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(Ecofin Agency) – The investment aims to reduce the critical funding gap faced by African climate tech startups.
On October 3, 2024, the International Finance Corporation (IFC) announced its first investment in a venture capital fund focused on climate tech companies in sub-Saharan Africa. IFC has committed $5 million to the Equator Africa Fund I, which targets early-stage climate startups in energy, agriculture, and sustainable mobility. The fund focuses primarily on companies in Kenya and Nigeria.
“Together we hope to address a critical financing gap for Seed and Series A-stage climate-tech companies as they scale in the region,” said Nijhad Jamal, Managing Partner of Equator. Africa faces significant climate challenges, needing an estimated $277 billion annually to tackle climate change. However, according to the African Development Bank (AfDB), the continent receives only $30 billion per year. African climate tech startups are turning to both local and international investors to raise funds.
Between January and May 2024, African climate tech attracted 45% of the total funding announced on the continent, about $325 million. According to Africa The Big Deal, this is a record high. In 2022, more than 500 climate tech startups across Africa raised $1.17 billion, representing 18% of all startup funding in Africa that year.
With IFC’s contribution, Equator Africa Fund I has now raised $54 million. The fund held its first close in April 2023, securing $40 million, and is preparing for its final close, targeting a total of $60 million. The fund aims to make at least 15 investments and has already backed six companies. These include SunCulture, providing solar energy and irrigation systems to farmers; Roam, which designs and develops electric motorcycles and buses; Odyssey, supporting investments in renewable energy infrastructure; Apollo Agriculture, offering financing and advisory services to smallholder farmers; Ibisa, providing parametric insurance for climate risks; Downforce Technologies, involved in innovative climate solutions.
Equator Africa Fund I invests between $1 million and $2 million in seed-stage companies and $2 million to $4 million in Series A funding for more mature startups.
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