Equator Launches $55 Million Fund to Boost African Climate Tech Startups
African venture capital firm Equator has announced the closing of a $55 million fund, specifically designed to support early-stage climate tech startups. This initiative addresses a critical funding gap in the African climate tech landscape, where young companies face unique challenges compared to their counterparts in more developed economies.
Climate tech ventures in Africa often navigate a more challenging funding environment. They frequently rely on development finance institutions (DFIs), foundations, and endowments, making them vulnerable to fluctuations in global capital flows, especially as aid and development budgets shrink. The sector as a whole also demands higher capital investments compared to traditional tech startups. Equator’s fund seeks to fill this void by backing scalable, sustainable solutions that can attract private capital investment.
“We are needed more than ever to invest in technology and scalable ventures tackling fundamental climate challenges,” stated Nijhad Jamal, Managing Partner at Equator. “These investments will help reduce dependence on aid and instead bring more global private capital into the region.”
Interestingly, despite this goal, Equator’s limited partners include key DFIs like British International Investment (BII), Proparco, and IFC, along with major foundations like the Global Energy Alliance for People and Planet, which is funded by the IKEA Foundation, the Rockefeller Foundation, and the Bezos Earth Fund, and well as the Shell Foundation. This reflects the sector-wide reliance on these institutions.
Investment Strategy and Portfolio Focus
Equator plans to invest in 15 to 18 startups, with initial investments ranging from $750,000 to $1 million for seed-stage companies and up to $2 million for Series A rounds. Beyond capital, the firm will provide crucial support in areas such as unit economics, governance, and regional expansion. The fund also aims to reserve capital for follow-on investments and later-stage financing, and it intends to involve its limited partners as co-investors to attract equity, debt, and blended financing options.
“In several of our portfolio companies, we’re the only Africa-focused investor on the cap table — that’s the role we see ourselves playing in this ecosystem,” Jamal explained. “Until our most recent investments, we had a 100% success rate in bringing our investors directly into the ventures we backed.”
Africa contributes less than 3% of global energy-related CO2 emissions, yet it faces some of the most severe effects of climate change. Equator invests in ventures “addressing economic and sustainability challenges emerging from these impacts.”
Shifting Focus: From Impact to Profitability
According to Jamal, the African climate tech sector is experiencing a shift. Initial strategies focused primarily on impact, but the emphasis is now on sales and clear economic value. Climate solutions need to demonstrate cost-effectiveness and appeal to customers with purchasing power. Examples include electric vehicles that compete on price, more accurate climate insurance, and businesses that are using AI-powered logistics optimization.
Roam Electric, Ibisa, and Leta are examples of portfolio companies that are building these solutions.
“The narrative has shifted,” Jamal noted. “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.”
Anticipated Exits and Capital Structuring
Jamal argues that today’s climate tech startups are different from their predecessors. These new ventures operate within a more mature ecosystem, allowing them to manage capital and time more efficiently. Where the first generation looked toward multibillion-dollar IPOs, Jamal anticipates exits in the realm of $100 million, a target that he still believes can provide strong returns for investors.
The sector is already consolidating, with some mergers and acquisitions. Noteworthy examples include Bboxx’s acquisition of PEG Africa as well as the merger between Equator-backed SteamaCo and Shyft Power Solutions.
Further, Jamal indicated the importance of structured capital allocation. With climate tech attracting increased debt financing, startups need the right mix of funding to avoid excessive equity dilution.
“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.
Before establishing Equator, Jamal held previous roles at BlackRock and impact investor Acumen Fund, where he oversaw the clean tech group. He subsequently founded Moja Capital, a personal investment fund that preceded Equator’s current strategy. Jamal leads Equator alongside partner Morgan DeFoort. One of Jamal’s early investments was SunCulture, an off-grid solar company based in Kenya, which Equator has since backed. They’ve also invested in other growth-stage companies like SoftBank-backed Apollo Agriculture and Odyssey Energy Solutions.
