Climate fund dry powder stood at $90 billion in this year’s first quarter, down from a $112 billion peak in the same period last year, according to a new Sightline Climate report. The recent figures don’t represent a retreat for the sector; on the contrary, 2025 was a record year for climate fund closes. Instead, deployment simply outpaced fundraising. What is shifting, though, is the nature of the investments, as capital increasingly moves away from experimental, higher-risk bets towards mature technologies deployed by established players.

That’s partly because capital is increasingly locked up in older funds for longer due to stretched exit timelines, making investors cautious about committing fresh capital. For example, infrastructure funds — whose returns from mature technology deployment are slow but steady, and whose appeal has only grown in response to rising power demand from the AI boom — captured 77% of new capital raised. But that renewed focus on infrastructure and stability is causing venture capital dry powder to deplete faster than it is being replenished, which could ultimately hurt early-stage climate tech startups.