Tenity’s Third Climate Fintech Report: A Deep Dive into Resilience and Gender Equality

Tenity, a prominent player in the global fintech innovation ecosystem and early-stage venture capital, has recently released its third Climate Fintech Report. This comprehensive analysis draws on data from 750 startups worldwide, revealing not only the resilience of the climate fintech sector amid economic challenges but also its remarkable strides in promoting gender equality in venture funding.

Funding Landscape: A Mixed Bag

Despite a notable 26% decline in global climate fintech funding, which fell to $1.9 billion in 2023, the EMEA (Europe, the Middle East, and Africa) region exhibited impressive stability. The region experienced only a 2.2% dip in funding, significantly outperforming the broader venture capital market, which saw a staggering 38% contraction. This resilience is particularly noteworthy given the backdrop of high interest rates and widespread layoffs in the tech sector.

Female Founders Achieve Funding Parity

One of the standout trends highlighted in the report is the unprecedented gains made by female founders in the climate fintech space. In pre-Series B rounds during 2022-2023, companies with at least one female founder or CEO secured 50.4% of funding across 114 transactions globally, averaging $5 million per funding round. This marks a stark contrast to the broader fintech sector, where female-led companies typically receive a mere 3.4% of venture funding.

Moreover, women have co-founded or lead one-third of all climate fintech startups, a figure that rises to an impressive 45% among companies founded in 2023. This shift not only signifies a change in the funding landscape but also reflects a growing recognition of the importance of diversity in driving innovation.

Regulation and Technology: Catalysts for Growth

The report underscores how Europe’s advanced climate legislation is propelling rapid growth in ESG (Environmental, Social, and Governance) Data & Analytics solutions. Regulatory reporting has emerged as a key capability, with over 90% of the 106 companies offering regulatory reporting being ESG data providers. This trend highlights the market’s demand for integrated solutions as climate-focused requirements become increasingly complex.

In this evolving landscape, companies are leveraging data-driven innovations, including AI, big data, and IoT, to automate ESG assessments and enable real-time environmental monitoring. The shift from historical data to real-time insights, powered by satellite imaging and geospatial analysis, is transforming risk assessment across the sector. Notably, Digital Risk Analysis and Insurtech companies are leading in this adoption, with two of the five most-capitalized companies in the dataset focusing on climate risk or climate data intelligence—Planet Labs at $574 million and ICEEYE at $438 million.

European Leadership Amid Scale-Up Challenges

While the United States continues to lead on a country level with 141 companies, the EMEA region maintains its regional leadership with 465 companies. The UK, Germany, and France form the core of the European ecosystem, collectively representing 50% of the companies and accounting for 66.5% of capital raised between 2022 and the first half of 2024.

Distinct trends have emerged within this triangle:

• UK: The UK has shown consistent early-stage (pre-Series B) strength, securing 36% of global seed funding in 2023. Early-stage companies attracted $180 million in 2023, which is 48% more than their later-stage counterparts.

• Germany: The German market reflects growing investor confidence, even amidst headline volatility. While two mega-rounds (Enpal at $230 million and Integrity Next at $109 million) dominated the 2023 funding landscape, early-stage funding was up by 11%, with the average deal size increasing by 40%.

• France: In contrast, France’s market has faced volatility, with funding declining sharply in 2023 after a strong 2022, which was buoyed by significant rounds for Deepki ($167 million) and Descartes Underwriting ($120 million). Even when excluding these major outliers, funding dropped by 55% across early and late-stage companies, indicating broader challenges.

Despite these developments, Europe’s climate fintech sector is still building solid foundations but lacks maturity. Only 17 companies across the region have raised over $50 million in total capital, compared to 23 in the US. Collectively, US companies have raised $3.9 billion—44% more than Europe’s $2.64 billion. This disparity is even more pronounced at the individual country level, with US funding exceeding the UK by more than eight times and France by seven times.

Insights from Tenity’s Chief Investment Officer

Commenting on the report’s findings, Andrea Fritschi, Chief Investment Officer of Tenity, remarked, “Climate fintech is not just showing remarkable resilience—it’s setting new standards for inclusion in venture funding. With blockchain technology applied to ensure accountability in carbon markets and AI tapped for real-time climate risk assessment, the sector proves that innovation and gender equality can go hand-in-hand. While Europe leads in diversity and early-stage innovation, the challenge now is matching US capabilities in scaling these solutions globally.”

This report not only sheds light on the current state of climate fintech but also emphasizes the importance of fostering an inclusive environment where diverse voices can thrive, ultimately driving innovation and sustainability in the financial sector.