African Venture Capital Firm Equator Raises $55 Million for Climate Tech Startups
A Climate Tech Fund for Early-Stage Startups
African venture capital firm Equator has raised $55 million for its first fund, which will back climate tech startups through one of the most difficult and often overlooked phases in their journey: the early stage. The fund will invest in 15 to 18 startups, writing checks of $750,000 to $1 million for companies at the Seed stage, and $2 million for those at Series A.
The Narrative Has Shifted
The narrative around climate tech has shifted from focusing on impact to prioritizing scalability and monetization. "The narrative has shifted," said Nijhad Jamal, managing partner at Equator. "It’s no longer just about development and impact. It’s about mobilizing private capital for scalable ventures that solve problems. The focus today is even more on things like unit economics and the path to profitability, because people know there isn’t just enough capital to throw at ventures to scale without thinking about monetization, real economics, profitability, or exits."
A Renewed Focus on M&A
Jamal believes climate tech startups today are different from their first-generation cleantech counterparts, which raised billions and are now looking ready for IPOs. "These new startups operate in a more mature ecosystem, allowing them to use capital and time more efficiently — key factors in becoming attractive acquisition targets," he said. The space is already seeing some consolidation, with notable M&A deals like BBOXX’s acquisition of PEG Africa in 2022 and Equator-backed SteamaCo’s merger with Shyft Power Solutions last year.
Importance of Capital Structuring
Jamal stressed the importance of capital structuring, as climate tech attracted the most debt financing last year. "If equity is used for everything, including working capital, dilution will be too high for investors or founders to see meaningful returns. But as debt and other financial instruments become more available, we’ll start seeing commercial exits, even if they’re more bite-sized," he said.
The Fund’s Strategy
The fund’s strategy is to back scalable solutions that can attract private capital, reducing dependence on aid and development finance institutions (DFIs). "We are needed more than ever to invest in technology and scalable ventures tackling fundamental climate challenges," Jamal said. "These investments will help reduce dependence on aid and instead bring more global private capital into the region."
Portfolio Companies
The fund’s portfolio companies include Roam Electric, Ibisa, and Leta, which are building solutions such as electric vehicles, climate insurance, and AI-powered logistics optimization for businesses.
Conclusion
Equator’s $55 million fund is a significant step towards bridging the funding gap for African climate tech startups. By focusing on early-stage companies, the fund aims to support the growth of scalable solutions that can attract private capital and reduce dependence on aid and development finance institutions.
FAQs
Q: What is the focus of the Equator fund?
A: The fund will back climate tech startups through one of the most difficult and often overlooked phases in their journey: the early stage.
Q: What is the total fund size?
A: The fund has raised $55 million.
Q: How many startups will the fund invest in?
A: The fund will invest in 15 to 18 startups.
Q: What is the typical investment size for the fund?
A: The fund will write checks of $750,000 to $1 million for companies at the Seed stage, and $2 million for those at Series A.
Q: What is the focus of the fund’s portfolio companies?
A: The fund’s portfolio companies are building solutions such as electric vehicles, climate insurance, and AI-powered logistics optimization for businesses.
