traditional paths (bridge rounds, strategics, project finance) or a real pipeline problem.

For founders, today’s playbook requires staying lean longer and building stronger proof points before attempting to scale.

The upshot: Growth Equity's strength indicates that companies proving commercial traction can access significant capital - they just need to survive longer to get there.

2) Sovereign climates

Energy security and sovereignty emerged as a major theme in 2025. Governments became more active investors, boosting dual-use technology, allied supply chains, and energy independence.

The EU was one of the most active investors in 2025 while the US Department of Defense invested in critical minerals (including Canada’s Ucore).

At home, federal investment clustered around energy and critical minerals, mostly led by the Canada Growth Fund. What’s still missing is a clear signal on which sectors matter - not just a press release or a strategy document, but significant strategic capital.

Instead, capital tends to be a) spread across sectors, and b) small cheques. Excluding venture rounds (where BDC remains the single most active investor), the average government funding was about $5 million.

2) What AI wave?

Data centre energy demand drove 27% growth in US climate tech VC funding last year. Canada saw minimal activity in this space beyond Hyperlume ($18M seed for data centre optical interfaces, later acquired) and XNRGY (undisclosed amount for sustainable HVAC).

This could turn into a missed opportunity for climate startups to serve explosive data centre demand, grid operator needs, next-gen chip efficiency and more.

3) Alternative capital & strategics

Beyond traditional VC rounds, we saw companies accessing capital through strategic investments and project raises. Strategics bring validation, distribution channels, and a path to acquisition.

What we're watching in 2026

1) Clean compute: Data centre growth is reshaping energy markets. Opportunities aren’t just around power generation. Sovereign AI needs and compute requirements are driving innovation across the stack: chip design, cooling systems, water management and grid integration.

→ Canadian startups are building across the AI ecosystem. In 2026, we’ll be watching to see how Canadian companies step into the clean compute space.

2) Dual-use climate tech: Geopolitics are forcing a rethink on many fronts, including climate tech’s addressable market. As Canada and NATO allies increase defence spending, climate startups have genuine opportunities in dual-use applications: homeland defence (particularly in the Arctic and along coastlines), disaster response, and military resilience.

→ Expect more founders to bring off-grid energy systems, autonomous monitoring, and wildfire response to government buyers looking to deploy budgets.

3) Energy affordability and security: Grids are becoming more constrained around the world. Electrification, data centres, industrial demand and population growth are colliding with aging infrastructure, supply chain bottlenecks, and extreme weather. On top of this, energy security continues to move up the priority list for governments.

→ Energy storage had a strong 2025 - in 2026, we’re watching companies working to integrate growing renewable capacity, bring down the cost of clean, baseload power, and start moving the needle on a more flexible and responsive grid.

4) Critical minerals: Canada's critical minerals sector saw strong 2025 activity, taking commercial-scale facilities from development to production. It’s not just EVs anymore: critical minerals underpin electrification, defence, semiconductors, and more. Supply chain diversification is picking up as tech and infrastructure starts to scale up. As allied countries work to reduce dependence on Chinese supply chains, Canada has both the geology and the processing capability to become a key supplier.

→ We’re watching how quickly plants come online, unit economics at commercial scale, and whether Canadian companies can win customers before international competitors fill the gap.

5) The risk: late-stage capital: Today’s early stage companies will need capital to grow. But the late stage market has disappeared for all but the strongest companies, creating a structural risk.

→ We’re watching how startups tap into alternative sources of capital, strategic investors and project finance - and which funds lean into this whitespace.

About the data: This analysis is based on publicly announced venture capital and growth equity rounds for Canadian climate tech companies that we tracked in 2025. Some rounds may go unreported and won't appear in this analysis.

Given the small sample size, the inclusion / exclusion of one data point can skew the results, particularly when we look at averages. I’ve called this out where possible and use medians alongside averages to offset the impact of outliers.

Verticals: Broadly, we consider climate tech to be companies creating technology that is intentionally reducing emissions, adapting to climate change, or helping monitor and quantify climate impact. I lean on Climate Tech VC’s classifications for Vertical and Industry. Deal classifications use Pitchbook's taxonomy for stage definitions.