Venture Capital in MENA Climate Tech

The Middle East and North Africa (MENA) region is particularly vulnerable to adverse effects of climate change. According to the World Bank, the extreme heat will reduce the number of agricultural lands and make certain regions unlivable. The commitment to the 2015 Paris Agreement to keep the global temperature below 2°C and the urgency to shift to a greener economy creates an unprecedented opportunity for climate tech startups. At the global level, there has been a significant improvement in the value of venture capital investment in climate technologies over the years. In the period from 2013 to 2019, the total venture funding had a more than 3750% increase. However, the MENA’s share in the venture capital investment in climate tech is quite limited, standing at only around 1.5% of the total VC investment made between 2013 and 2019.

Currently, the MENA is witnessing a strong momentum in its venture capital industry, especially within the e-commerce, real estate, and fintech sphere. Despite the surge in the number of climate tech startup solutions, their number is still limited, and this is partly because the climate tech startup ecosystem in the MENA region is not yet sufficiently developed to provide a supportive and enabling environment to startups. However, this is where private funding becomes particularly vital to the expansion of the startup environment. By channeling private funding into climate tech startup solutions, and providing them with sufficient financial backing, these startups will be able to introduce innovative solutions that tackle climate change-related issues, which can then be implemented on a local and regional level.

This paper is based on a benchmarking study with the largest VC investor regions, interviews with key stakeholders in the MENA climate tech landscape, and a survey conducted by the CEBC and distributed across investors in MENA. The purpose of the study is to identify the key barriers to a more abundant private investment in MENA’s climate tech startups and to propose recommendations to different stakeholders to define a clear roadmap.