Funding is pouring into the rapidly growing climate fintech scene in Europe and the United States
Climate fintech start-ups raised $1.2 billion in 2021 – three times more than all previous years combined – according to new figures from fintech-focused venture capital firm CommerzVentures.
The CommerzVentures Climate FinTech 2022 report found that US companies were on average better funded than European companies, particularly at the Series B level or later, where US companies raised $403m compared to $239m for the EU. However, EU climate fintech companies have raised more in total at the pre-seed, seed and Series A level.
In 2021, $233m was raised by European climate fintechs in Series A, with pre-seed and seed companies raising over $150m.
CommerzVentures analyzed 292 climate fintech start-ups and conducted extensive research, including a systematic literature review of 13 leading climate and fintech publications.
Data was also pulled from more than 10 attributes per company, including funding data, and the research team leveraged insights from the founders as well.
The report shows that the UK received the most funding in Europe, with $194 million disbursed to climate fintechs. France ($143 million), Germany ($96 million), Finland ($59 million) and Sweden ($50 million) complete the European top five.
The nascent nature of the sector is reflected in the fact that 68% of all funding rounds at all levels have taken place at the seed or pre-seed stage.
The report also determined that Europe is home to four times as many climate fintechs as the US and is also growing at a faster rate (3.4x vs. 2.6x year-over-year).
When it comes to the types of climate fintechs receiving the most money, those working in carbon accounting and climate risk management received the most attention, with totals of $410 million and $304 million. lifted, respectively.
Carbon offsetting is the most important sub-sector with 101 start-ups identified. In 2021, funding for this subsector was $132.5 million, 4.4 times more than previous years.