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- 20 ClimateTech Trends in Africa to Watch, according to VCs
20 ClimateTech Trends in Africa to Watch, according to VCs
In 2023, one in every three dollars invested in African startups went to ClimateTech ventures.
However, the capital falls far short of what’s needed to unlock transformative solutions at speed and scale.
As the pace of climate change heats up across the continent, investors are on the look out for impactful technologies that can truly move the needle.
We spoke to 16 African ClimateTech investors to hear where they’re investing next and the technologies they’re excited by.
Here’s what they told us:
🥘 Clean cooking
🚌 Electric mobility
Sustainable energy sources
🛠️ Circular construction materials
💨 Globally competitive DAC facilities
⚡️ Strengthening aging grid infrastructure
💦 Low emission water access, production and reuse
🌾 Low carbon fertilisers to improve crop yield and soil health
Before we jump in:
Clima-smart agtech solutions for climate resilience: Farmers across Africa are increasingly gaining access to climate-smart and satellite-based precision agriculture insights, allowing them to optimize the usage of water and fertilizer while transitioning to a more sustainable and regenerative agriculture model that can generate more yields and restore soil health.
Low emission water access and management solutions: Solutions tackling the problem of water scarcity, especially in the Northern part of Africa, will increasingly be critical. Examples include reverse osmosis small-scale and decentralized desalination systems to gain access to water at low energy cost.
Cold chain tech: Tech-enabled platforms allowing for a better, more affordable and fully end-to-end cold-chain to reduce food wastage and increase farmers' incomes in several food value chains.
DAC in the Global South: Direct Air Capture technologies have huge potential to combat the climate crisis and Africa has the right geology, abundant renewable energy, and local talent, to develop globally competitive DAC facilities.
Romain Diaz @ Satgana
Sustainable Agriculture, enabled by solutions such as precision agriculture, agrotech platforms, remote sensing & satellite imagery, fertilisers and pesticide optimisation, farm management software, farmers insurance, climate-resilient crops.
Sustainable Energy, enabled by off-grid solutions, solar water pumps, all kinds of renewables from solar to wind and biomass, energy storage, pay-as-you-go systems, and even Direct Air Capture as pioneered by Octavia Carbon, which is developing the first DAC facility in the Global South, enabling carbon removal from clean sources such as geothermal and hydropower in Kenya.
Sustainable Construction, enabled by green building materials, energy efficient buildings, rainwater harvesting systems, buildings enabled by circular models, etc.
Water Management, enabled by smart water metering, drip irrigation systems, remote sensing & satellite imagery, water quality sensors, water harvesting technologies, water desalination.
Vova Dugin @ E3 Capital
AgTech: New technologies and solutions can offer dramatic efficiency improvements across the agriculture value chain, spanning better traceability, storage, GHG emission impact and transportation.
Electric Mobility: The EV sector has gained significant traction in Africa, and we anticipate further innovation, especially in the 2-wheeler and storage segments in East Africa. We also expect to see developments in other markets where capital has been slower to invest.
Logistics: Africa grapples with some of the world’s highest transportation costs across private and commercial activities. A new generation of green and innovative solutions will not only reduce costs but also significantly diminish CO2 emissions for the sector.
Carbon Credits: Despite a substantial surge in popularity (along with scepticism and, in some instances, negativity) the ecosystem remains nascent, and we anticipate the entry of more innovative carbon credit companies bringing better traceability and accountability.
Farai Sekeso @ Cygnum Capital Group
Carbon Finance: In 2023 we started to see carbon take an increasingly important role in how companies and investors think about financing climate change mitigation initiatives. 2024 will see more innovation (building on 2023 landmark deals) around use of carbon credits to unlock financing for climate initiatives. This will be beneficial for companies that haven’t historically had strong enough cash flows to attract all the capital they needed to grow. I am excited to see more innovative funding structures underpinned by carbon markets to fund growth in the climate space.
Electric Mobility: Over the last couple of years players (largely the start-ups across Africa) in this space have been figuring out what their business and revenue models are. 2023 saw players gain better clarity on where they will position themselves in the value chain in short, medium and long term. This will no doubt attract more capital to the sector, including more commercial investors, as there is clarity on business models.
Green Buildings: Certainly a major contributor to climate change mitigation efforts as buildings contribute c.30% of emissions and consume c.60% of the energy on the continent. The financing of green buildings (energy-efficient structures) has largely been the preserve of DFIs and in hard currencies (due to ticket sizes and novelty). As more developers begin to design and build energy-efficient structures, I am excited to see more private sector supply-side financing including local currency funding. This will spur sector growth especially in the residential space where rapid urbanisation is a key driver of housing demand. I hope the supply-side funding is matched with demand-side financing & initiatives. This is a space with high growth and impact potential especially where parts of the supply chain are localised.
Tracking Carbon Footprints for Exporters: The EU Cross Border Adjustment Mechanism, activated on October 1st, has set the stage for a global shift towards carbon accountability. The demand for comprehensive carbon measurement, reporting, and reduction solutions is rising (especially if they can also reduce costs). Companies offering a robust, flexible, intuitive, and easily integrable carbon reporting stack are poised to attract a growing customer base seeking compliance with evolving carbon emission standards.
Tackling Africa's Emission Epicenter – AFOLU: Agriculture, Forestry, and Other Land Use (AFOLU) stand as Africa's primary source of emissions and a critical focal point for climate action. Key sub-categories include companies combating deforestation through monitoring and clean cookstoves, developing low-carbon fertilizers, and advancing precision agriculture technologies to enhance yields and reduce resource intensity.
Bolstering Grid Resilience in Southern Africa: The intersection of renewable technologies and an aging grid infrastructure poses a substantial challenge in Southern Africa. To ensure the reliable provision of energy to millions, solutions encompassing aggregation, diagnostics, upgrades, load balancing, net metering, and demand response are imperative.
Navigating a Just Transition and Green Jobs: Developing countries, including Africa, grapple with the concept of a "just transition" away from fossil fuels. While Africa's historical contribution to global greenhouse gases is limited, international agreements like the Paris Agreement emphasize the need for developed economies to support lower-carbon nations. Solutions and companies tapping into funding from these agreements gain a strategic advantage, leveraging concessionary financing for scaling operations. Another crucial aspect is facilitating the transition of workers from fossil fuel jobs to clean jobs, presenting opportunities for ed-tech platforms, job marketplaces, accreditations, and other innovative solutions.
Energy transition: Among ventures enabling the energy transition of households and MSMEs from high-carbon fossil-based fuels towards lower/no-carbon energy sources we see 2 exciting trends: solar generators that are getting ready to scale; and, for the growing e-mobility sector we will see more growth as business and market fit improves; and disaggregation in the e-mobility value chains pick up steam.
Agriculture Transition: Among ventures enabling more green, sustainable agricultural value chains for the agricultural ecosystem, we believe solutions enabling soil enrichment (biochar, black soldier flies etc.) will drive significant investments into the sector.
Resource Transition: We are seeing more ventures that are enabling households and businesses to transition away from take-make-waste systems to one where products and materials are kept in circulation in one form or another. We are excited about the continued emergence of green innovations in waste management, construction, and manufacturing and FMCG sectors.
NatureTech: Climate change drives and can be aggravated by loss of the very nature and biodiversity that underpins trillions of dollars of the global economy: pharmaceuticals, fashion, timber, food and more. There is a race on between economists and academics to agree a set of global principles for measuring and valorising nature. Startups have an opportunity to work in parallel with this effort to develop the tech stack that will digitally monitor nature-positive performance, report on it for corporate compliance purposes, verify and trace the authenticity of positive nature outcomes and help actors trade that effort for reward.
Climate resilience: We need startups to imagine that world and help communities ready themselves for it. In some geographies that will mean weather forecasting intelligence that helps communities defend against sudden extreme weather. In others it will mean developing alternative ways of living and working when long term weather change makes life — as it was — untenable. At CRAF we are particularly keen on climate proof foods which are less susceptible to extreme weather, and take the pressure off natural ecosystems to meet our food needs.
Carbon markets: The price of voluntary carbon credits is rightly climbing because it will take generations to lower atmospheric carbon levels to any semblance of what will deliver stable weather patterns and preserve nature. Startups that seek out technology and solutions that deliver persuasively long term carbon removal methods have an early-mover advantage to amortise investment while carbon markets are buoyant. At CRAF we look particularly at business models and tech that enable “natural carbon” sequestration believing that carbon markets will evolve to also capture the biodiversity and natural ecosystem gains.
Caitlin Wale @ Kinjani
Circular Construction Materials: By creatively repurposing mine and agricultural waste, this trend introduces sustainable, scalable materials for the construction industry.
Carbon-Negative Water Production: methods combining advanced filtration with chemical processes, not only providing fresh water but also actively reducing atmospheric carbon.
Victor Ndiege @ Kenya Climate Ventures
E-Commerce Platforms: Services for accessing climate adaptation solutions.
Index-Based Insurance: For agri / livestock supply chains, supporting pastoralists climate resilience.
Mobile-Based Financial Services: Credit rating for fishery supply chain actors.
Digital technologies: To help monitor the sustainable extraction and utilisation of natural resources, for example, extraction of water and forestry resources, e.g extraction meters, remove sensing mechanisms, remote inventory management technologies.
Victoria Harris @ Carbon Grant Fund
Job Creation: Alleviating poverty and improving livelihoods has a direct impact on climate resilience. I’m excited to see pipeline coming through that is thinking about livelihoods in township, peri-urban and rural communities and how activating these economies has a direct impact on climate.
Carbon Avoidant and Reduction Practices: We have seen over the years, and with good reason, prioritisation of carbon absorption methods and technologies. There is a growing trend for adaptive methods in reduction and avoidance technologies and practices that have more climate - inclusivity and allow a great contribution from consumers, founders and corporates to partake in the climate fight.
Circular Economy: Traditional SME’s that were previously not climate focused are shifting to include circular practices and reduce, repurpose, reuse and extend product life to ultimately lower carbon outputs and incorporate greener practices. We are going to see more business models shift and pipeline for investing open up as more and more SME’s who traditionally did not think of themselves as climate in nature take on these practices as the norm.
Peter George @ Spark+ Africa Fund
Clean Cooking: The segment of the Africa ClimateTech space that we are focused on is innovative appliances and fuels for a shift from traditional biomass to clean cooking. This includes LPG, electric stoves, as well as alternative fuels like ethanol and biomass and biogas. These are all starting to scale through PAYG technology integration, more supportive government policy regimes, and various other factors.
Agree, disagree or want to have your say? We’d love to hear from you.
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