Venture capital activity around climate tech has been heating up in Africa despite the global VC funding cooldown.
The continent’s climate tech startups secured over $860 million in equity funding, largely driven by clean energy technologies, representing 3.5x growth amid macroeconomic headwinds last year, data shows, making climate Africa’s most funded sector after fintech.
This seems to be just the beginning: The past few months have seen a slew of new funds dedicated to investing in the space, indicating that funding for climate tech startups will persist for a while.
Pan-African venture firm Novastar was last week reported to be raising over $200 million 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, climate tech venture capital firm Equator announced the initial close of its fund to back seed and Series A startups in the energy, agriculture and mobility sectors. Catalyst Fund’s new climate-focused $30 million kitty has also hit the ground running and is now investing in its first cohort of startups.
Satgana, a new climate tech firm launched late last year, plans to allocate up to 40% of its funds in “planet-positive” startups in Africa. Other African climate-focused investment vehicles that have raised capital recently include the $250 million AfricaGoGreen Fund (AAGF), which closed the second tranche of its fundraise in February, and the Energy Entrepreneurs Growth Fund (EEGF), which raised over $110 million last year.
The AAGF finances “climate-friendly” projects and counts pay-as-you-go solar providers BBOXX and Solarise as part of its portfolio. Similarly, the Shell-backed EEGF fund invests in startups that increase access to clean and reliable energy to households and businesses on the continent. Oxfam Novib and Goodwell have also launched a new fund to provide venture debt to startups in this space.
The rise of so many new funds shows that even amid the capital crunch, there will be some dedicated pools for founders building startups that can lead energy transition efforts and offer solutions to mitigate the effects of climate change. The timing of the funding couldn’t be better.