Rising investor interest sees Africa's climate tech defy funding trend
TLDR
- Climate tech startups in Africa secured an impressive $1 billion in investments in 2023, defying the funding downturn in the venture capital scene.
- One in three dollars invested in startups on the continent during the forecast period was directed towards climate tech ventures.
- Energy and water startups, along with agritech, emerged as dominant forces in the early-stage pipeline, indicating the need for increased innovation to address climate impacts.
In a noteworthy deviation from the broader funding downturn in Africa's venture capital scene in 2023, climate tech startups defied the trend by securing an impressive $1 billion in investments, data compiled by Africa: The Big Deal reveals.
Around one in three dollars invested in startups on the continent during the forecast period was directed towards climate tech ventures. This robust performance underscores both the potential of green investments in Africa and the growing emphasis placed by investors on this domain.
Energy and water startups claimed a substantial portion of the funding, with agritech emerging as a dominant force in the early-stage pipeline. This trend highlights the pressing need for increased innovation across diversified sectors to address and adapt to the challenges posed by climate impacts.
Key Takeaways
The surge in investor interest in regional climate tech aligns with findings from the 2023 Africa Climate Awareness Report. The report highlights a growing preference for cleaner solutions among the populace, with Africans displaying a strong inclination towards green technologies such as solar-PV and electric vehicles. This trend is particularly noticeable in countries like Kenya, Nigeria, South Africa, Egypt, and some Maghreb states. Despite a 22% decline in the overall funding amount for the climate tech sector between 2022 and 2023 (falling from $1.6 billion to $1.2 billion), Partech Africa trackers indicate a modest increase in the number of debt deals – rising from 71 in 2022 to 74 in 2023. This suggests a continued resilience and attractiveness of the climate tech sector, reflecting a sustained commitment to sustainable solutions in the face of evolving market dynamics.
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