Climate fintech companies continued to lure early-stage funds in 2022 despite a deterioration in private markets more generally, according to a new data report from venture firm CommerzVentures.
More than 50% of climate fintech investment rounds happened at pre-seed or seed stage illustrating the sector's capacity to lock down first-time funding.
As per the report VC funding to European startups substantially climbed above the US equivalent, winning by a 1.4 times multiple while the number of funding rounds was 2.5 times greater.
CommerzVentures also drilled down to find climate fintech's top-performing subsectors. Carbon accounting and carbon offsetting lured $970 million and $505 million, respectively, ranking first and second in the data report.
In both areas, growth was substantially higher than in other sectors. Carbon offsetting deal flow expanded by 3.1x last year followed by carbon accounting (2.4x) and carbon credits trading (2.0x). Sluggish growth in cash volumes, by comparison, were recorded in climate risk management which grew 1.1x to $343 million in 2022, while ESG reporting startups attracted $186 million, roughly the same as in 2021.
563 US and European climate fintech startups were included in the study, on the criteria they offered "scalable business models relevant for venture funding."
CommerzVentures analysts undertook a systematic literature review of 21 climate and fintech publications. The tech was then used to cross-reference startups on the basis of attributes listed by Crunchbase and Pitchbook.
One big caveat to this data — some of the companies included stated their HQ was in Israel or Australia, but as their operations mostly dealt with Europe or the US, they were considered within the scope of this study.
CommerzVentures is an independent venture capital venture with an €550 million AUM across three funds, investing throughout Europe, North America, Israel, and Africa. Its portfolio companies include Doconomy, ClimateView and Climate X. Read its research report in full here.