Despite the global decline in venture capital funding, Africa's climate tech sector is heating up rapidly. Last year, climate tech startups on the continent raised more than $860 million in equity funding, primarily focused on clean energy technologies. This represents a remarkable 3.5 times increase from 2021.
Interestingly, climate tech has become Africa's second-most funded sector after fintech and it seems like this won't be changing anytime soon.
E3 Capital, an early-stage venture capital firm formerly known as Energy Access Ventures, and Lion's Head Global Partners, an emerging markets-focused investment bank have just announced the first close of their E3 Low Carbon Economy Fund for Africa (E3LCEF) at $48.1 million.
The fund aims to reach a total of $100 million and joins the growing number of investment vehicles supporting startups in Africa's climate tech sector. The fund will provide initial and follow-on funding to startups focused on low-carbon economies, such as solar providers and electric vehicle (EV) companies.
E3 Capital partner Vladimir Dugin stated that the new fund will invest in businesses across sub-Saharan Africa, with typical investments ranging from $500,000 to $3 million.
Other notable climate-focused funds in Africa include Novastar's $200 million Africa People + Planet Fund, Equator's climate tech venture capital fund, Satgana, AfricaGoGreen Fund (AAGF), and the Energy Entrepreneurs Growth Fund (EEGF). Additionally, Oxfam Novib and Goodwell have launched a new fund to provide venture debt to startups in the climate tech sector.