Greentech to power ahead in 2025 even as tourist VCs check out

Asia sweltered under record-breaking heat in 2024, with many regions suffering temperatures of well above 40°C for days on end. The continent will face new climate challenges in 2025 as the world awaits President-elect Donald Trump’s return to power on January 20.

Trump, regarded as a critic of the green industry, has promised to pull his country out of the Paris agreement on climate change (again), halt offshore wind energy projects, and terminate the Biden administration’s tax credit for electric vehicles (EVs).

Climate change is a universal problem, and these policy changes in the US will have global repercussions.

Yet, investors in the sector remain sanguine.

Image credit: Tech in Asia

“Structurally, this theme [greentech] is intact, and there’s still a lot of opportunity to take advantage of, whether you’re a founder or an investor,” Andrew Wong, director at Singapore-based cleantech investment holding company Trirec, tells Tech in Asia.

From the departure of “tourist VCs” to the development of new types of battery technology, Tech in Asia explores five predictions for Asia’s greentech sector in 2025.

Goodbye, tourist VCs

The hype over green investing is dying. Many generalist VCs have shifted their focus away from climate tech to chase a more recent trend: genAI. Some don’t see this as necessarily a bad thing, since the investors who are truly committed to climate tech will stay.

Sandiip Bhammer, founder and managing partner of Green Frontier Capital, says generalist VCs with larger capital pools intensified competition and drove valuations of greentech startups higher in India.

With these “tourist VCs” exiting the climate space, the supply of capital will decline, giving the sector-specific VCs a chance to conduct more thorough due diligence and invest at more reasonable valuations. Last month, Bhammer’s firm launched a US$177 million fund to invest in India’s climate tech startups.

This shift should benefit both climate tech VCs and startups in the long run, as partnering with dedicated investors ensures consistent, long-term support, unlike one-off checks from generalist VCs who lack sector expertise and may leave when trends change.

ESG not quite dead

Despite claims that Trump will “bury” environmental, social, and governance (ESG) investing, ESG practices will continue to be enforced.

Limited partners (LPs) who invest in VC and private equity funds will increasingly require reports on – and push for – the sustainability of their portfolios.

This will flow down to the companies’ practices. Indeed, some Indian tech companies such as Swiggy, Zomato, and Zerodha have already started publishing sustainability-related reports.

More subsidies for local EV innovations

Shift in battery tech

Adapting to the heat