Climate Fintech Funding Trends in 2023: A Resilient Landscape
Despite a significant 26% decline in global climate fintech funding, which fell to $1.9 billion in 2023, the EMEA (Europe, the Middle East, and Africa) region has demonstrated remarkable stability. With only a 2.2% dip, EMEA has significantly outperformed the broader venture capital market, which saw a staggering 38% contraction during a challenging period characterized by high interest rates and widespread layoffs in the tech sector.
Female Founders Achieve Funding Parity
One of the standout trends in the climate fintech space is the unprecedented gains made by female founders. In pre-Series B funding rounds from 2022 to 2023, companies with at least one female founder or CEO secured an impressive 50.4% of the total funding across 114 transactions globally, averaging $5 million per deal. This is a stark contrast to the broader fintech sector, where female-led companies typically receive a mere 3.4% of venture funding. Notably, women have co-founded or led one-third of all climate fintech companies, a figure that rises to 45% among those founded in 2023.
Regulation and Technology Drive Growth
Europe’s advanced climate legislation is a key driver of growth in ESG (Environmental, Social, and Governance) Data & Analytics solutions. Regulatory reporting has emerged as a critical capability, with over 90% of the 106 companies offering regulatory reporting being ESG data providers. This reflects a growing market demand for integrated solutions as climate-focused requirements become increasingly complex. Notably, 70% of these integrated reporting solutions are concentrated in the European market, where stringent regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure Regulation (SFDR) create a robust demand for automated solutions.
Companies are leveraging data-driven innovations, combining AI, big data, and IoT to automate ESG assessments and enable real-time environmental monitoring. This shift from historical to real-time data, powered by satellite imaging and geospatial analysis, is transforming risk assessment across the sector. Digital Risk Analysis and Insurtech companies are leading in 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 Meets Scaleup Bottleneck
While the US maintains its lead with 141 companies, EMEA boasts a robust 465 companies in the climate fintech space. The UK-Germany-France triangle forms the core of the European ecosystem, 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 in these countries:
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UK: The UK has shown consistent strength in early-stage (pre-Series B) funding, 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.
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Germany: The German market is witnessing growing investor confidence beyond headline volatility. Despite two mega-rounds (Enpal at $230 million and Integrity Next at $109 million) dominating the 2023 funding landscape, early-stage funding increased by 11%, with the average deal size rising by 40%.
- France: In contrast, France’s market has experienced volatility, with a sharp decline in funding in 2023 after a strong 2022, which was buoyed by significant rounds for Deepki ($167 million) and Descartes Underwriting ($120 million). Even excluding these major outliers, funding dropped by 55% across both early and late-stage companies, indicating broader challenges.
A Foundation for Growth, Yet a Maturity Gap
Europe’s climate fintech sector is building solid foundations but still 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.
Andrea Fritschi, Chief Investment Officer of Tenity, commented on these findings: "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 utilized 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."
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