Climate tech startups in Africa were only able to raise $900,000 in the third quarter of 2024. This was revealed in a report by global tech startup analytics company, CB Insights. According to the report, the total raised by climate-focused companies on the continent represented a very minute fraction of the $4.8 billion raised by climate tech startups around the world.
This is a stark contrast from what had been obtained earlier in the year when climate tech funding into 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 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 made 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.
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 nonetheless poor to see the sector struggle to hit $1 million in funding across three months.
A climate change in climate tech funding
Africa is the continent expected to bear most of the effects of greenhouse emissions and climate change. Already, farmers in the continent 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 its 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 way longer time to mature than 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 the space.
The drop in funding into the African climate tech space also mirrors a decline in the global space. Startups around the world were able to raise $4.8 billion in the third quarter of 2024. This total represents the lowest quarterly funding since 2020 when the global space attracted $3.8 billion and $4.3 billion in Q1 and Q2.
The total also represents a 33.3 per cent 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 per cent decline.
But it’s not all gloomy for the space in the quarter as despite the low funding numbers, an impressive 4 new unicorns were able to emerge 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 an impressive 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 in Africa, funding into climate tech appears to be picking up again. 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 goes up from this point.
See also: Climate tech edges fintech, attracts 45% of Africa startup funding in 2024 so far
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