African venture capital firm Equator has raised $55 million to support early-stage climate tech startups, aiming to stimulate economic growth and sustainable development.
Investments for Climate Startups
Equator plans to invest in 15-18 startups, allocating $750,000 to $1 million for Seed stage companies, and $2 million for Series A. Besides funding, the firm will focus on providing assistance in economics, governance, and regional expansion. Equator will also earmark capital for follow-on investments and later stages, leveraging its leading partners to bring in equity, debt, or blended financing.
Bridging the Funding Gap
Climate tech startups in Africa face a tougher funding landscape compared to those in more developed economies, where governments often subsidize greener technologies. Equator aims to bridge this gap by attracting private capital and providing additional support. Equator's line of limited partners includes institutions like British International Investment, Proparco, and IFC, as well as foundations and endowments like the Global Energy Alliance for People and Planet.
Shift from Impact to Commercial Gain
In 2023, Equator focused on backing technical founders in the energy, agriculture, and mobility sectors. Over time, priorities have shifted towards commercial value. Managing partner Nijhad Jamal notes that modern climate solutions must deliver economic value to customers. The past focus on impact has been replaced with an emphasis on unit economics and profitability.
Equator, supported by significant funds and organizations, is focusing its efforts on scaling African startups in climate tech. These initiatives will help grow the sector and attract global private capital to the region.
