We went through the recent Startup Muster report on climate technology which was sponsored by ARENA. There are two key points to take away from this summary:
- Climate technology is harder to develop as an industry but absolutely worth the extra effort due to the jobs, manufacturing growth, regional development and economic benefit.
- The Startup Muster report needs to be funded and it needs to be funded for the next five years at least.
What is Climate Tech?
Startup Muster's climate tech definition is narrower than Climate Salad's. Their cohort is built around ARENA's priority areas: energy storage, renewable generation, hydrogen, mobility, clean fuels, grids, minerals, heavy industry, bioenergy, and data centre efficiency. That's 63 startups from 473.
Climate Salad's community explicitly includes carbon removal, adaptation and resilience, biodiversity, and natural capital, areas that are probably not shown in this dataset. That means the numbers below are almost certainly understating the real picture for Climate Salad members, particularly around:
- Patentable IP (nature tech and carbon methodologies are highly IP-intensive)
- Research commercialisation (biodiversity and carbon projects often emerge from academic science)
- B2G sales (adaptation and resilience work is heavily government-facing)
- Hardware intensity (nature tech monitoring, carbon measurement, and resilience infrastructure are all physical)
The headline "19% of Australian startups are climate tech" is a floor, not a ceiling, under Climate Salad's definition.
For Founders
The good news: Climate tech founders are more experienced, more technically sophisticated, and more mission-driven than the average Australian startup founder. Average founder age is 51 (vs. 46), 56% have prior startup experience (vs. 47%), and 97% align with National Reconstruction Fund priorities (vs. 66%). This is a mature, serious cohort, not first-timers chasing trends.
The hard news: The funding picture is genuinely brutal. 87% of climate tech founders need funding to continue (vs. 67% for all startups). 73% are actively trying to raise right now (vs. 51%). The top rejection reason from investors at 49% is simply maturity. Founders can't reach the stage investors want without early-stage capital. That's the valley of death defined in a single data point.
The 10.9 months runway number looks thin for any startup, but it's especially precarious for hardware and deep tech companies where development cycles are measured in years, not months. Also considering most funding rounds are taking 9-18 months (my data, not SM’s) and this is unworkable. 68% are funding themselves from their own cash, which is a real signal of how under-resourced this cohort is but may also align with the older founders. It also is a different story if the goal is to get to break even and grow organically vs capital raising for growth. I believe it’s widely acknowledged (if not yet widely truly accepted) that venture capital is only a very small part of the financing solution for climate tech.
The AI picture is interesting: only 37% of climate tech startups are building an AI product (vs. 51% for all startups). That makes sense given the hardware and physical-product orientation of the sector, but it also means climate founders need to think harder about where AI gives them legitimate leverage in development, operations, and customer discovery.
Key advice signal from the data: The top founder-to-founder recommendation is "validate the problem and market demand" (31%). For climate, that often means not just customer validation but policy validation, understanding which regulatory environments and procurement signals make a business model viable.
For Investors
This is where the data makes the strongest case for strategic action.
Climate tech founders are twice as likely to have patentable IP (66% vs. 44%), nearly twice as likely to be manufacturing products (64% vs. 37%), and far more likely to keep that manufacturing in Australia (62% combined inside/mixed, vs. 33% for all startups). This is genuinely differentiated IP, not SaaS commodities.
The rejection data is an investor opportunity in disguise. The top reasons for not investing (maturity, lack of proof of concept at scale, customer traction) are not fundamental problems with the companies. They're stage mismatch problems. Investors willing to operate at the pre-commercial stage, with appropriate grant co-investment strategies, are entering at the lowest valuation and highest strategic leverage point.
The stat that 89% of climate founders who received VC would raise again (vs. 79% for all) is a quality signal. These are founder relationships that retain trust through the process, which matters for long-term fund relationships. It will be interesting to see whether that proves true or if they find other financing mechanisms.
For international investors, the data shows climate tech founders have stronger domestic ties. Only 15% plan to hire overseas (vs. 24%), and 26% plan to manufacture entirely in Australia (vs. 12%). That's a sovereignly attractive investment profile in a world of supply chain risk.
The broader investor context: 80% of climate startups plan to raise in the next 12 months (vs. 54%). Deal flow is not the problem. Early-stage conviction is.
For Corporate Partners
Corporates are largely absent from this dataset but highly present in the opportunity. Climate tech startups overwhelmingly target enterprise businesses and mid-size corporates — and the top industries they serve include energy (61%), manufacturing (33%), agriculture (32%), and utilities and infrastructure (35%-40% range). These are exactly the industries where Australian corporates are under decarbonisation pressure.
The data confirms something Climate Salad members have long observed: 91% of climate tech startups sell B2B (vs. 72%). These companies aren't trying to change consumer behaviour. They're selling to businesses, which means corporates are both the primary customer and the primary proof-of-concept partner.
Yet only 32% of climate tech founders list government as a target customer, and many are frustrated by compliance complexity and slow procurement. Corporates who move faster than government by offering pilot contracts, procurement commitments, or joint development agreements, will get preferential access to the most promising companies before the investor pool does.
The manufacturing data is particularly relevant for industrial corporates: 64% of climate tech startups are currently or planning to manufacture products. Many need a large-scale manufacturing partner or early customer to bridge the valley of death. That's a strategic partnership opportunity, not just a procurement decision.
For Government
The report essentially writes a policy brief in data form and very closely aligns with many of the recommendations of the SERD report recently. This aligns well to the recent SERD report which has a number of items to support more pilots. https://www.industry.gov.au/publications/ambitious-australia-strategic-examination-research-and-development-final-report
By a wide margin, the top recommendation from climate tech founders to government is provide funding (43%). But the texture underneath that matters more than the headline.
31% specifically want ARENA to fund pilots (vs. 17% for all startups). Not grants for R&D, not accelerator programs: funded pilots. First customer, first real-world demonstration, first proof at scale. That's the gap that private capital won't fill because the risk profile doesn't fit VC return timelines.
14% flagged grant accessibility as needing improvement (vs. 9%), and 15% identified regulatory and compliance challenges as a current primary challenge (vs. 7%). The compliance burden is disproportionately landing on the companies most aligned with national strategic priorities. That seems like something we should fix.
The R&D Tax Incentive data deserves attention: 43% of climate tech startups use it (vs. 30% for all), and 26% used an R&D Tax finance provider (vs. 19%). Climate tech is one of the heaviest users of this mechanism, yet founders' top improvement request is simply "simplify the process." The complexity cost is real and measurable.
Finally, the sovereign manufacturing signal: climate tech companies are twice as likely to manufacture in Australia compared to the general startup population. Government support for early pilots, co-investment in proof-of-concept infrastructure, and streamlined pathways for first customers are critical industrial policy for Australia’s economic future.
On hardware
This is one of the most significant structural findings in the report, and it runs counter to the dominant narrative of the Australian startup ecosystem, which has historically skewed toward software and SaaS.
Hardware-focused startups have doubled since 2018. 64% of climate tech startups are currently manufacturing or planning to, compared to 37% for all startups. More striking: 26% plan to manufacture entirely in Australia. That is more than double the general startup rate.
This has cascading implications. Hardware companies have longer development cycles, higher capital requirements, more IP defensibility, and more complex supply chains. They need different investors (patient capital, not fast-exit VC), different support structures (lab access, prototyping facilities, manufacturing partnerships), and different government engagement (first customer commitments, not just grants).
The valley of death is deeper for hardware. You can't pivot a long-duration energy storage prototype the way you can pivot a software product. The 10.9-month runway figure is alarming in this context. It's simply not enough time to complete a hardware development cycle, let alone reach commercial demonstration.
For Climate Salad members, this is a cohort identity question worth owning. Australia's climate tech community is increasingly a hardware and deep-tech community and the ecosystem infrastructure (accelerators, investors, mentors, government programs, and advocacy groups) are working hard but not at scale or strength we need them to be yet.
On Climate Salad as a social network
This one deserves a moment of genuine acknowledgment, because the data is quietly extraordinary.
According to the info sources section, Climate Salad is named as a top social network by 5% of climate tech founders. This is ahead of Facebook/Meta (3%), X/Twitter (3%), Reddit (0%), and Instagram (0%) in the climate tech segment. LinkedIn dominates at 43%, as expected, but Climate Salad is punching well above its weight as a niche professional network. I’m assuming this puts our valuation in the 100’s of millions at least!
The implication isn't that Climate Salad should position as a general social network. It's the opposite: depth beats breadth in community building, and this data validates that a focused, high-trust community of 700+ companies can generate more signal for its members than platforms with billions of users generating noise. For founders looking for peers, investors looking for deal flow, and corporates looking for partners, Climate Salad's specificity is the product.
Why the industry must fund Startup Muster for the next five years, minimum
Let's be direct about something. This report is the only rigorous, longitudinal, publicly available data on Australian climate tech startups. It covers 63 validated climate tech companies within a broader sample of 473 startups, with trend data going back to 2013. It compares climate tech to the broader ecosystem across more than 200 data points. It is, in short, irreplaceable.
And it is chronically underfunded.
Startup Muster runs on a small team, state coordinators embedded in the ecosystem, and a patchwork of sponsors. For a dataset that underpins policy submissions, investment theses, accelerator program design, government grant architecture, and corporate innovation strategy, the funding model is embarrassingly thin relative to the value being extracted.
Here is the case for sustained five-year commitment, broken down by who benefits and why they should pay.
For government: You cannot design policy for a sector you cannot see clearly. This report literally names the valley of death, quantifies it (87% need funding to continue, 49% rejected for maturity), and points directly at the interventions that would work (funded pilots, simplified grants, early-stage capital). ARENA's foreword in this report acknowledges the structural barriers facing Australian climate tech. But acknowledgment without funding the evidence base that identifies those barriers is policy on vibes. Startup Muster costs a fraction of a single ARENA grant. The return on investment is not comparable.
For investors: Every venture fund, family office, and institutional investor active in Australian climate tech is making decisions based on incomplete information. This report is one of the only tools that shows you who is in the market, what stage they are at, what they need, and how they compare to the broader startup population. The 80% of climate tech startups planning to raise in the next 12 months are your deal flow. Funding the instrument that maps them is not philanthropy. It is market infrastructure.
For corporates: If you are a large Australian company with a net zero commitment and a supplier innovation program, you need to know where the solutions are coming from. This report tells you the industries climate tech is targeting (energy at 61%, manufacturing at 33%, utilities and infrastructure at 35%), the stage they are at, and what they need from a first customer. That intelligence is worth considerably more to your strategy team than the cost of a multi-year sponsorship.
For scaleups and successful founders: Many of the companies now raising Series B and C rounds in Australian climate tech got their start in a market that had almost no data to support them. The founders who came before them did it without a Startup Muster climate tech comparison report. The founders coming up now have this resource because Murray Hurps and a small team built it and fought to keep it alive. The obligation to fund the next generation of founders is real, and this is one of the most direct and efficient ways to discharge it.
The broader point is this. Australia is trying to build a globally competitive climate tech sector in a narrow window of time. In that context, the idea that we cannot collectively sustain the one annual data publication that maps our own ecosystem is not just a funding gap. It is a strategic failure.
Startup Muster deserves the support. Five years of committed funding from the organisations that benefit from this data would cost less than one mid-tier conference sponsorship per participant. The return is a sector that can see itself clearly, argue for itself with evidence, and attract the capital and policy support it needs to grow.
Fund it.
It is not a nice to have.
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Thanks to ARENA for the support of this report. We hope that you increase your support of industry projects like Startup Muster to match the scale and scope of your funding.
Photo by Richard Masquelier on Unsplash
How this article was written:
- Mick Liubinskas downloaded the report and went through ever slide making notes.
- Mick put those notes into Claude with instructions to write an article to cover off all stakeholders, clarify the difference in definitions and provide a summary.
- Claude produced a draft which Mick reviewed completely making approx 100 edits.
- Mick added a final note back into Claude re funding Startup muster
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