Climate Startups Dominate African VC Funding in 2024

In a surprising turn of events, climate-focused startups in Africa are now leading the pack in attracting venture capital (VC) funding. The first half of 2024 has seen these eco-friendly businesses secure a whopping 45% of the total $325 million raised by African startups. This shift marks a significant change in the investment landscape, where tech companies dealing with environmental issues are now outpacing traditional favorites like fintech and e-commerce.

The Rise of Green Investments

The growing interest in climate tech isn’t just a flash in the pan. Since 2019, startups focusing on climate solutions have pulled in over $3.5 billion in funding. This steady increase shows that investors are putting their money where their mouth is when it comes to supporting businesses that tackle environmental challenges.

These climate-focused startups aren’t just working on one issue. They’re spread across various sectors, all aimed at making life on the continent more sustainable. From companies working on clean water and better sanitation to those developing renewable energy solutions, the range is impressive. Some are even diving into more complex areas like removing carbon from the atmosphere and restoring damaged land.

The Numbers

The growth in funding for climate tech has been nothing short of remarkable. In 2019, these startups raised about $340 million. Fast forward to 2022, and that number jumped to $959 million. The upward trend continued in 2023, with investments hitting $1.1 billion.

Breaking it down further, in the first half of 2024, two sectors stood out:

1. Logistics and transport: $215 million

2. Energy and water: $132 million

These figures show that investors are particularly interested in startups that are rethinking how we move things around and how we power our lives.

The Story of Rhea

To understand what this surge in funding means on the ground, let’s look at a company called Rhea. Founded in 2022 by Priscillah Wakerera and Soinato Leboo, this Kenyan startup helps small farmers test their soil. It might not sound flashy, but it’s a game-changer for agriculture.

Rhea collects soil samples and analyzes them, giving farmers crucial information about what fertilizers and seeds will work best in their fields. When they started, getting investors interested was tough. But as more people started talking about climate change and sustainable farming, Rhea caught the eye of both local and international investors.

Their hard work paid off recently when Rhea was named the best climate tech startup at the AfricaArena climate summit in Nairobi. This recognition is a clear sign of how the tide is turning in favor of businesses that help the environment.

It’s not just private investors getting in on the action. Organizations like the Kenya Climate Innovation Centre (KCIC) are also playing a big role. Since 2022, KCIC has raised over $150 million to support small businesses working on climate solutions.

Gerishom Manyengo from KCIC shared that they’re helping over 3,000 small businesses. Many of these are working on practical solutions like solar energy, better waste management, and planting more trees. They’re even running a program to bring solar energy to farms in Kenya, Uganda, and Tanzania.

Experts in the field, like Josh Romisher from the climate-focused VC firm Holcene, believe this is just the beginning. Africa is poised for massive growth, and there’s a unique opportunity to do things differently from the start. Instead of following the same old polluting path to development, African countries can leapfrog to cleaner, more sustainable ways of growing their economies.

This potential for “green growth” is what’s exciting investors. They see a chance to make money while also helping to build a better future. It’s a win-win situation that’s driving more and more funding into African climate tech startups.

As we move further into 2024 and beyond, it’s clear that the interest in African climate tech isn’t going to fade anytime soon. With pressing environmental challenges and a continent ripe for innovative solutions, we can expect to see even more groundbreaking startups emerge.

For young entrepreneurs and established businesses alike, the message is clear: solutions that help the environment are not just good for the planet, they’re good for business too. As Africa continues to grow and develop, it has the chance to lead the way in showing how economic progress and environmental protection can go hand in hand.

The 45% surge in funding for climate startups is more than just a number. It’s a sign of a changing world, where the most exciting and valuable businesses are those that are helping to create a sustainable future for us all.