Climate Tech Surges Ahead of Fintech in African Startup Funding for 2024
A recent report by Africa: The Big Deal highlights a significant shift in the African startup ecosystem, with climate tech startups now attracting the majority of funding in 2024. This marks a notable change, as fintech has traditionally dominated the investment landscape.
Climate Tech’s Growing Influence
According to the report, climate tech startups in Africa have raised $325 million so far in 2024, accounting for 45% of all startup funding on the continent. This rise in climate tech funding is part of a broader trend over the past five years, with investments growing steadily: $340 million in 2019, $344 million in 2020, $613 million in 2021, $959 million in 2022, and $1.1 billion in 2023. Despite an overall investment boom in 2021 and 2022, climate tech’s share of total investments decreased during those years, dropping from 25% in 2019 and 32% in 2020 to 14% in 2021 and 21% in 2022. However, this trend reversed in 2023, with climate tech capturing 36% of total investments, and continuing to grow to 45% in 2024.
While climate tech is on the rise, other sectors are experiencing a slowdown. The logistics and transport sector has raised $215 million so far in 2024, whereas fintech, previously the leading sector, has seen a significant drop with only $158 million in funding, representing 22% of total investments. This is a sharp decline compared to last year, where fintech accounted for more than half of the total funding, with $852 million out of $1.7 billion.
Broader Context of Funding Slowdown
The report indicates that the overall startup funding in Africa has not reached the levels seen in previous years, reflecting a global context of economic uncertainty. The notable decline in fintech investments is a key factor contributing to this ‘funding winter.’ Despite some positive signs, the funding environment remains challenging for many startups across the continent.
photo credit: The Africa report
