Climate tech leads African startup funding in 2024 with $325m

Joy Agwunobi

A recent report by Africa: The Big Deal has revealed that climate tech startups in Africa have secured $325 million in funding, accounting for 45 per cent  of the total startup investments on the continent in 2024. This increase  in climate tech funding marks an all-time high since tracking began in 2019, despite a global slowdown in startup funding.

Climate tech encompasses a broad range of technologies and processes designed to combat climate change, including renewable energy sources, energy efficiency measures, and sustainable transportation. The sector’s growth shows the increasing focus of investors on environmentally friendly investments and the potential for ‘green’ investments in Africa.

According to the report, startup funding in Africa in 2024 has decreased compared to previous years. Noting the global trend of economic downturn as one of the key reasons for reduction in investments in the Fintech sector.

It noted that Fintech has secured only 22 percent ($158 million) of the total funding raised in Africa this year, whereas at the same time last year, it accounted for more than half of the total funding $852 million out of $1.7 billion.

The report found that in 2024 climate tech surpassed fintech as the leading investment destination in Africa, with logistics and transport coming in second at 29 per cent ($215m) and energy and water in third at 18 per cent ($132m). This shift in investor interest mirrors the growing preference for cleaner solutions among Africans, as shown in the 2023 Africa Climate Awareness Report.

Despite a drop in overall funding for African tech startups in 2023, climate tech startups continued to attract investments, with a modest increase in debt deals. The resilience of the sector can be attributed to the diversification of funding sources, innovation in business models and technologies, and the emergence of new technologies such as artificial intelligence and the Internet of Things.

The growth of climate tech in Africa has also caught international attention, with several UN agencies launching a program to drive new capital flow into climate tech to support African states in harnessing renewable energy systems.

According to the report, an analysis of funding raised by African startups between January and May 2024 revealed that climate tech accounted for a record 45 per cent of the total funding announced on the continent this year, totaling $325 million, the highest share since tracking began in 2019.

The report further stated that while climate tech funding has consistently increased over the past five years, from $340 million in 2019 to $1.1 billion in 2023, its share of total investments has fluctuated. Despite absolute growth, climate tech’s share dropped from 25 percent  in 2019 and 32 percent  in 2020 to 14 per cent  in 2021 and 21 per cent  in 2022,  noting that as the investment boom during that period favoured other sectors, such as Fintech.

The report stated further, “The share of Climate Tech funding began to rebound in 2023, reaching 36 percent, and is showing continued growth in 2024, with a current share of 45 per cent. Although it appears unlikely to surpass the record $1.1 billion invested in Climate Tech in 2023, the sector is maintaining its upward momentum.”