Europe has a startup creation story to be proud of. Across energy, food systems, industrial decarbonisation, and frontier technologies, European founders are building some of the world’s most ambitious climate tech ventures. The pipeline is growing: the number of climate tech companies entering the Series B stage has more than doubled since 2020, rising from 220 to 533 in the first half of 2025 alone. And yet, too many of these companies stumble at precisely the moment they should be accelerating: the transition from early validation to commercial scale.

That stumble has a name – the Series B funding gap – and it’s both larger and more structural than most people realise.

At World Fund, I’ve had the privilege of contributing to our latest report, The Series B Funding Gap in European Climate Tech, leading the narrative, coordinating across internal teams, working with our design team on bringing it to life, and steering the launch campaign. The report brings together exclusive data from partners including Dealroom, Cleantech Group, EIF, Innovate UK, Cleantech Scandinavia, and Tesi, and offers what I believe is the most comprehensive picture we’ve had yet of where Europe’s climate tech financing system is — and isn’t — working.

Between 2020 and 2024, European climate tech companies faced a cumulative Series B funding shortfall of approximately $13.5 billion compared to the United States. This isn’t just about round sizes, though those are telling too: the average European Series B round stands at $35.2 million, more than 20% below the US average of $45.5 million. More fundamentally, only 15% of European seed-stage climate companies go on to raise a Series B, compared to 25% in the US. Far fewer companies are making it through the critical inflection point where capital intensity rises and commercial scaling begins.

What makes this gap so stubborn is that it isn’t a talent or innovation problem. Europe produces more climate tech startups than the United States. Returns from European VC are comparable to their American equivalents. The problem is structural: too few European funds are large enough to write the $25–100 million tickets that early growth stage companies need, and far too little private institutional capital finds its way into venture at all. In the US, 72% of VC funding comes from institutional investors; in Europe, that figure is just 30%. Pension funds allocate 1.9% of their assets to venture in the US, in the EU, the equivalent figure is 0.018%.

The result is a continent that excels at creating climate tech companies and then watches them scale with foreign capital, or not scale at all. Roughly 37 European climate tech scaleups per year are unable to raise a Series B despite having the fundamentals to do so. That is not just a missed investment opportunity, it’s a direct cost to Europe’s strategic resilience, energy sovereignty, and industrial competitiveness.

The report also explores the significant regional variation across the continent. Germany comes closest to matching US benchmarks on both graduation rates and round sizes, while the Nordics and the Netherlands face particularly acute bottlenecks despite vibrant early stage ecosystems. France stands out for the strength of domestic investor participation, a dynamic that the Tibi programme has actively supported. These differences matter because there is no single European fix: solutions need to work across fragmented regulatory and capital market environments.

This report doesn’t just diagnose the problem; it points to a way forward: coordinated regulatory reform, the mobilisation of institutional capital through blended finance mechanisms, and the creation of more mid-sized funds capable of leading growth rounds domestically. The case for action is urgent, and in an increasingly volatile geopolitical environment, it is also a strategic imperative.

You can read the full report here.