Climate tech startups in Africa raised $900,000 in the third quarter of 2024. This was revealed in a report by global tech startup analytics company, CB Insights. According to it, the total represents a minute fraction of the $4.8 billion raised by climate tech startups globally.
This is a stark contrast from the total raised earlier in the year when funding for climate tech on the continent rose astronomically, even edging out financial technology as the major contributor. As of June 2024, African climate tech startups have raised $325 million as was revealed by African tech startup analytics company, Africa the Big Deal.
This number represented 45% of the total $721 million raised by tech startups on the continent, an all-time high for the climate tech sector. The number also made the sector the most funded, outpacing fintech which attracted $158m in 202, representing just 22%.
This meant in each of the first two quarters of the year, climate-focused startups averaged more than $150 million. While that earlier report noted that Climate Tech is not so much a ‘sector’ per se as it covers a wide range of use cases, it is poor to see the sector struggle to hit $1 million in funding across three months.
A climate change in climate tech funding
Africa is expected to bear most of the greenhouse emissions and climate change. Already, farmers are grappling with drought and resultant low yields. Desertification is already taking a huge toll on the Sahel region while coastal cities like Lagos have no real buffers against rising oceans that are gradually sinking coasts.
As noted by the International Monetary Fund (IMF), African countries face a disproportionate burden to avoid the worst of climate change. Yet, investment into the African climate space has been far from adequate.
One of the problems with investment in African climate tech startups is that their solutions are usually too expensive for the people who are largely living in poverty. This means investments may take longer time to mature than in other regions. However, it is expected that as the realities of climate change become harsher, the sheer necessity would drive the adoption of innovations in space.
The drop in funding into the African climate tech space also mirrors a decline in the global space. Globally, startups raised $4.8 billion in the third quarter of 2024. This total represents the lowest quarterly funding since 2020 when the space attracted $3.8 billion and $4.3 billion in Q1 and Q2.
The total also represents a 33.3% decline compared to the $7.2 billion raised in the previous quarter (Q2, 2024). Compared to the first quarter of the year when climate tech startups raised $10.8 billion, Q3 numbers represent a colossal 55.5% decline.
But it’s not all gloomy for the space in the quarter as an impressive 4 new unicorns emerged from the climate space during the quarter. They include 24M Technologies and Altana AI, both in the United States, and Ather Energy based in India.
The space also witnessed 5 global exits, the largest of which was China’s Neo Fusion which was acquired by Hefei Industrial Capital Venture Investment, at a valuation of $2 billion.
Other exits include Ireland’s Kyte Powertech acquired by R&S on a $277 million valuation; USA’s SRE Power acquired by Asia Properties at a valuation of $72 million; America’s ElectroChem acquired by UltraLife on a $50 million valuation; and the United Kingdom’s Observe Technologies with a $40 million valuation acquired by the AKVA Group.
Looking forward, funding into climate tech appears to be picking up again in Africa. In October, Octavia Carbon, a Kenyan climate technology company fighting greenhouse gas emissions, raised $3 million in a seed funding round. The round which was co-led by Lateral Frontiers and E4E Africa, also saw participation from Catalyst Fund, Launch Africa, Fondation Botnar, and Renew Capital.
With that alone, the continent appears to have surpassed the previous quarter’s numbers. One can only hope that it continues.
See also: Climate tech edges fintech, attracts 45% of Africa startup funding in 2024 so far
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