U.S. Cleantech Leadership Endures, but Start-Up Pipeline Is Narrowing
Energy innovation is crucial to meeting growing global energy demand, furthering economic growth, and mitigating climate change. In recent years, the United States’ most significant contributions to global energy innovation have been channeled through its robust clean technology start-up ecosystem. CFR’s “Global Energy Innovation Index” (GEII) ranks countries’ commitments and contributions to the innovation process. By and large, European countries placed the highest, while the United States stands at thirteenth place. Despite its lackluster overall position, the United States makes vital contributions to the creation and growth of markets for new clean energy technologies, as measured by the number of high-impact start-ups created, early-stage venture capital (VC) investment, and successful company exits.
U.S. Cleantech Leadership in the GEII Market Index
Investment in innovative clean technologies—like renewable energy, sustainable transportation, and pollution control—is crucial to addressing the climate challenge while creating new industries and enterprises that can further economic development.
The market index of the GEII—which evaluates the ability of a country’s entrepreneurs and businesses to build markets for energy innovations—includes three indicators that focus on entrepreneurship: high-impact clean energy start-ups, early-stage VC investment, and successful company exits. The GEII identified high-impact energy start-ups through the Cleantech Group’s awards and tracking system, which recognizes companies for their outstanding innovation, market impact, and growth potential. Early-stage VC investment was tracked by the number of dollars invested by deal. Start-up exits—the point in a company’s life when founders and early investors sell their ownership stake to generate profit—were tracked through initial public offerings (IPOs) and acquisitions across different types of technologies.
Because all three indicators are closely tied to economic activity, the GEII scales them by gross domestic product (GDP) in order to make cross-country comparisons. Yet, even with this adjustment, the United States is a high performer, ranking first, fourth, and fifth in these three categories among the thirty-nine countries in the index. In absolute terms (not GDP-adjusted) U.S. leadership is even more pronounced: the United States accounts for close to half of the world’s high-impact start-ups, venture capital, and exits.
The United States’ strong showing on those three indicators lifts its ranking in the markets index to fourth place. Notably, this ranking is five places higher in 2025 than it was in 2021, highlighting the United States’ continued momentum and appetite for growth in the cleantech industry despite swings in federal support.
High-Impact Clean Energy Start-Ups
The number of high-impact clean energy start-ups in a country demonstrates its ability to turn promising ideas into viable, profitable ventures. The United States’ strength in doing so is clear: since 2021 the United States has been home to close to 44 percent of all global high-impact clean energy start-ups (see Figure 1). In 2025, its share increased to 46 percent, underscoring U.S. consistency and leadership in the industry. Even when scaled by GDP, the United States still places first, followed by Canada and the United Kingdom, which ranked second and third, respectively.
Figure 1:
Early-Stage Venture Capital Investment
Early-stage VC funds activities that other investors perceive to be too risky to support, enabling start-ups to form, scale, and generate technological advances. The scale of VC investment demonstrates the willingness of a country’s financial sector to take on technological, commercial, and regulatory risk in clean technology development.
Between 2020 and 2024, early-stage venture capital investment in clean energy technology companies increased by 82 percent globally. When not scaled by GDP, the United States accounted for the largest proportion of this investment. Figure 2 highlights that in 2022, at the peak of the last investment cycle, the United States made up nearly 50 percent of global investment. Although the totals have declined in recent years, U.S. companies like Pacific Fusion and Form Energy continued to raise hundreds of millions of dollars. When scaled by GDP, the United States ranks fourth, just behind Sweden, Estonia, and the United Kingdom.
Figure 2:
Successful Company Exits
The United States is also a global leader in successful clean technology start-up exits, which include acquisitions and IPOs. This indicator provides insights into the capacity of a nation’s energy innovation ecosystem to scale cleantech businesses and bring their products and services into the mainstream.
In absolute terms, U.S. start-ups made up a majority of the world’s successful exits (see Figure 3). In 2022, the U.S. share of global exits was 60 percent, up from 56 percent the year before. When scaled by GDP, the United States came in fifth place, trailing only Sweden, Finland, Canada, and Estonia. Although totals are down in recent years, companies like solar hardware developer Nextracker raised $638 million in its IPO, and the acquisition of community solar management firm Solstice Power Technologies by Mitsui highlights continued U.S. success in scaling cleantech businesses.
Figure 3:
Where Is the Sector Heading?
U.S. leadership on these three indicators is predicated on a clean technology ecosystem in which entrepreneurship is supported by deep capital markets and viable pathways to scale and exit. Maintaining that strength remains as crucial as ever. Despite a reduction of government-backed investments, clean technology investment in the United States continued to increase in 2025. However, that investment has shifted away from early-stage ventures to what Latitude Media calls “later-stage, technology-ready companies,” such as those that will provide energy to the surging artificial intelligence industry. This hesitancy to take new bets on cleantech ventures could have downstream effects on U.S. innovation for years to come. Loss of early-stage companies across a range of fields could mean that the United States is unprepared to respond if new opportunities arise.
On a global scale, the shift away from early-stage investment appears consistent; cleantech investment increased by 8 percent from 2024, reaching $40.5 billion dollars of overall, while seed and series A funding decreased by 20 percent and 7 percent, respectively. China—which placed twenty-eighth in the markets index and twenty-ninth overall—is an important actor to keep an eye on. The Cleantech Group expects significant Chinese investment in energy storage, grid resilience, and materials innovation moving forward. The Chinese central government recently announced new funding to support start-ups. The United States cannot afford to forfeit its innovation edge.