Venture capital investment in climate fintech is accelerating, owing to increased interest from investors, startups and corporates, according to a new report by F10.
F10 is a global innovation ecosystem for fintech and insurtech startups, with hubs in Switzerland, Singapore and Spain.
Using data from more than 400 climate fintech startups, the report finds that venture capital investment in climate tech almost doubled between 2020 and 2021 to more than US$40 billion deployed in capital, accounting for 14 per cent of all venture capital.
In addition, climate fintech investment grew by one of the highest compound annual growth rates in 2021 of all the subsectors of climate tech.
The report notes that ESG data and analytics solutions have seen the most significant increase, followed by digital investment solutions. This is attributable to corporates wishing to measure emissions activity, as well as investors wanting to allocate capital to more sustainable fund options, F10 says.
Despite these proliferations, digital risk analysis and insurtech receive the highest proportion of funding at €716 million. F10 notes this is a result of this sector’s mergers and acquisitions activity between financial institutions and insurers to mitigate climate risk.
Although Europe leads regionally, the US hosts the most climate fintechs by country. The report suggests this is owing to more progressive European climate finance policymaking, including the European Green Deal, and the implementation of the Sustainable Finance Disclosure Regulation.
However, North America leads in total funding, ahead of Europe, Middle East, Africa, Asia Pacific and Latin America, with average total funding per climate fintech approaching €20 million, compared to €8 million in Europe.
Commenting on the findings of the report, Andreas Iten, co-founder and CEO of F10, says: “Three years ago, the terms “climate fintech” and “green fintech” were nowhere to be heard. Today, these terms encompass a space which has exploded with activity, including hundreds of startups and dozens of initiatives to support them around the world.”
