Investment managers backing green technology companies are preparing to invest more this year based on clearer rules and lower borrowing costs, even as they face higher standards for where their money goes.
All the factors that shaped where money goes in 2025, including President Trump’s policy decisions, the growth of artificial intelligence, and the proliferation of power systems, will continue to influence investment choices this year. Companies seeking funding will need to show they can not only reduce carbon pollution, but also make a profit.
Where investors see opportunities
Despite concerns about an AI bubble, most investors agree that companies that serve data center energy needs are good investments. This includes startups working on new types of geothermal power generation, companies developing renewable energy projects, and software makers improving energy efficiency.
According to the International Energy Agency, energy usage in U.S. data centers is expected to jump 130% by 2030 compared to 2024 levels. Even if only half of that projected growth happens, it’s still a “huge opportunity,” said Rajesh Swaminathan, a partner at Khosla Ventures.
Another reason to feel positive is that there are more opportunities to acquire clean energy companies that have fallen in value, said Hans Kobler, who founded and runs Energy Impact Partners.
Investors are also interested in companies working on power grid technology. Nasdaq’s main grid index rose nearly 30% in 2025, outpacing other major stock indexes. But even after such a strong performance, investors say they want more from grid technology stocks.
Investment in the U.S. power grid reached $115 billion last year, about a quarter of the global total, and that number is expected to rise to more than $128 billion over the next two years, according to BNEF.
Jens Pearce, who oversees sustainable equity investing at Mirova US, said that as climate change worsens severe weather, the appetite for funding projects that help communities prepare for disasters will also “further increase.”
In the United States, disaster preparedness and recovery are already major business. A group of about 100 large public companies focused on disaster preparedness and response outperformed the S&P 500 by 6.5% annually from October 2015 to October 2025, according to Bloomberg Intelligence.
Nuclear power startups received about one-fifth of all climate venture funding in the first nine months of 2025, and publicly traded nuclear companies enjoyed a rise in stock prices, largely due to the technology’s potential to meet AI’s energy needs. However, investors have mixed feelings about whether the sector will remain promising in 2026.
Some investors are worried about soaring prices at nuclear power companies. Garvin Jabusch, who oversees investments at Green Alpha Advisors, said the fundamental business facts of many nuclear stocks don’t justify their prices, so “it’s clear we need to pivot.”
However, some of the biggest investors in climate technology remain committed to the sector, particularly nuclear fusion. Tech billionaire Chris Sacca’s venture is raising new funding for nuclear fusion. Khosla Ventures’ Swaminathan said his team would also “double down” on its nuclear investment in 2026. He acknowledged that the sector is getting very hot, but said, given the odds, “today’s valuation is very reasonable.”
The ever-growing industry is also attracting unexpected new entrants. Trump Media and Technology Group, which runs the president’s social media platforms, announced in December a surprise deal with fusion startup TAE Technologies worth more than $6 billion.
Where investors are withdrawing
Pitchbook says U.S.-based companies that make alternative proteins will experience large investor exits in 2025, with venture funding for cell culture technology down about 90% from the previous year. And the situation is unlikely to improve this year.
“It’s a tough place to invest,” O’Sullivan said. The company has funded a number of alternative protein makers, but has become increasingly wary of giving more support.
Some agricultural technology areas, such as automation and precision farming, are likely to receive support from investors as labor shortages persist and farmers want to cut costs. But for many others involved in sustainable agriculture, the funding situation is “very difficult,” said Josh Posamentier, who helps run Congruent Ventures.
Corporate acquisitions for U.S. crop agriculture fell to zero in the first nine months of 2025 from $38 million a year earlier, according to BNEF. This comes after acquisition deals in the sector have already fallen by nearly 97% in 2024 dollars from 2023 levels.
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