Africa, responsible for less than 3% of global energy-related carbon dioxide emissions, is disproportionately impacted by the adverse effects of climate change. However, investor interest in clean tech companies has surged, with climate tech startups raising over $60 billion globally in 2021, representing about 14% of all venture capital dollars raised that year. In Africa, clean tech accounted for 15%-18% of total venture capital funding, with Equator, a climate tech venture capital firm focused on sub-Saharan Africa, raising $40 million in commitments for its first fund.
Equator invests in seed and Series A startups across the energy, agriculture, and mobility sectors, where there are numerous untapped market opportunities. The firm aims to act as a bridge between startups' earliest checks and growth capital, filling the gap between seed and Series A funding rounds. The lack of capital and institutional investors supporting companies at this stage creates an opportunity for Equator, which plans to mobilize capital at later stages from large regional funds, global climate tech funds, and corporations excited about the sector and region.
Equator's investment focus on energy, agriculture, and mobility sectors is particularly critical in Africa, where the majority of the population still lacks access to reliable electricity and transportation, and climate change already has severe impacts on agriculture and food security. Investing in innovative solutions in these sectors can help address these challenges while also creating new economic opportunities and reducing emissions.
Equator's limited partners include the British International Investment (BII), the Global Energy Alliance for People and Planet (GEAPP), the Shell Foundation, and impact investor DOEN Participaties. The firm's investments in SunCulture and other promising startups in the region demonstrate its commitment to supporting innovative solutions to climate change challenges in Africa.
Equator's success in raising $40 million in commitments for its first fund and its focus on early-stage investments in Africa's clean tech sector is a positive sign for the region's future in the fight against climate change. As investor appetite for clean tech companies continues to grow, it is essential that more resources and funding be directed towards supporting innovative solutions in Africa and other regions most vulnerable to the adverse effects of climate change.
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