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African startups and VCs must prioritize climate-resilient business models – Dotun Olowoporoku

Simon Osuji by Simon Osuji
January 20, 2025
in Business
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African startups and VCs must prioritize climate-resilient business models – Dotun Olowoporoku
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The continent contributes a mere 4% to global carbon emissions, yet bears the brunt of climate-related risks. Major cities like Lagos, Cairo, Nairobi, and Johannesburg are already feeling the heat, literally and metaphorically. Sea-level rise threatens coastal areas, extreme heat disrupts daily life, and water scarcity depletes arable land.

On average, African countries are losing 2–5 per cent of their GDP, with some diverting as much as 9 per cent of their budgets to address climate extremes.

A climate tech white paper from Ventures Platform, a VC firm that has invested in over 90 startups across various sectors, including climate tech, revealed that by 2050, more than 90% of Africans could be exposed to climate-related hazards, potentially resulting in nearly $440 billion in annual damages.

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Turning crisis into opportunity

This adversity has also sparked a wave of African startups, finding innovative ways to tackle these hurdles, while also creating new economic opportunities on the continent.

From renewable energy to sustainable agriculture and eco-friendly transportation, these ventures are crafting creative solutions to both mitigate and adapt to climate change.

In an interview with Business Insider Africa during the Africa Prosperity Summit, Dotun Olowoporoku, Managing Partner at Ventures Platform, a VC firm that has funded over 90 startups across the continent and various sectors, including climate tech, emphasised the dual responsibility of startups and VCs in the space.

“African VCs often prioritise impact and livelihoods along with traditional metrics, but there is an urgent need to focus on climate-resilient business models. Startups like MAX, Rana Energy, and ThriveAgric, which was recognised in the 2024 TIME 100 Climate list, show how tech-driven solutions can address local issues and help global climate efforts,” he noted.

For startups, he stressed that “Building climate-resilient business models isn’t just about addressing environmental challenges. It’s also about unlocking societal and economic sustainability.”

Companies like Thrive Agric, Remedial Health, Moove, and SunFi show how businesses can seamlessly blend sustainability with profitability across critical sectors including agriculture, healthcare, transportation, energy, and financial services.

Agro drones

Despite the potential of this ecosystem, funding remains a significant challenge for climate tech.

In 2024, while fintech dominated startup funding, securing nearly half of all investments, climate tech captured 32%, making it the second most funded sector, according to Africa: The Big Deal. Yet, this figure is lower than 2023, reflecting challenges in the energy sub-sector, which saw a 42% year-on-year funding drop.

Still, Dotun sees reasons for optimism. He notes that funding is gradually improving, with more Limited Partners (LPs) showing interest in the space. He emphasizes the vital role of policies as catalysts and enablers for many climate tech solutions.

“Unlike fintech, where you can simply build a business and expect the policy to follow, climate tech is a bit different. It’s a collective, wider ecosystem issue that impacts many people. We need to engage with governments and policymakers, presenting the innovative products we’re building. Engaging with them and helping shape policies is key,” he stated.

Dotun also noted a prevalent misconception among some African governments, who view climate change as a problem mainly for the West, arguing that “we don’t need to focus on reducing our impact.”

He stresses the importance of investing in enablers and mitigants, urging Africa to focus on understanding how climate change affects the continent and finding ways to minimize its impact.

Accelerating climate tech growth in Africa

Startups are finding innovative ways to make climate tech more accessible. Take solar energy, for instance. Just a few years ago, high costs and a lack of awareness posed significant barriers. Today, companies like SunFi are bridging the gap by providing financing options for solar panel adoption.

“The challenge used to be educating the market,” Dotun recalls. “Now, with reduced costs and increased awareness, adoption is accelerating. What we need to do as Africans is invest in adaptation as quickly as possible.”

This shift in market dynamics is encouraging. Shorter time-to-market cycles for products like solar panels make climate tech more attractive to investors who were previously deterred by the long wait for returns.

“Startups that demonstrate both significant climate impact and venture-scale economics will attract the funding they need to thrive. Measuring performance against climate impact metrics and financial benchmarks is key to their long-term viability,” Dotun advises.

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