Equator Raises $55M to Back Climate Tech Startups in Africa
TLDR
- Equator, an Africa-focused venture capital firm, has raised $55 million for its first fund to invest in early-stage climate tech startups
- The firm plans to support 15 to 18 companies with seed investments ranging from $750,000 to $1 million and Series A checks of up to $2 million
- The fund aims to address a financing gap in Africa’s climate tech sector, which lacks the government subsidies available in more developed markets
Equator, an Africa-focused venture capital firm, has raised $55 million for its first fund to invest in early-stage climate tech startups. The firm plans to support 15 to 18 companies with seed investments ranging from $750,000 to $1 million and Series A checks of up to $2 million.
The fund aims to address a financing gap in Africa’s climate tech sector, which lacks the government subsidies available in more developed markets. Instead, startups in the region rely heavily on development finance institutions (DFIs), foundations, and endowments, making them vulnerable to shifts in global capital flows.
Equator’s limited partners include DFIs such as British International Investment (BII), Proparco, and IFC, as well as private foundations like the Shell Foundation and the Global Energy Alliance for People and Planet. The firm plans to help startups scale by refining their unit economics, governance, and regional expansion strategies while also mobilizing co-investors for follow-on funding.
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Key Takeaways
While climate tech was Africa’s second-largest VC sector after fintech in recent years, investor sentiment has shifted from impact-focused funding to commercial viability. Startups are now expected to demonstrate clear economic value and strong unit economics. Equator’s portfolio includes companies like Roam Electric (electric mobility), Ibisa (climate insurance), and Leta (AI-driven logistics optimization). The firm anticipates a rise in mergers and acquisitions, with exits in the $100 million range rather than billion-dollar IPOs. As climate tech startups look for sustainable funding, Equator emphasizes structured capital approaches, blending equity with debt to prevent excessive dilution. The firm expects increasing availability of alternative financial instruments to facilitate more commercial exits in the sector.
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