The News
Venture capital firm Equator closed a $55 million fund focused on climate tech startups in sub-Saharan Africa on Tuesday, boosting financing for early-stage ventures in sectors ranging from agriculture to energy.
The firm, based in Kenya and the UK, counts the World Bank’s International Finance Corporation, British International Investment, and France’s Proparco among its backers. Equator plans to invest in around 15 early-stage ventures in total, the firm’s founder and managing partner Nijhad Jamal told Semafor.
It has already invested in six companies including electric motorcycles-maker Roam and solar-powered irrigation systems provider SunCulture, both based in Kenya, using money raised in earlier funding rounds. In October, the IFC said its $5 million investment into Equator was its first in a climate-focused venture capital fund.
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Africa is disproportionately affected by climate change compared to other parts of the world, despite contributing a fraction of global greenhouse emissions: In sub-Saharan Africa, the cost of adaptation is estimated to be between $30-50 billion per year over the next decade, according to the World Meteorological Organization. This is a major factor driving investment from financiers like IFC and BII as part of an overall push for sustainable development.
It is “not about investing in climate tech for the sake of it but investing in innovation and solutions to real and sizable problems,” Jamal said. “We are climate tech investors operating in a region where caring about climate change is, to be honest, a luxury. Customers ultimately are focused on incomes, livelihoods and tangible benefits.”
As such, Equator’s fund is looking for commercially viable startups — both those based in or expanding into Africa — that strengthen the case for normalizing climate tech investments. It will write checks of between $500,000 and $5 million for early-stage ventures depending on their needs, with a view to “de-risking” investment in these startups and paving the way for larger funds to invest tens of millions of dollars at growth stages, Jamal said.
A 10-year timeline for deploying its fund and recouping returns means Equator can be relatively patient with its portfolio companies. But the firm still has to “be thinking about returning capital to investors,” its CEO said. “If we’re unable to do that, it’s bad for the whole ecosystem because that will prevent private capital and other investors from coming in and backing the next fund.”
Step Back
In each of the last two years, about a third of the investment into African startups went to those in the climate sector, according to funding tracker Africa: The Big Deal. Energy startups accounted for nearly 60% of climate tech’s total in 2024 at $423 million.
Last year BII invested $10 million into Kenyan investor Novastar as part of its fund to finance climate ventures. In another move, EchoVC Partners, an Africa-focused venture capital firm, invested in 14 climate-related startups across Africa through an inaugural $3 million “eco” fund. The firm has started raising a separate $3 million fund to replicate the pilot with new investments this year.
Notable
- The African Development Bank invested $10 million in December in a fund started by Nairobi-based energy investment firm Persistent aimed at boosting climate-tech in Africa.