Key Takeaways
- • According to research from CREO Advisory, net IRRs in climate-focused venture capital could have been boosted by up to 7% had deals been struck at 'market' prices rather than at climate valuation premia.
- • The findings attribute a material drag on climate VC returns to elevated deal pricing, a premium paid for climate-themed companies relative to broader venture valuations.
- • The research points to valuation discipline as a key return lever for allocators committing capital to climate-focused venture strategies.
Summary
New Private Markets reports, citing research from CREO Advisory, that high entry pricing has materially weighed on returns in climate-focused venture capital. According to the research, if deals had been struck at 'market' prices instead of climate premia, net internal rates of return could have been boosted by up to 7%.
The finding frames valuation as a central driver of performance in the segment. Climate-focused venture deals have carried a valuation premium relative to comparable opportunities, and the research suggests that premium has absorbed a meaningful portion of potential upside for investors.
The article, authored by Toby Mitchenall and published 23 October 2025, is accessible in full to registered readers; the publicly visible excerpt contains the headline finding and the 7% estimate, and the full report's methodology and sample were not available in the source material reviewed.
For institutional allocators and fund managers, the research underscores that entry discipline may matter as much as sector selection in climate venture strategies, particularly as capital continues to flow into the theme.
The finding frames valuation as a central driver of performance in the segment. Climate-focused venture deals have carried a valuation premium relative to comparable opportunities, and the research suggests that premium has absorbed a meaningful portion of potential upside for investors.
The article, authored by Toby Mitchenall and published 23 October 2025, is accessible in full to registered readers; the publicly visible excerpt contains the headline finding and the 7% estimate, and the full report's methodology and sample were not available in the source material reviewed.
For institutional allocators and fund managers, the research underscores that entry discipline may matter as much as sector selection in climate venture strategies, particularly as capital continues to flow into the theme.
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