COP28 could be the accelerator Mideast ClimateTech startups need
DUBAI, United Arab Emirates – Momentum is building in the UAE for a wave of investment in climate technology as Dubai hosts this year’s United Nations climate conference.
“New COP28 agreements can unlock funding mechanisms and financial incentives for climate-focused ventures, encouraging greater investment in sustainable initiatives,” Noor Sweid, founder and managing partner at UAE VC firm Global Ventures, told The Circuit. She said new emission reduction and renewable energy targets will likely drive demand for new technology, “further underlining the role of regional ventures in the global transition.”
Investment in so-called ClimateTech accounted for just 5% of the total capital invested in the Middle East, North Africa and Turkey from 2018 through 2022, according to venture capital data platform MAGNiTT. But there are signs the sector is gaining traction, notching a 62% annual growth rate in 2022 with the expectation that the trend will only be accelerated by COP28.
ClimateTech startups are developing products for a variety of industries where removing carbon emissions are especially challenging, including agriculture, energy, real estate and transportation.
More than 100 climate tech startups are showing off their work at the Startup Village in COP28’s Green Zone, the area of the conference open to the public.
Saeed Alhassan, the founder of UAE startup Manhat, which is developing sea-to-freshwater and floating farm products, is one such entrepreneur. He said that he was able to raise around $100,000 in grant funding in the run-up to COP28 because of increased interest in ClimateTech. He’s now using the Green Zone to connect with potential investors as he aims to raise $1 million in seed funding coming out of the climate meeting.
“Definitely the networking effect is very positive, we already have good leads on investors,” he told The Circuit. “It’s still Day 7 and we still have another week to go.”
This week the Dubai Future District Fund, a government-backed venture capital fund, said it has earmarked up to $54 million of its $272 million fund to invest in ClimateTech startups. Meanwhile, Abu Dhabi’s start-up ecosystem Hub71 announced this week a new initiative to attract companies building decarbonization products to the capital. The program will offer participants up to $136,000 in cash and incentives for equity and provide workspace, mentorship and introductions to investors and commercial partners like ADNOC, Siemens and e&. Hundreds of start-ups have applied.
Sky Kurtz, the co-founder and CEO of Pure Harvest Smart Farms, is no stranger to fundraising. His indoor farming business was the most-funded startup in 2022, having raised a total of $387 million in a mix of equity and debt.
“My first COP was COP26 [in Glasgow, Scotland]. And I’m not kidding, it changed me,” he told The Circuit. “I was really affected, to really open my eyes and become more educated.”
He is hopeful for an accelerating effect on investment in companies working on climate change issues coming out of this year’s climate meeting.
“It’s an opportunity for companies that are contributing to mitigating climate change,” he said, “to showcase the strength of their thesis, and why they are attractive to venture capital and possibly investable.”