According to CommerzVentures’ latest report on climate fintech, venture capital (VC) investment in companies focused on achieving net-zero economies reached an unprecedented $1.2 billion in 2021, marking a significant increase compared to previous years. Prior to 2021, a total of 292 firms in Europe and North America collectively secured only $400 million.
The report, which examines numerous scalable climate fintech companies across Europe and North America, highlights six key insights:
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Record Funding Levels: The $1.2 billion in VC funding for climate fintech in 2021 was three times greater than that raised in any previous year.
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Regional Insights: Europe led with $624 million in total funding, while the United States followed closely with $576 million. However, U.S. companies enjoyed a higher average funding amount per firm.
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Stage of Investment: A significant 68% of climate fintech startups are currently at the seed and pre-seed stages. Additionally, 23% have progressed to Series A funding, and 9% have achieved Series B or later rounds.
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Dominant Sub-Categories: Carbon offsetting and carbon accounting emerged as the most active areas, with CommerzVentures identifying 101 startups focused on carbon offsetting and 68 on carbon accounting. Other notable areas include impact investing (29 startups), ESG reporting (27), climate risk management (21), sustainable banking (17), supply chain analytics (17), impact financing (7), and carbon credits trading (5).
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Funding Disparities: Business-to-business (B2B) climate fintechs attracted nearly six times more funding than business-to-consumer (B2C) firms in 2021, securing $1 billion compared to $179 million. This trend continues, with B2B funding outpacing B2C at a rate of 3.4 times versus 2 times, respectively.
- Emerging Trends: Decentralized finance is poised to be a major trend within the climate fintech landscape, with infrastructure for the tokenization of carbon already in development.
These insights underscore the growing emphasis on innovation within the climate fintech sector and the increasing support from venture capitalists aimed at addressing climate change challenges.