Introduction

Equator Africa, a venture capital firm focused on early-stage climate tech, has closed an additional $5 million from the International Financial Corporation (IFC). This latest funding aims to support businesses that are driving innovation in Africa’s climate sector, furthering the firm’s mission to bridge the significant funding gap in the region.

Expanding Climate Tech Funding in Africa

The new investment follows Equator Africa’s initial close of $40 million in April 2023. The fund is designed to address the persistent funding challenges faced by seed and Series A-stage startups focused on climate technology in sub-Saharan Africa. This additional investment boosts the total fund size to $54 million.

Part of this increase comes from the Korea Green Resilient and Innovative Development (K-GRID) Programme, a $30 million initiative by the Korean government aimed at supporting IFC projects that promote climate mitigation technologies. The K-GRID programme contributed a $1.5 million guarantee, solidifying its role in driving climate innovation.

IFC’s Commitment to Climate Solutions in Africa

Farid Fezoua, IFC’s Global Director for Disruptive Technologies, Services, and Funds, expressed enthusiasm about the potential of Africa’s climate tech sector. He noted that businesses focusing on climate technology are contributing to both economic growth and environmental sustainability.

“IFC’s investment in Equator Africa reflects our commitment to supporting businesses that deliver solutions, from renewable energy to electric vehicles,” said Fezoua, reinforcing IFC’s dedication to funding initiatives that tackle climate challenges across the continent.

Investing in Africa’s Climate Innovation Ecosystem

Equator Africa invests in tech-enabled companies across sub-Saharan Africa, with a particular focus on green energy, agriculture, and mobility. While the fund primarily targets Kenya and Nigeria, it has also backed companies in Côte d'Ivoire, Ghana, Madagascar, Senegal, Sierra Leone, South Africa, and Zambia.

Some of Equator Africa's notable investments include:

  • SunCulture: A Kenyan company providing solar-powered energy and irrigation systems for farmers.
  • Roam: A Kenya-based developer of electric motorcycles and buses.
  • Odyssey: A platform offering data and technology solutions for investment and asset management in distributed renewable energy infrastructure.
  • Apollo Agriculture: A Nairobi-based company providing input financing and advisory services to smallholder farmers.
  • Ibisa: A startup offering parametric insurance products designed to mitigate climate risks.
  • Downforce Technologies: A company focused on making soil organic carbon measurement technology accessible and affordable.

These investments showcase Equator Africa’s commitment to supporting startups that tackle key climate challenges across multiple sectors.

Climate Tech Investment in Africa on the Rise

An analysis by startup funding tracker Africa: The Big Deal highlights the growth of climate tech funding in Africa, noting that $325 million has been invested in climate tech startups in 2024 so far. This marks a significant rise from previous years, with investments increasing from $340 million in 2019 to $1.1 billion in 2023.

While the sector has seen strong growth, experts warn that the current funding levels are insufficient to meet Africa’s ambitious climate goals by 2030. Reports indicate that annual climate funding needs to increase from $30 billion to nearly $300 billion to address both mitigation and adaptation efforts effectively.

Continued Growth in Africa’s Climate Tech Sector

The momentum in Africa’s climate tech space shows no signs of slowing down. In March 2024, venture capital firm Satgana closed its first fund aimed at supporting early-stage climate tech startups in Africa. Similarly, the African Development Bank Group (AfDB) committed a $10 million junior equity investment to the KawiSafi II Fund to further boost climate tech innovation on the continent.

These developments, combined with Equator Africa’s expanded funding, indicate a strong and growing commitment to supporting African startups that are driving the continent’s climate solutions.