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<a href="https://equator.vc/" target="_blank" rel="noopener">Equator,</a> a climate tech venture capital firm that backs seed and Series A startups focused on climate technology across energy, agriculture, and mobility sectors, has successfully closed its $40 million funding round. 



The VC firm plans to use the funds to support and invest in climate technology startups across Sub-Saharan Africa. The startups in mind are those focused on tackling issues disrupting climate change in the region with solutions like renewable energy, energy efficiency, waste management, sustainable agriculture, and mobility. 



The investment will assist these startups in scaling their operations and making a major contribution to mitigating the effects of climate change on the continent. This support will help address the effect of climate change on African income inequality.



The funding round saw the participation of big partners, including BII, the Global Energy Alliance for People and Planet (GEAPP), the Shell Foundation, and impact investor DOEN Participaties according to a <a href="https://techcrunch.com/2023/04/05/equator-secures-40m-in-commitments-for-fund-targeting-climate-tech-startups-in-africa/" target="_blank" rel="noopener">report by TechCrunch</a>. 



Speaking about the importance of this new funding, Nijhad Jamal, the managing partner, said, 



<blockquote class="wp-block-quote">So climate change has worsened global income inequality and we’re seeing that very acutely in sub-Saharan Africa. And the ventures and innovation that we’re investing in is a material component to addressing some of these challenges.<cite>Nijhad Jamal, the managing partner of Equator.</cite></blockquote>



Equator Ventures already has a significant presence in the African region. It has employees in Nairobi, Lagos, London, and Colorado.



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<h4 id="the-african-climate-tech-industry">The African Climate tech industry</h4>



<figure class="wp-block-image size-full"><img width="1920" height="1080" src="https://technext24.com/wp-content/uploads/2023/04/image-33.png" alt="Equator VC raises $40M to invest in Sub-Saharan African climate-tech startups" class="wp-image-188386"/><figcaption>Photo Credit: The United Nations</figcaption></figure>



While the African tech startup scene has grown and is still growing with more and more entrepreneurs creating solutions to address the challenges the continent face, securing funding has somewhat been an issue.



Some investors are more focused on helping a category of startups to upscale their operations but some startup industries like climate tech do not seem to be a good option for investors&#8217; appetite as it is not one of the booming markets.



However, the fund&#8217;s focus on climate tech startups is particularly important, given the urgent need for action on climate change in Africa. Although, according to a <a href="https://www.iea.org/reports/africa-energy-outlook-2022/key-findings" target="_blank" rel="noopener">report</a> by International Energy Agency, Africa accounts for less than 3% of the world’s energy-related carbon dioxide (CO2) emissions to date and has the lowest emissions per capita of any region, the region is still very much impacted by the adverse effect of the climate change. 



<figure class="wp-block-image size-full"><img width="900" height="600" src="https://technext24.com/wp-content/uploads/2023/04/image-32.png" alt="Equator VC raises $40M to invest in Sub-Saharan African climate-tech startups" class="wp-image-188385"/><figcaption>Photo Credit: CSMonitor.com</figcaption></figure>



The continent is particularly vulnerable to the effects of climate change, with many communities already experiencing the impacts of rising temperatures, droughts, floods, and other extreme weather events. 



One reason could be the lack of dissemination of technologies and information pertinent to adaptation, typically provided by clean or climate tech companies. Another reason could be that the African population is growing faster than the infrastructure can keep up with.



However, unlike other ecosystems, while African climate energy tech startup ecosystem is still in its early stages. It has seen much support from investment opportunities. In 2015, the African Development Bank <a href="https://www.afdb.org/en/news-and-events/press-releases/energy-power/21?page=65" target="_blank" rel="noopener">launched</a> a $1 billion facility to support clean energy projects on the continent. In 2016, the US  <a href="https://www.energy.gov/articles/fact-sheet-obama-administration-announces-new-financing-renewable-energy-projects-and" target="_blank" rel="noopener">pledged $7 billion</a> to support clean energy development in the region.



According to TechCrunch, in 2021, climate tech startups raised more than $60 billion, accounting for approximately 14% of VC dollars raised that year; in Africa, clean tech accounted for 15% to 18% (approximately $863 million) of total funding poured into the region last year, placing clean tech second only to fintech.



Nevertheless, there is a greater need for investment and understanding of the importance of renewable energy solutions and the continent&#8217;s vast untapped potential. This is what Equator VC firm is looking to achieve. 



<h4 id="equators-contribution-to-the-climate-tech-startup-ecosystem-in-africa">Equator&#8217;s contribution to the climate tech startup ecosystem in Africa</h4>



<figure class="wp-block-image size-full"><img width="1000" height="600" src="https://technext24.com/wp-content/uploads/2023/04/Untitled-design.png" alt="Equator VC raises $40M to invest in Sub-Saharan African climate-tech startups" class="wp-image-188387"/></figure>



By investing in climate tech startups, Equator can help to build a more sustainable future for Africa, while also supporting the growth of the continent&#8217;s tech ecosystem. It will also provide much-needed support for these startups to accelerate their growth and operations. 



The new $40 million funding hopes to provide a new source of funding and support for entrepreneurs and innovators working to tackle the challenges posed by climate change, which might also attract a new wave of entrepreneurs and investors to the sector, creating new opportunities for innovation and collaboration.



Equator says it will participate in round sizes of $10 million or less, which is typical for pre-Series B clean tech companies in Sub-Saharan Africa, and hopes to make up to 15 investments over the fund&#8217;s life cycle. The clean tech VC spends between $1 million and $2 million in seed stages and between $2 million and $4 million in Series A stages.



The VC firm is focused on capitalizing on the current shift in the global narrative about the importance of climate technology and its effect on climate change. It hopes to use this investment to help lower the cost of technologies like solar systems and batteries while also providing better access for people and businesses through pay-as-you-go models.



Read Also: <a href="https://technext24.com/2023/01/10/0-african-startups-selected-by-cf/">3 Nigerian startups, 7 others benefit from $2m fund to drive Africa’s fight against climate change</a>

Equator VC raises $40M to invest in Sub-Saharan African climate-tech startups

Technext.ng

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