Skepticism is the biggest barrier to funding climate solutions
Understanding insights from Terraset's 2026 capital needs survey
Terraset exists to close the gap between deployment-ready climate solutions and funding. We pool philanthropic capital and move it to where markets haven’t arrived yet, using purchase commitments and revolving funds to move money faster and further than traditional philanthropy can.
To understand where that gap is most acute, we surveyed the companies working to close it. Last year, we asked carbon removal developers what they needed most. This year we surveyed companies across a broader set of climate solutions. The answers shifted in ways that matter, and confirm what we see every day in our portfolio.
Read the full 2026 Capital Needs Survey results here.
Nearly 80% of companies are ready to deploy. Most still can’t access the capital to scale.
Over 55% of respondents are at the “Demonstration” stage, and another 24% already have repeat third-party sales. Today, 39% are producing under 100 tons per year. Within 3 to 5 years, 51% are targeting more than 100,000 tons annually. Closing that gap requires project finance that is challenging to access today.
The #1 barrier to capital is sector skepticism.
This is the most important year-over-year shift in the survey. In 2025, the top barriers were high upfront costs and lack of early revenue (both at 54%). In 2026, the top barrier is investor hesitancy or misunderstanding of the sector, which jumped 14 points to 56%, while high upfront costs dropped to 43%. The technology is maturing, but funder confidence has not kept pace.
60% of companies face meaningful setbacks without near-term capital.
We asked what would happen if respondents didn’t raise their target funding in the next six months. 25% said their project would be paused or cancelled. 34% said they would proceed at a smaller scale. Nearly 60% of the solutions in this survey are at risk of meaningful setback in the next six months.
Purchase agreements are by far the most crucial lever.
When asked what would most accelerate progress, committed demand was the most cited answer across every pathway, with 71% ranking pre-purchase agreements as the most beneficial type. And their impact goes beyond revenue: 66% of respondents said the most important feature of a purchase agreement is the ability to use it to raise additional capital. A committed buyer unlocks debt, equity, and supplier agreements downstream.
The market is outgrowing grants and moving toward scalable capital structures.
In 2025, recoverable grants were the most desired financial tool at 73%. In 2026, they dropped to third at 43%. Equity investments (58%) and low-interest loans (57%) now lead. Companies are moving past grant dependency toward scalable capital structures, and the binding constraint is patient capital to build first facilities and prove the economics at scale.
Companies are converging on $100 to $200 per ton.
38% of respondents are targeting the $100 to $200 per ton range in the near term, rising to 46% in the 2-5 year window. The three factors holding back cost reductions are CapEx, feedstock, and financing costs. Lowering the cost of capital through concessional finance or blended structures would directly reduce the cost per ton.
What suppliers told us in their own words
Three themes came through consistently when we asked what “catalytic” support actually means to them.
Committed buyers unlock everything else. A signed purchase agreement is the prerequisite for all other financing. Without one, loans are inaccessible, equity is too expensive, and the whole funding structure falls apart.
The hardest gap is between a working pilot and the first commercial facility. Many companies have a viable product and customers and are stuck on the financing needed to build at scale. They need patient loans, non-dilutive grants, and flexible capital for first-of-a-kind construction.
Verification costs are a gating issue. For newer approaches like enhanced weathering, bioenergy with carbon capture, and refrigerant destruction, the absence of accepted measurement and verification standards determines whether a company can participate in the market at all.
Where funders fit
If you’re a corporate buyer, a foundation, or an impact investor, here’s where capital goes furthest.
Make a purchase. A 3-5 year purchase agreement is the most catalytic action a funder can take. 66% of suppliers will use your contract to attract additional financing.
Fund the construction gap. Patient loans and early-stage capital convert a working pilot into a commercial project.
Cover verification costs. Verification is blocking credit issuance across newer pathways, and funders who cover these costs strengthen the credibility of an entire approach.
Make introductions. 87% of respondents said customer introductions would help them most. Connecting a buyer to a climate company may be the highest-leverage action you can take.
Read the full 2026 Capital Needs Survey results here.
If this resonates and you want to talk through where capital goes furthest, we’re at hello@terrasetclimate.org.