Washington climate tech startups land $375K as AI hoards capital

A small check in a lopsided market

Six early-stage climate companies in Washington state picked up new funding in early October. The amount was modest, but the timing says a lot about where climate investing stands in 2026. The money came from the Opalene Climate Challenge, a one-time initiative run by the Portland-based nonprofit VertueLab. It chose six startups from close to 40 applicants and presented them at the Seattle Climate Innovation Hub.7 Organizers built the program for one reason: AI-linked climate companies can still raise money, but everyone else is finding fewer deals and less patience, especially founders whose products don't serve data centers.7

Three startups received $100,000 each. Airbuild, which also won a $5,000 audience prize, uses microalgae to turn wastewater treatment plants into fertilizer producers. Ocean makes cheap, low-carbon bamboo panels for roofs and other building uses. ZILA BioWorks makes plant-based resins and epoxies to replace carbon-intensive ones.7 Three more received $25,000 each. Azotera is working on low-cost ammonia for energy storage and farming. Climate Solutions International sells software that helps government staff weigh resilience, cost and emissions on infrastructure projects. Emerald Battery Labs is developing sodium-ion batteries to replace lead-acid units in commercial fleets and data centers.7

That adds up to $375,000 in grants. A single AI seed round can easily exceed that, so the figure matters less than what it shows: philanthropic donors are covering a gap that venture investors are leaving open.

How the money was structured

The program first planned to raise matching funds from the state. Organizers decided that would take too long and used philanthropic donors only.7 The awards are recoverable grants paid out of donor-advised funds. If a startup succeeds, the money goes back to the donor's fund or to another nonprofit the donor names.7 That gives founders financing without the growth demands of traditional venture capital, and it lets donors recycle their money into later companies.

Co-director Allison Arnold described the goal as getting money to strong startups that are short on capital. She was direct about the region's weakness: the Pacific Northwest lacks the risk capital found in Silicon Valley, Boston or New York.7 She also argued that capital is only part of what founders need. In her view, entrepreneurs who use local support programs tend to do better.24 The winners fit that pattern. Five of the six are commercializing technology from the University of Washington or Washington State University. Many have gone through the Cascadia Clean Tech Accelerator or UW's CoMotion Labs Climate Tech Incubator, or have taken money from the E8 angel group.7

One republished version of the story credits the main funding quote to VertueLab president Aina Abiodun instead of Arnold.23 GeekWire's original reporting gives the quote to Arnold.7 This article follows GeekWire's attribution.

The national numbers: growing totals, fewer deals

The Opalene grants fit into a national market that looks healthy in total but is narrowing fast. Climate tech venture funding reached $26.1 billion in the first half of 2026, according to investment tracker Currence. That was up 55% from a year earlier and the strongest first half since 2022.16 The growth was concentrated, though. Low-carbon data center developers took 34% of all climate venture money, up from 3% the year before. Two rounds, DayOne's $4.5 billion and Nscale's $2 billion, made up about a quarter of the total.16 The number of deals fell 25%, and the ten largest rounds accounted for 42% of investment.16

The trackers disagree on the totals. Net Zero Insights counts debt and grants and puts first-half funding at $41.3 billion, roughly flat year over year. It also says the deal count is the lowest it has ever recorded.14 Even with different methods, the two trackers agree on the trend: bigger checks going to fewer companies, with an average round of about $27 million.14

The money available to early-stage investors looks much worse. PitchBook reports that fundraising by climate-specialist VC funds dropped 39.7% to $3.9 billion in 2025. Through mid-August 2026, only $546 million had been raised across six funds.19 For the first time since 2015, the full-year total is expected to come in under $1 billion, compared with more than $10 billion five years ago.13 PitchBook blames weaker global fundraising after 2022, cuts to federal programs and tax incentives under the second Trump administration, and a slow market for exits.13 Europe now accounts for most of what is being raised. Denmark's Kompas II and the UK's 2150 Urban Tech Sustainability Fund II make up about 79% of this year's total.19

The broader venture market adds to the pressure. Global VC reached a record $330.9 billion in the first quarter of 2026, and AI took 80% of it. One analysis estimates a $2.7 billion Series B gap for climate companies and says founders are turning to corporate venture arms, Department of Energy loan guarantees and project finance.20

Where the money is going, and where it isn't

AI is creating winners as well as losers in climate tech. PitchBook analyst John MacDonagh describes AI as more help than harm overall. Data center developers need power, renewables can be built quickly but run intermittently, and storage can fill those gaps.11 Gigascale Capital's Mike Schroepfer has called it "a tale of two cities": energy, critical minerals and supply-chain companies have more money available than he has ever seen.11

Carbon capture is on the losing side. Equity funding in the carbon category fell 61% in the first half to its lowest level since 2020.16 Among carbon removal founders, 64% said access to capital had gotten worse, while 83% of nuclear founders said it had improved. Microsoft's decision this spring to stop buying new carbon removal credits hit the market especially hard.14

Washington's own deals follow the same split. Seattle-based Endurance Energy raised a $54 million Series A led by Founders Fund to tap geothermal heat from deep-sea volcanoes. It plans to put a 100-kilowatt generator on the Juan de Fuca ridge and says it aims to deliver power to the grid within two years.6 Fusion developer Avalanche Energy raised a $29 million Series A in February.8 Among tracked Seattle climate companies, Zap Energy has the largest disclosed raise at $448 million.1 These are always-on power projects that appeal to investors focused on data center demand.

Homeostasis, a carbon-capture startup in the Tacoma area, shows how companies are adapting. It turns captured CO2 into graphite, a critical battery material used in EVs and grid storage.9 The company raised $600,000 in pre-seed funding and received $700,000 from Washington's Climate Commitment Act.4 Its later funding came from LAB7, the investment arm of Saudi Aramco, rather than from US climate VCs.9 According to its CEO, the Trump administration isn't interested in carbon removal but does want domestic graphite. Tariffs of about 200% on Chinese graphite could still shrink the battery market the company is counting on.9 Its pitch now leads with graphite and supply chains, not carbon removal.

The batteries and storage angle

The Opalene winners with the clearest storage stories got the smaller $25,000 awards. Emerald Battery Labs is targeting commercial fleets and data centers with sodium-ion chemistry.7 Azotera is betting that low-cost ammonia can work as both fertilizer and a way to store renewable energy.7 Both aim at markets that investors currently like, since PitchBook's analyst identifies storage as the fix for intermittent renewables.11 One reading is that both companies are still too early for institutional money, even with promising markets. That stage, between a working lab prototype and a first commercial order, is where the Opalene program aimed its money.

Funding for early climate tech has been thinning for some time. Sightline Climate found that seed and Series A climate investment fell 20% and 7% in 2025, while growth-stage investment rose 78%.17 Investors are backing later-stage companies they see as likely winners, which leaves fewer of the small checks that materials and battery startups need to reach a pilot.

Our take

The common framing, that AI is draining money from climate, is only half right. AI is drawing money to climate companies that serve its power needs: geothermal, fusion, grid hardware and low-carbon data centers.166 It is pulling money away from companies working on fertilizer, building materials, bio-resins and carbon removal.147 Even investors with "climate" in the fund name increasingly invest alongside generalist tech funds. Earthshot Ventures says 90% of its portfolio companies have generalist co-investors.11

The Opalene Climate Challenge was designed as a one-time effort, and $375,000 won't change the capital shortage across the region.7 What it does show is a possible model for regions outside the major hubs: recoverable grants, university spinouts and accelerator networks working together to carry hardware startups to the point where larger investors will look at them. Washington has the research base and the support programs. The test now is whether donors, state programs like the Climate Commitment Act, and patient investors will commit money regularly, or whether funding will keep arriving one program at a time.