Climate tech edges fintech, attracts 45% of Africa startup funding in 2024 so far

Climate tech is quickly taking over from financial technology as the preferred venture funding destination on the African continent. According to funding numbers for 2024 so far, African climate tech startups have raised $325 million. This was revealed by African tech startup analytics company, Africa the Big Deal.

This number represents 45 per cent of the total $721 million raised by tech startups on the continent so far, an all-time high for the climate tech sector. The number also effectively makes the sector the most funded sector so far, edging the financial technology sector which was only able to attract $158m of the 2024 total, representing just 22 per cent of the total.

The report noted that Climate Tech is not so much a ‘sector’ per se as it covers a wide range of use cases, therefore investments into the space were tracked as an additional layer as depicted below:

Even though the funding boom of 2021 and 2022 did not much favour the sector, climate tech funding is one sector that has witnessed continuous and consistent growth over the years. This is in sharp contrast with financial technology which has witnessed dwindling numbers since 2023. Funding into the sector grew from $340 million in 2019 to $344 million in 2020. This number further rose to $613 million in 2021, $959 million in 2022 and $1.1 billion in 2023.

Despite this growth, there has been a great decline in the total share of investments in tech startups on the continent.

“The investment boom in 2021 and 2022 did not benefit this space as much as others (such as Fintech), resulting in a drop in its share of total investments: from 25% in 2019 and 32% in 2020 to 14% in 2021 and 21% in 2022. This share started to pick up again in 2023 (36%) and seems on track to grow again in 2024 45% so far,” the report states.

Climate tech’s all-time high despite declining investments

Climate tech’s 45 per cent contribution to the total funding on the continent in five months represents an all-time high since tracking these numbers in 2019. The sector is, however, set to witness its first funding decline in five years because topping last year’s $1.1 billion investment into the space seems unlikely at this stage. This could be attributed to the overall decline in funding in the African tech space.

African tech startup funding witnessed a boom between late 2020 to 2022. This boom was triggered mostly by huge investments in the fintech sector. However, a number of reasons, ranging from global inflation forcing investors to recall their funds to the failure rates of fintech companies with many of them crashing and burning with investor funds. The all-too-many stories have shrouded the fintech space in Africa with a cloak of uncertainty, forcing investors to take several steps back.

The decline in funding was so bad that fintech is not even second on the total share contribution with Logistics and Transport beating it to second place with a contribution of 29 per cent ($215 million). Sadly, this decline in fintech funding inadvertently led to a huge decline in general tech funding in 2024 so far.

“In 2024 so far, start-up funding in Africa is not quite what it was in previous years, in line with a global context that remains quite gloomy. One of the key reasons is that significant drop in investments in the Fintech space. Indeed, Fintech only represents 22 per cent ($158m) of the funding raised this year so far in Africa, while at the same time last year, it made up more than half of the total ($852 million out of $1.7 billion),” the report noted.

The African startup winter, however, does not seem like looking up anytime soon. This is not to say there may not be major investments into the space as we have witnessed major investments in startups. Noteworthy is the $110 million funding into Nigerian vehicle financing company, Moove. With Tyme Bank aiming for unicorn status with its planned IPO targeted at raising $150 million, more funding is on the way for the space and for financial technology indeed.

See also: African tech startups raised $187 million in May as climate funding continues to rise