(Ecofin Agency) - Africa has more than 500 climate startups, 147 of which have attracted venture capital since 2015. Over the past year, the category has attracted the second-highest volume of venture capital on the continent, behind financial technology. 

African startups committed to fighting climate change or adapting to a dangerously warming world raised a total of $1.17 billion in funding in 2022. The figure is contained in a report published by the tech accelerator AfricArena.

The report, which is based on data from the African Private Equity and Venture Capital Association (AVCA) and Partech venture capital fund, defines climate start-ups as companies that combine innovation and ecological transition, developing cutting-edge technologies that can help reduce the carbon footprint of a specific sector and ensure long-term environmental protection.

Also known as greentech or cleantech, these start-ups are active in several sectors, including renewable energy, sustainable mobility, green building, water resource management, reforestation, waste management, and sustainable agriculture.

Of the total funds they attracted in 2022, $863 million was raised in 69 equity financing deals. The size of most of the deals exceeded $5 million per deal.  The category also recorded some large deals including the $200 million acquisition by Bboxx, a British cleantech specializing in off-grid solar kits, of its counterpart PEG Africa, which operates in Ghana, Mali, Côte d'Ivoire, and Senegal.  

 Non-dilutive funding is on the rise 

The report reveals that the total amount of funding raised by these greentechs represents 18% of the total funding raised by all African startups, all categories combined, in 2022. They were therefore the second best-funded startups on the continent behind fintech (39% of total funding).  

According to Partech, in 2022, the startups active in Africa raised $6.5 billion. Debt financing accounted for about 23% of this overall amount or $1.55 billion in 71 deals -representing 106% of the deals recorded in 2021. This non-dilutive financing method is very popular in Kenya, which accounted for 39% of debt financing in 2022.

This year, AfricArena expects African startups to raise between $6.5 billion and $7.3 billion in 2023 (a growth of 0 to 13% compared to 2022), with a likely decline in equity investments that should be largely offset by debt financing.

The report forecasts that in 2024, the funding attracted by African startups would reach $9.5 billion “with a substantial rebound of the market and an expected 20 -30% growth.” It also expects the volume of funding raised by African startups to exceed the $10 billion mark for the first time in 2025 (+15 to 20%) and approach $14 billion in 2026 (+13 to 20%).

Overall, Africa has more than 500 climate startups, 147 of which have already raised funds from local and international venture capital players since 2015.