The adaptation and resilience investment space is amassing investor interest — but still has big funding gaps slowing its evolution.
A new report, published today by the investment and advisory firm Tailwind Climate, has found that when it comes to companies purely focused on adaptation, “investment remains glaringly low for innovators at all stages.” That’s despite emerging investor interest in the market, estimated at $2 trillion per year in 2026.
“Pure play adaptation companies represent 12% of all climate tech companies, but they’re only receiving 3% of the funding,” Tailwind’s co-founder Katie MacDonald told Latitude Media. “One of the specific areas of challenge is that there’s very little funding at the pre-seed and the seed level. There’s proportionately more funding at the research level.”
The overwhelming majority of the funding for “pure play” adaptation companies goes to software and data solutions, such as climate risk analytics and modeling; meanwhile, MacDonald said “there’s way less money going into solutions that can harden buildings or physically harden the grid or enable risks to be lowered through hard tech.”
There’s a certain sense that we’ve seen these problems before. Both the funding gap at the pre-seed and seed level, and the preference for software (which requires less capital than hardware) were also trends from the first wave of climate tech investments in the early 2010s. “We saw this exact capital gap back during climate tech 1.0,” MacDonald said.
So funding both from governmental sources and philanthropy, which can act as a catalyst for other investments from the private sector, is fundamental for bridging the gap.
“With some of the commitments coming through from philanthropy and some of the [Inflation Reduction Act] initiatives funding resilience and adaptation, private investors are getting more comfortable with the space and acknowledging the enormous market size attached to it,” MacDonald said, adding that she hopes to see more money on offer at earlier stages, as ultimately happened for mitigation solutions in the first generation of climate tech funding.
Tailwind’s research was backed by Breakthrough Energy Fellows and the Autodesk Foundation, among others.
Accidental investors
When the researchers broadened their scope beyond “pure play” adaptation companies, it appears that private investors are already getting more comfortable with adaptation and resilience.
As Tailwind’s report notes, “many climate tech funds are ‘accidental’ A&R investors,” meaning they’ve been investing in mitigation solutions that also promote adaptation, even if the latter is not part of their investment thesis. A “dual benefit” investment, for example, would be a microgrid, which enhances the grid’s hardening and resilience, while using less energy.
“Dual benefit startups constitute a third of all climate tech startups,” according to the report, even if they’re still underfunded, with only 16% of total funding.
Other research also found evidence of this growing interest in adaptation. A recent PwC report found that in 2024, “technology for climate adaptation and resilience stood out as a theme, featuring in more than one-quarter (28%) of climate tech deals.”
PwC also notes that “big financial players” such as JPMorganChase, Nuveen, and Wellington “have embedded adaptation plays in their climate investing.” BlackRock specifically, it added, is working to develop a product focused on adaptation. So far, most of the innovators’ attention has been focused on solutions in the water infrastructure, agriculture, food and forestry, and grid resilience categories, according to Tailwind’s report.
Blind spots — where there’s demand, but “insufficient startup activity,” according to MacDonald —- include the intersection between climate and health, with solutions such as physical cooling devices, air purifiers, and electronic health records integrating climate risk data, as well as “social systems,” such as early warning systems for natural disasters.
