Grace Ashiru
The green revolution in tech startup funding continues on the continent, with a new report revealing that Africa’s climate tech startups have surpassed their fintech counterparts, securing nearly half of all funding accumulated so far in 2024.
Startup funding is favoring African climate tech startups, with companies in this sector attracting 45% of the total funding raised by tech startups in Africa to date in 2024.
According to an analysis by startup funding data tracker Africa: The Big Deal, the sector has garnered US$325 million so far in 2024. Although this is significant in percentage terms, a major downturn in overall funding for African startups over the past two years has impacted the total funding for the sector, following years of growth.
Over the past five years, Climate Tech funding has experienced significant growth, with investments rising from $340 million in 2019 to $344 million in 2020, $613 million in 2021, $959 million in 2022, and reaching $1.1 billion in 2023,” the report outlined.
“With Climate Tech’s share of total investments reaching 36% in 2023, the sector appears poised for continued growth in 2024. However, surpassing last year’s $1.1 billion investment in Climate Tech seems unlikely at this point,” the analysis further noted.
Despite a notable $187 million raised in May, marking a 149% increase compared to the funds raised by tech startups in April, the sector’s overall investment has been declining compared to previous years.
The Big Deal report points to a significant decline in funding within the fintech sector as the primary reason for the slowdown. Fintech startups, once dominant, have only raised US$158 million so far in 2024, making up a mere 22% of the total funding.
At this point last year, fintech funding stood at US$852 million of the US$1.7 billion raised, accounting for more than 50% of the total funding then.
In contrast, Africa’s climate tech sector has surpassed fintech this year. The climate tech sub-sectors garnering the most funding in 2024 so far are Logistics & Transport, which received 29% or $215 million, and Energy & Water, which secured 18% or $132 million, making it a close third.
The Big Deal noted, “But what’s particularly interesting is to look at the proportion of funding that is going to ventures that can be considered as ‘Climate Tech’,” emphasizing that Climate Tech encompasses a wide range of use cases.
Climate tech companies offering fintech solutions in various African markets raised US$30 million, while logistics and transport firms secured US$95 million. Tech startups in agriculture and food innovations received US$68 million, and deep tech climate solutions garnered US$10 million. Leading the pack, energy and water tech companies attracted US$132 million in investments.
The continued funding interest in climate tech brings hope to the future of climate transition and action in Africa, as innovators leverage technology to accelerate resilience efforts.
The impact of increased funding is already being felt, with global investors providing much-needed resources and expertise. This support has enabled innovations, such as battery-swapping technology solutions, to grow increasingly across the continent. Chinese EV manufacturer BYD, for instance, announced this week a partnership with Kigali-based EV line Ampersand to ramp up production to more than 40,000 electric motorcycles by the end of 2026.
The strategy involves not only increasing the number of units but also enhancing their quality, including the introduction of high-quality battery solutions that will be more affordable.
“This partnership is a significant milestone for Ampersand as we remain at the forefront of delivering sustainable, cost-effective, mass-market EV solutions,” stated Josh Whale, CEO of Ampersand, in an announcement.
