Climate Insider Brief:
- Climate Tech has emerged as the leading investment trend for African startups in 2024, accounting for 45% of all startup funding on the continent so far.
- This growth is a trend that has been building over the past five years, with Climate Tech’s share of total investments increasing from 14% in 2021 to 21% in 2022 and now to 45% in the first five months of 2024.
- Notable deals in the Climate Tech space include a $110 million funding round for Nigerian vehicle financing company Moove and Tyme Bank’s planned IPO targeting $150 million.
A recent report by Africa: The Big Deal has revealed that Climate Tech has emerged as the leading investment trend for African startups in 2024, accounting for 45% of all startup funding on the continent so far. This significant growth is a trend that has been building over the past five years, with Climate Tech’s share of total investments increasing from 14% in 2021 to 21% in 2022 and now to 45% in the first five months of 2024.
The report highlights the decline of Fintech as a major funding destination, which was previously the dominant sector. In 2023, Fintech accounted for 51% of total startup funding, but this year it has seen a significant drop, with only $158 million raised so far, representing just 22% of the total. This decline is attributed to a combination of factors, including global inflation, investor caution, and the high failure rate of Fintech startups.
In contrast, Climate Tech has experienced steady growth over the past five years, with funding increasing from $340 million in 2019 to $1.1 billion in 2023. This year’s total of $325 million already surpasses last year’s contribution and is likely to continue growing as more deals are announced.
The report notes that Climate Tech is not a single sector, but rather a broad category that encompasses a wide range of technologies and processes designed to address climate change. This includes renewable energy sources such as solar and wind power, energy efficiency measures like smart grids and electric vehicles, as well as sustainable infrastructure and technologies.
Logistics & Transport came in second place with $215 million, followed by Energy & Water with $132 million. Agric & Food and Deeptech trailed behind with $68 million and $10 million respectively.
The decline in Fintech funding has had a ripple effect on the overall tech startup ecosystem in Africa, leading to a general decline in funding across the board. However, Climate Tech’s growth is expected to continue, driven by increasing awareness of the need to address climate change and the growing demand for sustainable solutions.
The report highlights several notable deals in the Climate Tech space, including a $110 million funding round for Nigerian vehicle financing company Moove and Tyme Bank’s planned IPO targeting $150 million. These deals demonstrate that there is still a significant investment appetite for Climate Tech startups in Africa.
Despite the challenges faced by the African tech startup ecosystem, there is optimism that Climate Tech will continue to be a bright spot. With many startups still raising funding and notable deals on the horizon, it is likely that Climate Tech will continue to dominate African startup funding for the foreseeable future.
Climate Tech’s rise to prominence as the leading investment destination for African startups is a testament to the growing recognition of the importance of addressing climate change. As investors become increasingly aware of the need for sustainable solutions, Climate Tech startups are poised to benefit from this trend. While Fintech may have declined as a major funding destination, Climate Tech’s growth is expected to continue driving innovation and job creation across Africa.
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SOURCES:
Technext24
Techeconomy
