Tenity’s Third Climate Fintech Report: A Beacon of Resilience and Gender Equality
In an era where climate change is at the forefront of global discussions, Tenity, a prominent player in the fintech innovation ecosystem and early-stage venture capital, has released its third Climate Fintech Report. This comprehensive document draws on data from 750 startups worldwide, illuminating the sector’s resilience amidst economic challenges and its remarkable strides in promoting gender equality in venture funding.
Funding Landscape: A Mixed Bag
The report reveals a complex funding landscape for climate fintech in 2023. Despite a notable 26% decline in global climate fintech funding, which totaled $1.9 billion, the EMEA (Europe, the Middle East, and Africa) region demonstrated remarkable stability. Here, funding only dipped by 2.2%, significantly outperforming the broader venture capital market, which saw a staggering 38% contraction. This resilience is particularly impressive 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 progress made by female founders in the climate fintech space. During the pre-Series B funding rounds of 2022-2023, 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 funding round. 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 lead one-third of all climate fintech startups, a figure that rises to an impressive 45% among companies founded in 2023.
Regulation and Technology: Catalysts for Growth
The report also underscores the role of regulation and technology in driving growth within the climate fintech sector. Europe’s advanced climate legislation is propelling the demand for ESG (Environmental, Social, and Governance) Data & Analytics solutions, with regulatory reporting emerging as a critical capability. Among the 106 companies offering regulatory reporting, over 90% are ESG data providers, reflecting the market’s demand for integrated solutions as climate-focused requirements become increasingly complex.
Innovative companies are leveraging data-driven technologies, including 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. Notably, Digital Risk Analysis and Insurtech companies are leading the charge in adopting these innovations, 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 and Scale-Up Challenges
While the United States continues to lead on a country level with 141 companies, the EMEA region retains 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 these countries:
-
UK: The UK maintains 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 is showing 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 funding sharply declining in 2023 after a strong performance in 2022, bolstered 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 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.”
The insights from Tenity’s report not only highlight the current state of climate fintech but also set the stage for future developments in this vital sector. As the world grapples with the urgent need for sustainable solutions, the resilience and innovation within climate fintech offer a promising path forward.