On January 31, 2026, staff at KOKO Networks arrived at their Nairobi offices to find the doors locked and a text message waiting on their phones. The company that had spent over a decade replacing charcoal stoves with bioethanol burners across 1.5 million Kenyan households was gone by Friday afternoon, all 700 employees laid off in a single afternoon. The Kenyan government had refused to authorise the sale of the carbon credits that funded Koko’s entire subsidy model, and without them, the business could not survive the weekend.
Koko’s collapse is not a footnote to Africa’s climate tech story. It is the story, told from its most exposed edge. Climate-focused startups have become the one bright spot in a continental funding market that has otherwise gone cautious and cash-flow obsessed, pulling in a record amount of capital even as fintech’s grip on venture dollars keeps loosening. But the same feature that makes climate tech attractive to investors, its dependence on carbon markets, government approvals, and blended development finance, is also what took Koko from 700 employees to zero in a matter of days.
Why Climate Tech Is Eating Fintech’s Lunch
Fintech used to be the default answer to “what is African tech.” It no longer is. Fintech’s share of African startup capital fell from roughly 60% in 2022 to about 25% by 2025, according to data compiled from Partech Africa, TechCabal Insights, and Disrupt Africa. Climate-focused companies moved in to fill the gap, and by 2025 they were raising more than three times their 2024 funding targets.
The scale of that shift shows up in the totals. Climate tech’s share of total African startup funding climbed from 34% in 2024 to 38% in 2025, according to Lucidity Insights, even as the continent’s overall venture market contracted sharply from its 2022 peak. Put differently, investors are being more selective across the board, and climate is the sector they keep choosing anyway.
Capital is rotating toward businesses with something fintech increasingly lacks in Africa: physical assets, predictable cash flows, and a customer base that has nowhere else to go. Nigeria’s Koolboks and Powerstove picked up catalytic funding this year for solar-powered freezers and IoT cookstoves, continuing a wave of solar-sector deal activity TechMoonshot has tracked since 2024, from Sun King’s early raises to smaller distributors like Yellow Malawi. South Africa’s Zimi Charge raised $2.6 million for EV charging infrastructure. Aions Ventures launched a $6 million seed fund built specifically around South Africa’s energy insecurity, and Southern Africa got its first dedicated climate-tech vehicle in June when Holocene closed its debut $70 million-adjacent fund family. None of this reads like a hype cycle. It reads like infrastructure finance wearing a startup badge.
TechMoonshot’s own tracking backs that up. Eighteen of the fifty companies on our most recent watchlist of promising African startups are climate tech, more than any other category, spanning carbon-credit soil monitoring, pay-as-you-go solar, and SME solar financing.
The Off-Grid Solar Machine
If there is a template for climate tech success in Africa, it belongs to Sun King. The Kenyan pay-as-you-go solar company has issued over $1.3 billion in solar loans to nearly 10 million customers across 11 countries, and in July it pulled off one of the largest clean-energy financing deals Sub-Saharan Africa has seen outside South Africa: a $156 million securitization that converts its customer repayment streams into an investable asset. Five commercial African banks funded the senior tranche, with development finance institutions layered underneath to absorb the riskiest debt.
That structure matters more than the headline number. Sun King is not raising equity to survive; it is borrowing against revenue it already collects, in local currency, from households paying as little as $0.19 a day by mobile money. Sun King followed the securitization with a $40 million equity round from Lightrock in December, giving it both debt and equity legs to stand on, a luxury most African solar startups do not have.
Others are still fighting for the model Sun King already proved. d.light closed a $176 million round in 2024, the largest climate tech deal of that year, to keep scaling solar home systems for off-grid households. Earthbond is chasing a narrower but arguably more lucrative problem: Nigerian small businesses currently burning diesel generators at roughly $0.50 per kilowatt-hour, more than double the cost of solar, but unable to front the capital to switch. Tokyo-based WASSHA took a different route entirely, acquiring Kenyan mobility fintech Zaribee to bundle its solar kiosk network with motorcycle financing, betting that a customer who reliably pays for a solar lantern is a good credit risk for a motorbike too.
Behind all of it sits Mission 300, the World Bank and African Development Bank’s push to connect 300 million people to electricity by 2030. The programme had mobilised over $8.5 billion and signed national energy compacts in 17 countries by late 2025, and it functions as a kind of backstop demand signal for every solar startup on this list: the market they are chasing is not shrinking, it is institutionally guaranteed to grow.
How a Carbon Credit Actually Becomes Money
Solar financing is straightforward compared to the second engine powering African climate tech: carbon credits. A credit does not start on a balance sheet. It starts with a developer, sometimes a private company, sometimes a community trust, designing a project that measurably reduces or removes emissions compared with what would have happened anyway, a principle the industry calls additionality. The project then follows a methodology approved by a standards body such as Verra or Gold Standard, which sets the rules for measuring, monitoring, and verifying the claimed reduction. Only after that verification does a credit exist to sell.
Africa’s slice of this market has grown fast. The continent’s share of global credits issued climbed from 13.5% in 2018 to 25% in 2023, and African projects have collectively issued around 300 million credits worth roughly $2.2 billion since the market began, spanning renewable energy, reforestation, and community cookstove programmes. The African Development Bank is now building a Carbon Markets Support Facility to help governments professionalise the trading side, and industry estimates put Africa’s carbon market opportunity at $50 to $100 billion by 2030.
That number explains why carbon credits show up as a secondary revenue stream across the sector, alongside the climate-focused solar and clean-energy deals that dominated Africa’s $1.44 billion first-half funding total in 2026. Tunisia-based Alder pays farmers to store carbon in their soil, using AI and satellite imagery to measure it, then sells the resulting credits, aligning farmer incentives with climate goals in a way that pure agritech subsidy programmes rarely manage. But the same mechanism that makes carbon credits lucrative also makes them fragile, because a credit’s value depends entirely on a government’s willingness to authorise its export.
Who Is Actually Writing the Cheques
Look closely at who is funding this boom and a second pattern emerges: it is rarely pure venture capital. The funding landscape in 2026 increasingly revolves around development finance institutions and blended capital vehicles, with organisations such as DEG and Proparco anchoring funds like the Africa Go Green Fund. That fund alone committed $8 million in Rwanda to distribute 200,000 improved cooking devices, a project designed to hit climate and health targets simultaneously rather than chase a venture-style exit.
The same pattern repeats at almost every scale. IFC and EDF Power Solutions signed a $40 million financing deal in May to expand off-grid solar access, with IFC separately committing another $40 million to a facility supporting mini-grids and independent renewable projects. Acumen’s Hardest-to-Reach initiative put $3.25 million in debt into Malawi’s Yellow Malawi and Zambia’s RDG Collective, structured so the first tranche disburses in dollars but repays in local currency to shield the companies from foreign-exchange risk. Even Catalyst Fund’s newly closed $30 million Climate Resilience Fund I blends equity with embedded venture-building support rather than writing pure cheques and walking away.
This is, on balance, a healthier capital structure than the equity-only booms that inflated and then deflated African fintech valuations between 2021 and 2023. Debt tied to real assets and real cash flow is harder to fake than a growth story built on projected user numbers. But it also means climate tech’s growth is now tightly coupled to development-finance risk appetite and government cooperation, the same dependency that broke Koko, rather than to open capital markets that reward product execution on their own terms.
Koko’s Collapse Is the Warning Label
That fragility is exactly what killed Koko Networks. The company’s clean-cooking model depended on selling roughly six million carbon credits a year into international compliance markets under Article 6 of the Paris Agreement, which requires governments to formally authorise cross-border credit transfers. Kenya’s government declined to issue that authorisation in January, reportedly citing monopoly and carbon-accounting concerns, and Koko’s UK trading subsidiary entered administration within three weeks. A $179.6 million World Bank guarantee could not move fast enough to save it.
The knock-on effects landed on exactly the population climate tech is supposed to serve. Roughly 1.5 million households that had switched from charcoal and kerosene to subsidised bioethanol now face the prospect of switching back, which would erase the emissions reductions Koko had spent years generating. Compliance credits trade at a premium to voluntary ones precisely because they carry government sign-off, but that premium comes with a single point of failure: if the state changes its mind, the revenue disappears overnight, and nothing about a startup’s product quality or customer traction can protect it.
Carbon Markets Africa, the industry body pushing for cleaner rules ahead of its 2026 summit, has been blunt about the underlying problem: voluntary markets are slowing over integrity concerns even as compliance demand rises unevenly across the continent, and Africa is losing value it should be capturing from its own natural assets in the process. Koko is the clearest evidence yet that “carbon revenue” is not a hedge against Africa’s energy poverty problem. It is its own separate risk, layered on top.
The Gap Neither Solar Nor Carbon Credits Fully Close
Strip away the funding headlines and the underlying problem climate tech is trying to solve remains stubbornly large: hundreds of millions of Africans still lack reliable electricity, and the sector’s two main financing tools, pay-as-you-go solar debt and carbon credit revenue, each work well only under specific conditions. Solar securitization needs a large enough base of paying customers with a repayment history long enough to convert into tradeable debt, which favours later-stage players like Sun King over newer entrants. Carbon credits need governments to keep authorising exports, which Koko’s insolvency proved cannot be assumed.
What that leaves is a sector whose funding numbers look increasingly resilient on paper while its underlying revenue models remain concentrated in the hands of a small number of scaled operators and exposed to regulatory decisions made in a handful of capitals. The next test of that resilience will not come from a funding round. It will come from the next government that decides, for reasons that have nothing to do with climate policy, to withhold a signature.
