Uncovering the state of climate fintech in 2024, Tenity, the global fintech innovation ecosystem and early-stage VC, has published its third ‘Climate Fintech Report’, revealing that the industry has been resilient to economic challenges.
Looking at 750 startups from across the globe, Tenity found that female founders are making unprecedented gains in climate fintech. In pre-Series B rounds during 2022-2023, companies with at least one female founder or CEO secured 50.4 per cent of funding across 114 transactions globally. This averaged out to $5millon per funding. Comparatively, in the broader fintech sector, female-led companies typically receive just 3.4 per cent of venture funding.
Notably, women have co-founded or led one-third of all climate fintechs, a figure that rises to 45 per cent among companies founded in 2023.
Market demand for regulatory reporting
Europe’s advanced climate legislation is driving rapid growth in ESG data and analytics solutions, with regulatory reporting emerging as a key capability. Amongst the 106 companies with a regulatory reporting offering, over 90 per cent are ESG data providers. This reflects the market demand for integrated solutions as climate-focused requirements become more complex.
The report also shows that 70 per cent of these integrated reporting solutions are concentrated in the European market. There, stringent regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure Regulation (SFDR) create demand for automated solutions.
Companies use 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, transforms risk assessment across the sector.
Digital risk analysis and insurtech companies lead in adoption, with the subsector gaining major traction – two of the five most-capitalised companies in the dataset have a climate risk or climate data intelligence focus (Planet Labs $574million and ICEEYE $438million).
Regional trends
The report found that the EMEA region showed the most stability. Despite a 26 per cent decline in global climate fintech funding to $1.9billion in 2023, the region only faced a 2.2 per cent dip. This significantly outperformed the broader VC market’s 38 per cent contraction during a period marked by high interest rates and tech sector layoffs.
Furthermore, while the US still leads on the country level with 141 companies, EMEA retains its regional leadership with 465 companies. The UK-Germany-France triangle forms the core of the European ecosystem. Together, they represent 50 per cent of the companies and account for 66.5 per cent of capital raised between 2022 and 2024 (H1).
Tenity found that the UK maintains consistent early-stage (pre-Series B) strength. UK seed-stage companies secured 36 per cent of global seed funding in 2023. Early-stage companies attracted $180million in 2023, 48 per cent more than their later-stage counterparts.
Meanwhile, Germany’s market showed growing investor confidence beyond headline volatility. While two mega-rounds (Enpal $230milliom, Integrity Next $109million) dominated the 2023 funding, even when removing these outliers, the early-stage funding was up by 11 per cent and the average deal size by 40 per cent.
France’s market has been volatile, with funding declining sharply in 2023 after a strong 2022 bolstered by Deepki $167million and Descartes Underwriting $120million rounds.
Building solid foundations
Andrea Fritschi, chief investment officer of Tenity
Commenting on the findings, Andrea Fritschi, chief investment officer of Tenity said: “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.”
Even excluding major outliers, funding dropped 55 per cent across early and late-stage companies, indicating broader challenges Europe’s climate fintech sector is building solid foundations but lacks maturity.
Only 17 companies across the region have raised above $50million of total capital compared to 23 in the US. Collectively, these US companies have raised $3.9billion— 44 per cent more than Europe’s $2.64billion. This disparity is even more pronounced at the individual country level, with US funding exceeding the UK by more than right times and France by seven times.
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