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AFRICA’S climate-related tech startups are experiencing a remarkable surge in funding. From January to May 2023, 33% of all financing directed towards tech startups was dedicated to green initiatives.
Recent findings from the startup funding database, ‘Africa: The Big Deal,’ reveal that as much as US$2.8 billion has been invested in climate-related startups in Africa since 2019.
This accounts for 21% of the total funding received by startups across the continent during this assessment period.
According to the database’s latest funding status report, more than 230 deals, each exceeding US$1 million, have been inked since 2019. Such a substantial number of deals underscores the growing optimism surrounding the sector.
The first five months of 2023 have witnessed a particularly encouraging trend, with climate-related tech startups receiving 33% of the total tech startup funding — a remarkable achievement second only to the latter half of 2020.
Furthermore, the number of deals being struck is on the rise, exhibiting a steady pace of growth. The deals made in 2023 alone constitute a remarkable 27% of all deals—an unparalleled half-year percentage since 2019.
Three of five climate-related deals struck since 2019 have been in the energy ecosystem, capturing 73% of all deals and attracting $2 billion of the total $2.8 billion invested.
Leading the pack in recent funding destinations are solar pay-as-you-go giants M-Kopa and Sun King, who have raised $255 million and $150 million, respectively.
With their last-mile approach, these two pioneers are set to revolutionize off-grid solar energy accessibility across the continent, and their funding also accounts for over 89% of the total funding raised in 2023.
The report also highlights the rapid evolution witnessed in the supply side of climate-related investments. Several recent announcements in 2023 have emphasized the availability of funding opportunities for climate-related startups.
Noteworthy among these is AfricaGoGreen’s second close, securing a substantial US$47 million equity investment in February, made possible by a diverse range of institutions and organizations.
Other significant funding sources include Oxfam Novid and Goodwell’s Pepea, which received US$20 million, and Novastar’s Africa People in collaboration with Planet Fund, which recently announced their intention to extend their reach into West Africa with up to US$200 million in funding.
The impact of this influx of revenue into climate-related tech startups has led to a surge in innovation, ranging from urban waste management solutions to water access initiatives and even more sophisticated ventures like climate insurtechs.
For instance, a Nairobi-based startup, Kubik, which secured the top spot in the Viva Africa Tech Award, excels in recycling plastic waste into low-cost and low-carbon building materials. Their innovative products are at least 40% cheaper, twice as fast to build with, and five times less polluting than conventional materials.
To tackle climate change effectively, Africa requires a staggering US$2.5 trillion for climate change mitigation by 2030, averaging US$250 billion annually. The growing investment in climate-related tech startups is just one step towards meeting this challenge.
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