A slew of new funds point to potential for dedicated pools for climate startups
Venture capital activity around climate tech is heating up in Africa despite the global cooling of VC finance.
The continent’s climate tech startups raised more than $860 million in equity funding, largely driven by clean energy technologies, representing 3.5x growth amid macroeconomic headwinds last year, data showsmaking climate Africa’s most financed sector after fintech.
This seems to be just the beginning: in recent months, a slew of new funds have been dedicated to space investments, indicating that funding for climate tech startups will continue for some time to come.
Pan-African firm Novastar reportedly raised more than $200 million last week for its third fund, Africa People + Planet Fund, which will invest in startups developing agriculture and climate solutions on the continent. Around the same time, Equator, a climate technology venture capital firm, announced the first close of its fund to support seed and Series A startups in the energy, agriculture and mobility sectors. Catalyst Fund’s new $30 million climate-focused cat has also taken off and is now investing in its first cohort of start ups.
Satgana, a new climate technology company launched late last year, plans to allocate up to 40% of its funds to “planet-positive” startups in Africa. Other African climate-focused investment vehicles that have recently raised capital include the $250 million AfricaGoGreen Fund (AAGF), closing the second tranche of the fundraising in February, and the Energy Entrepreneurs Growth Fund (EEGF)which grossed more than $110 million last year.
The AAGF finances “climate-friendly” projects and includes pay-as-you-go solar providers BBOXX and Solarise in its portfolio. Similarly, the Shell-backed EEGF fund invests in startups that increase access to clean and reliable energy for households and businesses across the continent. Oxfam Novib and Goodwell have also launched a new fund to provide venture capital to startups in this space.
The emergence of so many new funds shows that even during the capital crunch, there will be some dedicated pools for founders building start-ups that can lead energy transition efforts and provide solutions to mitigate the effects of climate change. The timing of the financing could not be better.
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