Dealroom.co – Urban Tech, 2023

Urban Tech startup funding for 2023 has reached $26.6 billion, surpassing the levels seen in 2020. However, this still represents a 39% decrease compared to 2022. The decline can be attributed to a significant drop in late-stage funding rounds, while early and breakout stages of startups are showing more resilience. One notable exception is the green buildings sector, which has raised $5.3 billion this year, marking a threefold increase from 2020 and on track for its best year ever. The capital stack for urban tech is expanding beyond venture capital to include more debt, private equity, and project infrastructure financing, as the climate tech sector matures and faces a more challenging funding environment. Climate tech funds are also experiencing a slowdown in fundraising, with a projected 62% decline in 2023 compared to the previous year. Urban tech startups are raising substantial amounts of non-dilutive capital, particularly through debt financing. They have raised nearly $17 billion, near an all-time high and a threefold increase from 2020. In terms of investment trends, SaaS x construction startups have seen a significant decline of 68% in VC funding despite the productivity challenges faced by the construction industry. On the other hand, sustainable building construction startups have raised a record $2.5 billion this year, driven by sustainable cement and green steel. Building operation decarbonization startups are on track for their best year, having already raised $2.6 billion. This is led by residential solar and building energy management. Startups focused on preventing and combating wildfires have also attracted significant VC funding, surpassing $100 million and matching the funding levels seen in 2021.