Climatetech VC on the Rise in MENAT, Reports MAGNiTT
Horticulture and renewables captured the most funds in the region.
Climate technology (climatetech) is on the rise in MENAT, with megadeals in horticulture and renewable energy capturing the lion’s share of funding, says MAGNiTT in a report on climatetech investment in the Middle East, North Africa, and Turkey (MENAT).
The report found that climatetech grew 11 times and saw a compound annual growth rate (CAGR) of 62% in MENAT between 2018 and 2022, accounting for 4.9% of total capital invested in the region during that period. This amounts to $651 mn between 2018 and 2022 across 225 deals. Investment peaked in 2022, with $270 mn raised in 50 deals. An additional $40 mn was invested in the first half of 2023.
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The UAE led funding in the region, capturing 62% of funds in 45 deals valued at $401 mn. Turkey captured $124 mn in 80 deals, Saudi Arabia saw $68 mn raised in 21 deals, Egypt captured $42 mn in 35 deals and Tunisia captured $6 mn in six deals.
Although renewable energy was the leading sub-industry in the number of deals secured, horticulture received the most funding. Other notable sub-industries that received deals include farming, waste management, and responsible consumption and production.
Horticulture represented $288 mn of the funds raised during that period, largely due to Pure Harvest Smart Farms’ $181 mn raise, which marked the first mega-deal in the sub-sector. Renewable energy, micromobility, farming, and circular economy also received considerable funding.
This is consistent with what industry experts have said is increased diversification and acceptance in the UAE’s startup ecosystem.
150 investors became involved in climatetech between 2018 and 2022, with the most active being Egypt-based Flat6Labs, which closed 15 climatetech deals, and Saudi Arabia’s KAUST Innovation Fund, which closed 10 deals.
Pure Harvest Smart Farms’ $181 mn deal and Yellow Door Energy’s $400 mn private equity buyout deals both represented mega deals in the sector, followed by Egypt’s KarmSolar's $28 mn venture funding raise.
Hosting two consecutive COPs (Egypt’s COP27 and the forthcoming COP28 in the UAE) has increased investor appetite for climatetech, according to the report. It has also facilitated a more robust enabling environment, with government initiatives, accelerator support, and VC funds all pooling into the industry.