As the consequences of climate change have increased over the past few years and have particularly negative impacts on the Middle East and North Africa (MENA) region, it is important to create and invest in advanced technology and innovative solutions. The venture capital (VC) ecosystem consists of entrepreneurs who either own a small business or established a startup for a new business idea that typically carries a considerable amount of risk, as well as both venture and private equity funds. Venture capital firms raise capital from limited partners to provide high-risk startups with short- or long-term funds in exchange for equity and high return on investment, whereas private equity investors tend to focus on low-risk businesses. The VC industry in the MENA region has rapidly grown since 2020, with hundreds of deals made with startups across various sectors. Globally, climate tech startups have received notable VC funding amounts, but the share of those investments in the MENA region remains limited. More specifically, climate tech refers to several sectors that are crucial to decarbonization, including energy efficiency, electric mobility (e-mobility), and greenhouse gas (GHG) capture, amongst others. In order to establish a net-zero carbon economy in the MENA region, encouraging VC investments and building an environment where both investors and climate tech startups can flourish is no longer in question.

The climate tech sector

The clean technology sector has always been an appealing one for investments. Between 2005 and 2007, thousands of entrepreneurs launched cleantech startups during the ‘cleantech bubble’ and VC firms and investors spent billions of dollars funding them. However, the Great Recession brought the end to those startups and left VCs hesitant, which led to investors pulling out and losing more than half of their investments, and funding activity in the cleantech sector dramatically decreased. As global sustainability concerns ascent and governments urge planning and acting towards decarbonizing the economy, investing in the sector made a strong comeback in 2014 and worldwide VC investments in climate tech reached 16.4 billion U.S. dollars in 2020.

Figure 1. Value of venture capital investments in climate technology worldwide from 2009 to 2020 (in billion U.S. dollars)1

Climate tech is receiving a more optimistic view and is looked at with a different context, making investing in climate tech startups this time around positive and promising. Most importantly, climate change is presently a considerably more urgent issue than it was in 2009, which calls for innovative solutions. Entrepreneurs can now take advantage of modern and remarkably improved infrastructure within different sectors to help create and deliver their products. Additionally, the great evolvement of the public agenda which includes setting national and international strategies, pledges, net-zero targets, and environmental, social, and corporate governance (ESG) requirements created more investment interest in climate tech startups.

Climate tech startup ecosystem in the MENA region

The United Arab Emirates is certainly drawing entrepreneurs and investors. In 2020, nearly half of all startups in the region were based in the UAE, with Egypt and Saudi Arabia coming in second and third. Although the region’s total VC funding passed the $1 billion mark for the first time in 2020, and numerous VC deals were made in FinTech, e-commerce, and other industries, structural reforms are required to encourage entrepreneurs to build their innovations and venture funding to flow in the rest of the region for all of MENA to emerge as a global startup hub.

Figure 2. Funding activity (number of deals) comparison between fintech and climate tech startups, between 2015 and 20202

 Investments into MENA-based climate technology startups are quite insufficient when compared to the total VC investment in regions like North America and Europe. In addition to the VC-startup ecosystem needing further development in the region, venture capital firms lack investment opportunities in climate technology because not many climate tech startups are based in the region, where only 49 climate tech startups were founded since 2010 compared to 2,003 in the US and Canada and 2,938 in Europe. Climate tech startup funding trends differ significantly from those of FinTech, an industry that has seen tremendous funding and fundraising rounds, deals, and startup activity in the region.

Governments can pave the path for a thriving climate tech startup ecosystem in the MENA region

The interactions between key actors in MENA’s climate tech startup ecosystem – public and private corporations, accelerators, venture capital firms, private equity, startups, and governments ­– may exhibit a number of challenges that limit VC investments in climate tech startups and discourage entrepreneurs from establishing them in the region. Governments undoubtedly possess the ability to accelerate progress because they play a critical role not only within the startup ecosystem but also in every other system. Over the past few years, public and private programs and initiatives to support startups were established, like the DIFC FinTech Hive in the UAE, MISA in Saudi Arabia, and TIEC in Egypt. Nonetheless, the energy market structure in the MENA countries, the lack of first-time and follow-on funds allocated to climate tech startups, and the burdensome procedural costs for establishing businesses in the region are obstacles that hinder the development of the ecosystem. The significance of government programs and initiatives is further elevated by the fact that startups, particularly early-stage ones, require more than just financial support; they also greatly benefit from other tools and expertise to guide them throughout and position them to be interesting and inventive pitchers and leaders.

The CEBC conducted a survey to further understand the barriers that stand in the way of VC investment in the MENA region with participation from venture capital, corporate venture capital, private equity, growth equity, and others. The results showed that investors in the UAE displayed the highest level of confidence to invest in the region, and other countries in the region are also confident in investing in climate tech. The results also indicated some of the barriers hindering VC investment in climate tech startups, which include the lack of successful exits receiving the most votes, followed by scaling issues and the lack of investable opportunities. Consequently, governments’ activities in the region impact the founding of climate tech startups in the region due to limited resources, which in turn restricts the amount of VC investment.

Figure 3. Confidence level in investing in MENA, by sector and country3

Recommendations to governments, VCs, and universities  

To reach net-zero emissions by 2050 and achieve and maintain national strategies, the difficulties that prevent the development and deployment of MENA climate tech startups must be addressed. Policymakers, venture capitalists, and universities are essential parties whose activities influence the determining factors that allow the climate tech startup ecosystem to thrive in the MENA region. Besides, it is pivotal to consider how the global startup ecosystem will be affected amidst the present economic and market disruptions. As a result of rising interest rates, inflation, and recent macroeconomic events, total VC deals decreased by almost 9% in H1 2022 and climate tech startups witnessed a 20% drop in VC funding in H1 2022 compared to that in H2 2021. Although the climate tech startup ecosystem being adversely impacted is inevitable, the severity of the climate crisis has grown to a point where low-cost renewable sources and technological innovations cannot be disregarded and will be the key driver of investments.

Using the data collected from our interviews and surveys and taking current business uncertainties into account, we developed actions for these stakeholders to follow to promote the growth of MENA-based VC investment and climate tech startups. The key recommendations are:


1- Conduct a thorough analysis to serve as a foundation for implementing strategies –

2- Build a climate tech ecosystem by: developing a policy framework for startups and investors; encouraging venture capital, private equity, and stimulus investments; establishing public-private collaborations; utilizing government funding to support R&D; and building more accelerator and incubator programs for climate tech startups

Venture capitalists 

1-Be aware of the strategic opportunities and solutions climate tech startups offer in the region

2-Increase engagement from corporate venture capitalists to not only provide funding and expertise but also gain a competitive advantage


1-Offer climate change and sustainable development courses

2-Build climate tech innovation hubs within universities to foster a more entrepreneurial spirit amongst students

To read the CEBC’s detailed analysis on Venture Capital in MENA Climate Tech, download the whitepaper here:


Axios. (January 14, 2021). Value of venture capital investments in climate technology worldwide from 2009 to 2020 (in billion U.S. dollars) [Graph].
In Statista. Retrieved March 29, 2021, from

CEBC analysis on data. Note: The data may be not fully representative of the MENA market, CEBC shall not be liable for errors that may be contained herein.

CEBC analysis on survey results