Climate-related startups are thriving despite the broader downturn in fintech funding, with Europe taking the lead, as highlighted in new data from CommerzVentures, the venture capital arm of Germany’s Commerzbank.
Recent figures indicate that investment in climate-related financial technology firms reached $2.3 billion across the US and Europe. CommerzVentures’ Climate FinTech Report 2024 analyzes investments in over 600 fintech startups working in various sectors, including carbon markets, energy management, carbon accounting, ESG reporting, natural capital, climate risk management, and supply chain analytics.
While climate startups face challenges amid a tough venture capital landscape, they are managing to attract investment more effectively than their counterparts in the broader market. The report notes that total investment in climate fintech fell by 19% year-on-year, a significantly smaller decline compared to the 38% drop observed across the market as a whole.
Remarkably, this trend highlights European fintech’s success, which has outpaced growth in the US, attracting $1.4 billion in VC funding compared to $881 million secured by US startups. The carbon markets and energy management sectors garnered the most funding, bringing in $729 million and $530 million, respectively. Meanwhile, carbon accounting fintechs secured $333 million last year, placing them in third for funding within this space.