FUNDING | African Climate Tech Startups Captured 45% of the Total Funding, Surpassing Fintech, in H1 2024

In recent years, the venture capital (VC) scene in Africa has seen a notable shift, particularly in the fields of agritech and climate tech.

The journey of Rhea, a Kenyan agritech startup that focuses on soil health, illustrates this transformation vividly.

Founded in 2022 by Priscillah Wakerera and Soinato Leboo, Rhea initially struggled to attract investor interest. Back then, fintech and e-commerce startups were the main darlings of venture capitalists, while agritech and climate solutions received far less attention. However, this narrative is changing.

Rhea’s recent accolade at the AfricaArena climate summit, where it was named Best Climate Tech Startup, underscores the shifting focus towards climate and agricultural technology. This recognition comes as investments in these sectors are surging, reflecting a broader trend of increased interest and funding.

The investment landscape has evolved significantly.

Since 2019, climate tech funding has seen impressive growth, with investments rising from $340 million to $1.1 billion in 2023. So far in 2024, climate tech startups have captured 45% ($325 million) of the total raised ($780 million) by African startups to date, signaling a strong shift towards sustainable and impact-driven solutions.

So far in 2024, climate tech has already overtaken fintech. Key areas of investment include:

• Logistics and transport which received $215 million
• Energy and water with $132 million in funding

This reflects an expanding investor focus on climate resilience and sustainable infrastructure.

Climate tech funding has been growing in absolute numbers in the past 5 years:

• $340 million in 2019
• $344 million in 2020
• $613 million in 2021
• $959 million in 2022 and
• $1.1 billion in 2023)

After its share of total investments reaching 36% in 2023, the sector seems on track to grow again in 2024 despite the fact that topping last year’s $1.1 billion invested in Climate tech seems unlikely at this stage.

Organizations like the Kenya Climate Innovation Centre (KCIC) are playing a crucial role in this shift. Since 2022, KCIC has secured over $150 million to support small enterprises in climate tech sectors, including solar energy, waste management, and reforestation. KCIC’s initiatives, such as the solar energy program in Kenya, Uganda, and Tanzania, are helping integrate sustainable practices into various industries.

The rising interest in agritech and climate tech is not just a passing trend.

According to Christophe Viarnaud, Founder and CEO of AfricArena, these sectors hold significant promise for the future of African tech.

Josh Romisher, CEO and Co-Founder of Holcene, echoes this sentiment, highlighting Africa’s potential to become a major player in global climate discussions.

With massive innovation opportunities on the horizon, the investment landscape for agritech and climate tech in Africa is set for continued growth. As the continent faces increasing climate challenges, the focus on sustainable and impactful solutions is more crucial than ever.

The evolving investment trends in Africa underscore a growing recognition of the potential for agritech and climate tech to drive both economic and environmental progress.