The Future is Green: Venture Capital Trends to Watch in 2025
This year is shaping into a pivotal period for climate-focused venture capital funding and, as a natural consequence, SEIS and EIS investment strategies. We know you’ve heard that before – it was the same last year and the year before. So, what does this repetition tell us?
It highlights a critical truth. Investment in green technology, renewable energy, and climate innovation is growing steadily. Still, it is not yet growing at the scale or speed required to meet the accelerating demands of the climate crisis. While governments are beginning to increase regulation and introduce frameworks that enhance investor protection, there remains a considerable gap between ambition and execution.
On the upside, global climate tech investment is still trending upward despite a challenging 2024. Europe is also becoming more prominent than in previous years, suggesting a strong appetite for sustainable innovation.
Still, we are reminded daily of the worsening effects of climate change and its devastating impact on communities and ecosystems worldwide. In this article, we will explore the dynamics driving the green investment revolution, key venture capital trends to watch in 2025, and how SEIS and EIS investors can take advantage of the shifting landscape to deliver impact, innovation, and long-term value.
The macro shift and why climate tech is the new VC frontier
In 2024, some of the fastest-growing VC-backed start-ups in Europe were in climate tech sectors, such as:-
Carbon removal and sequestration
Clean energy and electrification
Climate data and analytics
Circular economy and waste tech
So, what's happening behind the scenes? Why is climate tech in demand, and is this the early days of a long-term trend?
Shifts in institutional capital
There is a saying in the investment world: follow the money; it's really as simple as that. Considering that, as far back as 2021, a staggering $130 trillion in assets under management were aligned with net zero targets, this shift represents one of the most important venture capital trends shaping global climate finance in 2025.
Pension funds, sovereign wealth funds, and insurance companies are increasing their exposure to ESG climate-aligned portfolios to meet the growing number of net zero mandates. Interestingly, private investors are less aligned, perhaps less convinced, than institutional and high-net-worth individuals.
In the eyes of many, climate tech is no longer a niche impact play; it’s becoming a fiduciary responsibility. These massive institutions are backing decarbonisation innovation funds and channelling capital into climate tech investment as part of long-term ESG strategies.
UK climate goals for 2050
The recent extension of the SEIS and EIS structure removed uncertainty, instead clarifying the UK government’s commitment to climate tech and initiatives in this area. The UK government is committed to net zero by 2050, pushing further ahead while other countries are watering down their initial aspirations.
The British Business Bank Future Fund is responsible for breakthrough support for start-ups in net zero sectors, often co-investing with private VCs. The government’s ongoing green finance strategy targets £100 billion in private investment in net zero transition by 2030. This ambitious target puts the UK government at the forefront of climate tech investment in what many see as a rerun of ongoing success in the broader FinTech sector.
The emergence of climate change venture capitalists
This ongoing interest in climate tech, the so-called green revolution, is certainly benefiting from a more structured and fluid investment environment. Joining the dots, from early-stage SEIS funding to EIS, we now have VCs backing the next stage. This has created a myriad of funding/exit opportunities, mergers, and acquisitions, and it is a means for early investors to at least stand the chance of a potential return.
While SEIS and EIS funding has made a huge difference in climate tech, once the domain of mission-driven impact investors, mainstream VCs are joining the revolution, backed by global relevance and potentially strong returns.
In some cases, the opportunity to blend financial acumen with environmental urgency is creating a new hybrid investor profile. However, this is not an investment in social conscience or a trend based on pure emotion. We are seeing the emergence of viable long-term businesses needing short-term capital.
The rise of tax-efficient Green Funds
To put it another way, UK-based EIS and SEIS funds investing in UK companies. Previously dismissed as “tax offsets”, investors are now waking up to the long-term opportunities, AI-driven innovation, and potential rewards. It's also fair to say that the ongoing squeeze in income tax, capital gains, and the ever-growing IHT burden has prompted some high-net-worth individuals to reconsider their approach to areas such as climate tech investment.
Income tax relief of 30% on EIS investments and 50% on SEIS investments are attractive in their own way. Then we have the long-term favourable treatment of capital gains and even inheritance tax, all prompting high-net-worth individuals and IFAs to seek curated, impact-led portfolios - in other words, green technology funds!
A reality check and growing momentum
These growing tax pressures and climate concerns mean that SEIS and EIS investments are no longer niche; they are necessary. What began as a snowball high up the mountain, out of sight and out of mind, is now gathering pace and size with a greater appreciation of the potential impact of client change.
OnePlanetCapital is a leader in both fields. Our recently launched SEIS climate tech fund benefits from our accumulated knowledge of similar, albeit slightly later-stage, investments via our EIS fund.
The key to early-stage and start-up investment, especially in areas such as climate tech, is identifying a favourable risk/reward ratio. We are not talking about gambling; we’re talking about objectively viewing a new, potentially groundbreaking technology. We take a hands-on approach, helping founders and directors fund and grow their businesses, which is a win-win for all parties.
The key to long-term success
It's important to remember that these early-stage and starter investments carry a much higher degree of risk but also potential reward. The key is identifying those with the potential to disrupt existing markets, steered by experienced founders and a strong management team. When you also consider timing as a critical element, many experts argue we live in the perfect proactive environment regarding green technology, climate change, and climate tech investment.
Of course, this will attract a range of different investment opportunities, incorporating different risk levels and potential returns. It’s essential to appreciate the changing investor sentiment and perception while at the same time not getting carried along on a wave of emotional impact investments. Successful investors can maintain a clear head, separate emotion from statistics, and still appreciate this change in trend.
Vertical deep dives and where the smart climate money is going
To understand the most compelling venture capital trends of 2025, look at where the smart climate money is going: into specialised verticals that blend innovation with impact. Investors are no longer content with broad “green” labels; instead, they are backing niche innovators solving very specific climate bottlenecks.
Below, we have listed the five climate tech subsectors likely to attract the lion's share of capital in 2025.
Bioplastic and packaging innovation
The ongoing debate over single-use plastics and extended producer responsibility schemes have created a surge in demand for bioplastic and packaging innovation. Tightening regulations and financial assistance for innovative alternatives have prompted the creation of biodegradable and compostable materials made from:-
Algae
Seaweed
Agricultural waste
Slowly but surely, these are replacing petrochemical plastics, although long-term mass-market appeal will be based on the financials and the ability to bring down the cost of production. There is also growing interest in companies producing low-carbon packaging for the growing e-commerce market, with online retailers like Amazon under pressure to reduce their packaging and carbon footprint.
Carbon removal and storage
For many, the re-emergence of the carbon credits market will prompt recollections of the previous attempt, which was the subject of manipulation and illegal activity.
The situation is different today, with a range of direct air capture and mineralisation tech gaining significant institutional investment. Innovative start-ups focused on biochar, ocean carbon removal, and carbon-storing concrete are catching the headlines with substantial government funding for broad carbon-negative solutions.
This area has been overlooked for many years, lacking promotion and focus from the authorities and VC investors. However, there's no doubt the tide is turning, and investment is more forthcoming for innovative carbon removal and storage solutions.
Battery and grid technology
Many would describe the current situation as a "perfect storm" regarding battery and grid technology innovation and investment. Investment in this area is increasing, with opportunities emerging for SEIS/EIS investors looking for pre-commercial/early revenue companies.
The innovators of today, tomorrow’s potential market disruptors, have the potential to secure a significant element of a growing and potentially huge market. There are many reasons for the increase in investment, such as:-
Great-scale storage to support intermittent renewable energy sources such as wind and solar.
Growth in second-life EV battery usage and recyclable lithium solutions - despite Elon Musk and Tesla's challenges in the US!
Other factors to consider include more flexible platforms using AI and IoT to achieve real-time optimisation. Any means of enhancing efficiency will feed into the bottom line and increase long-term profitability.
Sustainable AgriTech
Since the first fields were farmed and the first animals bred for consumption, farmers have been trying to balance efficiency, safety and the end product. A growing element of the climate tech sector, there has been growing interest in:-
Precision agriculture
Soil carbon monitoring
Vertical farming has undoubtedly gained investor traction, and insiders believe we are just scratching the surface. We have start-ups looking to reduce methane emissions from livestock and the regeneration of soil health to enhance future returns. A controversial topic, climate-resilient crops and water-efficient irrigation have also caught the eye of VCs looking at significant long-term returns.
The broader world of agri-biosciences is now intersecting with food tech and carbon capture, bringing multiple investment opportunities.
AI for climate intelligence
So-called smart cities are not new to investors, but recent innovations and the use of AI models have taken them to a whole new level. The ability to optimise energy use in buildings, grids, and industrial systems is groundbreaking. Coupled with innovative predictive analytics and greater compliance with ESG regulations, it is possible to predict global and localised climate risk and disaster forecasting with unerring accuracy.
AI tools for carbon accounting and offset validation also provide a strong crossover with FinTech and InsurTech. The potential savings for insurers are obvious, but the knock-on effect of reduced premiums creates a likely win-win scenario. We also know that venture capital funds are backing AI-led climate platforms for both mitigation and adoption, creating solid foundations to build on the vast benefits of AI-fuelled climate intelligence.
IFAs take centre stage in the green investment boom
As with the broader financial markets, the role of IFAs is constantly changing, adapting to evolving circumstances. Recently, they have taken centre stage in the green investment boom, leading investors to the (potentially) promised land by connecting funding with the green tech revolution.
Joking aside, IFAs are no longer just investment advisers; they are becoming strategic sustainability partners for high-net-worth clients. They have taken on a pivotal role under increasing regulatory and client pressure to integrate ESG and climate-aligned portfolios into client strategies. Many advisers now actively research SEIS and EIS opportunities in climate change based on client mandates to stay competitive and relevant.
Growing client demand
Rumours and counter rumours regarding budget changes in the UK seem to have piqued the interest of investors looking for:-
Tax efficient investments
Alignment with personal values
Potential long-term growth
High-net-worth individuals, business founders, and C-suite investors are actively seeking green portfolios that offer both impact and tax relief. IFAs have taken on the role of portfolio curators, with SEIS and EIS funds seen as valuable means of mitigating risk and creating a diversified pool of investments.
SEIS/EIS as a planning tool
When considering potential tax relief of up to 50% and advantages regarding capital gains and IHT, well-managed and well-structured SEIS climate-based funds are in high demand. They provide a solid yet flexible solution for clients concerned about long-term sustainability and legacy planning. They also dovetail with the thoughts and aspirations of the new generations, which are heavily focused on impact investments with a social conscience.
Aside from the welcome extension to the SEIS and EIS investment timescales, this ongoing government support enhances credibility and compliance and creates a welcome high-impact option for many investors.
Time poor high net worth individuals want curation and climate returns
Recent market volatility has highlighted the benefits of long-term investment, which has not gone unnoticed by high-net-worth individuals. As the number of green opportunities continues to increase, there is now the option to seek strong, long-term returns while prioritising ethical and environmental impact.
Many high-net-worth individuals lack the time for in-depth research, so they increasingly depend on experienced portfolio managers and tax-efficient SEIS and EIS funds.
Enhanced appetite for curated, pre-vetted portfolios
All investors would look towards pre-made, diversified portfolios with built-in due diligence and risk mitigation in a perfect world. Ironically, due to the regulatory nature of SEIS and EIS investments and increasing fund flows towards climate tech, these funds are proving a viable option for long-term investors.
The opportunity to buy into funds with a proven track record, established criteria and the ability to screen investments for both impact and innovation is critical. OnePlanetCapital provides both a mix of experience and innovation and the ability to read markets and identify investments with significant potential.
OnePlanetCapital’s differentiator
OnePlanetCapital’s SEIS and EIS funds benefit from the experience and skills of entrepreneurs who’ve built and exited businesses, experiencing the often extreme highs and lows. Having been in the shoes of today’s founders, they can offer real-world insight, extensive support, and focused mentorship to portfolio companies. We know from experience that high-net-worth individuals trust this approach, blending strategic vision with grounded and practical execution.
In summary, high-net-worth individuals don't just want growth; they want to invest in the future they believe in without spending hours researching it. That's where we come in!
Summary: What this means for VCs, marketers and investors
In recent years, we have seen a huge shift in investors' approaches to climate change and climate tech. Climate tech is now at the centre of global venture capital trends, driving some of the most strategic and scalable investments in 2025 and beyond.
Greater awareness of climate change and its very real consequences is reshaping consumer behaviour, regulatory frameworks, and investor expectations, not just in the UK but globally. Green innovation underpins some of the most exciting and scalable investment opportunities in venture capital portfolios today.
There are also some very strong touchpoints, with a strong appetite among venture capital firms fearful of missing out on competitive deal flow and long-term returns. We then have IFAs actively embracing green tax-efficient investments to remain relevant and trusted advisers amongst their clients. Last but by no means least, the fuel which is firing this movement is a growing interest from high-net-worth individuals looking to diversify their portfolios, taking in ethical investments within a tax-efficient EIS/SEIS wrapper.
Purpose-driven portfolios and climate initiatives are the one theme where ethics and economics align. If you're looking to invest in climate tech through SEIS or EIS in 2025, please take a look at our funds or speak to the team for more information.