Climate tech IPO window shows signs of reopening

Climate tech startups have never been easy sells to public markets. They demand heavy capital, move on long time horizons, and often rely on unproven, first-of-its-kind technology. Their central mission , reducing pollution , tackles an externality that markets consistently fail to price correctly. These are not the attributes that typically excite stock pickers.

Yet the tide appears to be turning. Public markets are beginning to show real interest in climate tech, at least for a select group of companies.

This week, nuclear startup X-energy went public, raising $1 billion in an upsized offering that delivered significant returns for investors, including Amazon. Retail demand surged, with shares jumping 25% in the first hour of trading. Around the same time, geothermal startup Fervo announced it had filed for an initial public offering. The IPO’s size remains undisclosed, but PitchBook values the company at roughly $3 billion based on private investment.

These moves align with what investors told TechCrunch late last year. After years of lukewarm sentiment toward climate tech, they predicted public markets would begin embracing energy-focused startups. Nearly every investor surveyed singled out companies in nuclear fission or enhanced geothermal as the most likely to go public. Fervo was mentioned repeatedly.

The catalyst? Data centers. The AI boom has transformed rising electricity demand into a hot, marketable story. Startups that had already positioned themselves for an energy upswing now benefit from a narrative that is both timely and compelling. Fortune, it seems, truly favors the prepared.

For investors, these IPOs also offer a welcome opportunity to return capital to limited partners. A prolonged drought in public offerings had locked up substantial climate tech funding, just as many funds were eager to begin cashing out.

But this isn’t solely about liquidity.

Fervo and X-energy pursued the traditional IPO route, signaling confidence that a broad investor base wants in. If the goal were simply freeing up capital, they could have taken the SPAC path, as several others have. They chose the longer road instead.

Still, much of the climate tech sector will likely be left behind in this IPO wave.

Companies not tied to energy markets will need alternative strategies to keep moving forward , and they won’t have access to the deep pockets of public markets. This divergence suggests the climate tech world is becoming K-shaped, a pattern Mark Cupta, managing director at Prelude Ventures, described when we spoke recently.

Startups on the wrong side of the IPO window still have private investors to rely on. But there too, a K-shaped trajectory is emerging.

Venture capital and growth funds raised about $6.5 billion last year, according to Sightline Climate. That matches 2021 levels, but the number of funds has grown, meaning each fund is now smaller. For founders, that could mean less available capital. On the bright side, more competition among funds might improve fundraising outcomes.

Meanwhile, the largest funds keep expanding. Infrastructure dominated climate tech fundraising in 2024, with 42 funds capturing 75% of all sector dollars, per Sightline Climate. That success will benefit startups with mature technologies ready to scale.

Sightline also noted that many new infrastructure funds are specializing in renewables, grid technologies, and energy storage. The K-shape, it appears, is here to stay.