Funding for African climate tech startups plummeted to $900,000 in Q3 2024, a drastic decline from the $325 million raised in the first half of the year. The sharp drop reflects a global shift in venture capital priorities, with artificial intelligence (AI) emerging as the sector of choice due to its faster commercialization and returns.

This trend was highlighted in the State of Climate Technology Q3’24 report by CB Insights, a research firm tracking investment trends. Earlier in 2024, climate tech led the funding race, accounting for 45% of the $721 million raised by African startups, outpacing fintech’s 22%. This early momentum was driven by investor enthusiasm for solutions tackling urgent issues like drought and desertification.

However, the global tide turned as high interest rates and capital-intensive demands made climate tech less appealing. In contrast, AI’s rapid developments and shorter timelines captured investor interest. Globally, climate tech funding fell to $4.8 billion in Q3 2024, the lowest since 2020 and a staggering 55.5% drop from Q1.

Despite the bleak quarter, signs of recovery are emerging. Kenyan startup Octavia Carbon raised $3 million in seed funding in October, surpassing the entire Q3 funding total for African climate tech. CB Insights suggests this could signal renewed investor interest in scalable environmental solutions.

Globally, the climate tech sector still showed resilience, recording four new unicorns and major deals like Neo Fusion’s $2 billion acquisition in China. Observers hope Africa’s climate startups will bounce back as global interest in sustainability regains momentum.