FinTech companies that are driving net-zero continue to attract record venture capital funding, according to a new report from Commerz Ventures.
In 2022, climate FinTech investments reached a record high of $2.9bn, representing 2.4-times more capital than 2021. The sector has come a long way in a short time, with just $405m raised between 2010 and 2020. It stated that all companies included in its research were founded post 2010.
European companies raised 1.4-times more venture funding across 2.5-times more funding rounds compared to the US. In terms of numbers, European climate FinTechs raised $1.7bn across 124 deals and US companies raised $1.1bn 49 deals.
The report also highlights that early-stage companies are attracting the lion share of funding, with over 50% of all financing rounds being at pre-seed and seed stage. Series A deals made up 26% of deals.
As for the most attractive sectors, carbon accounting and carbon offsetting attracted the most funding in 2022, with $970m and $505m respectively. On top of that, carbon offsetting grew the most rising by 3.1-times. This was followed by carbon accounting at 2.4-times and carbon credits trading at 2-times.
In terms of year-over-year comparison, impact investing attracted less funding than last year dropping by 50%. ESG reporting attracted the same amount of activity than 2021.
In Europe, France led the charge for climate FinTech, with startups raising a total of $770m. It was then followed by the UK with $562m, Iceland with $117m and then Germany with $109m.
The report states that relative to the country’s economic size, both Iceland and Sweden, which had $59m raised, are recording high funding volumes.
The investment firm completed the research by analysing its database of over 500 climate FinTech companies. For the research, it included companies based in Europe, the USA and Canada, as well as companies headquartered in Australia and Israel where they mainly operated in Europe and North America.
Commerz Venutres is an independent venture capital firm that manages over €550m across three funds. It backs businesses in Europe, North America, Israel and Africa.
In other ESG news, Doconomy, a climate technology startup helping banks understand their environmental impact, acquired Stockholm-based financial wellbeing FinTech Dreams Technology.
Read the full report here.
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