Africa’s Climate Tech Startups To Get $55M Boost

Equator, an Africa-focused venture capital firm, secured $55 million for its first fund to support climate tech startups, particularly in their early stages, as reported by TechCrunch.

Africa has less than 3% of global energy-related CO2 emissions but suffers from some of the worst climate impacts. Equator seeks to address that, saying it invests in deals “addressing economic and sustainability challenges emerging from these impacts.”

Funding African climate tech startups

In African countries, climate tech startups have to navigate a difficult funding landscape compared to their peers in more developed countries, where governments give money to companies working on environmental technologies.

Instead, African climate tech startups heavily depend on development finance institutions (DFIs), foundations, and endowments, which means they are susceptible to shifts in global capital flows. DFIs generate less capital, which adds another layer of pressure on African startups, specifically climate tech companies, which rely on more capital than traditional tech startups.

This is where Equator come in, to bridge the gap and support scalable solutions that can appeal to private capital.

$55 Million Fund

The VC firm intends to invest the funds in 15 to 18 startups. Companies at the seed stage will receive checks worth $750,000 to $1 million, whilst startups at Series A will receive $2 million.

Outside of capital, Equator aims to support founders in understanding unit economics, governance, and regional expansion. The fund will also set money aside for follow-on investments and later-stage rounds, and it plans to deploy its LPs as co-investors to introduce equity, debt, or blended financing. 

Speaking to TechCrunch, the firm’s managing partner, Nijhad Jamal said “In several of our portfolio companies, we’re the only Africa-focused investor on the cap table — that’s the role we see ourselves playing in this ecosystem.”

Image: Equator