Equator, an Africa-focused venture capital firm, has raised $55 million for its first fund to back early-stage climate tech startups.
Why it matters
Unlike startups in developed economies that benefit from government subsidies, African climate tech ventures rely heavily on development finance institutions (DFIs), foundations, and endowments—leaving them vulnerable to shifts in global capital flows.
The big picture
As aid budgets shrink, DFIs are deploying less capital, tightening the funding environment. Climate tech startups—requiring more capital than traditional tech companies—are hit hardest.
Equator’s play
The fund plans to bridge this gap by:
- Investing in 15 to 18 startups, with checks ranging from $750,000 (Seed) to $2 million (Series A)
- Helping founders with unit economics, governance, and regional expansion
- Reserving capital for follow-on investments and later-stage rounds
“We are needed more than ever to invest in scalable ventures tackling fundamental climate challenges,” said Equator’s managing partner, Nijhad Jamal.
The challenge
Despite its mission to mobilize private capital, Equator’s own backers include DFIs like British International Investment (BII), Proparco, and IFC, alongside foundations such as the Global Energy Alliance for People and Planet and the Shell Foundation.
The narrative shift: Investors and founders are now prioritizing profitability and scale over impact alone.
- “It’s no longer just about development,” Jamal said. “The focus today is on monetization, real economics, and exits.”
Examples of scalable climate solutions include:
- Electric vehicles that cost less than fuel-powered alternatives
- AI-driven logistics optimization
- Climate insurance covering extreme weather events
M&A momentum: While billion-dollar IPOs remain rare, Equator expects more $100 million exits as startups mature.
• Recent moves include BBOXX’s acquisition of PEG Africa and a merger between SteamaCo and Shyft Power Solutions.
Source: TechCrunch
