It was the best of times, it was the worst of times…I’ll spare you the rest, but a Dickensian cliché perfectly sums up this year’s New York Climate Week.
Much of the climate tech community, like the rest of the U.S. economy, is eagerly riding the AI wave. Some are concerned about the large number of natural gas power plants being built to power AI data centers. But since many climate tech startups are energy-focused or energy-adjacent, the ramp-up is being embraced as an opportunity to get companies past the valley of death.
A single focus also means that some promising sectors risk being overlooked.
This is a continuation of a trend that emerged last year. As climate-change technology companies struggle to raise money due to federal subsidies ending and investor hesitance, companies that can adapt their pitches to suit AI enthusiasts have done so.
This pivot has helped many climate tech startups secure new funding from investors. The total value of venture deals increased for the fourth consecutive quarter, reaching the $14 billion level in the first quarter of this year, according to the latest data available to PitchBook. It’s the best funding environment for climate tech in years, with most of the deal volume being driven by sectors boosted by data center construction, such as the built environment, grid infrastructure, and dispatchable energy that can be turned on or off when needed.
It’s an opportunity that most people don’t want to miss.
An exchange during a panel discussion at New York Climate Week captured that moment. When asked whether it would be better to build AI at the current pace or at a more climate-friendly pace, the two founders did not hesitate to say that faster is better. Unsurprisingly, both startups were in the energy sector.
But not everyone agrees.
We heard from several founders who felt that the data center boom was getting in the way of other promising areas of climate technology, including those that don’t rely on AI geeks to achieve their goals.
“Companies are still concerned about climate change,” one founder told me. The difference today is that big companies don’t want to make a fuss about it for fear of incurring the wrath of the Trump administration.
There were also signs that the AI boom was starting to wane in some quarters. Three years ago, it was difficult for many startups to find funding to scale, even if they were showing promising results. Customers are now starting to participate in demos. “Where was this money three years ago?” I asked several people. I received many surprising responses.
They acknowledged that this is the world they live in these days. All smart entrepreneurs find ways to meet customers where they are.
After all, the underlying idea of New York Climate Week was that data center parties won’t last forever, but they might last long enough to help startups build durable businesses. Once that happens, they can refocus on the carbon reduction mission they were founded to pursue.
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