Equator Secures $40M in Pledges for a Fund Focused at African Climate Tech Startups
Equator, a venture capital firm concentrated on investing in climate tech startups in Sub-Saharan Africa, has secured $40 million in limited partner commitments for its first fund. BII, GEAPP, The Shell Foundation, and DOEN Participaties are among the investors. They are all committed to supporting sustainable and impactful energy, agriculture, and mobility startups.
Equator intends to invest in seed and Series A startups, bridging the gap between pre-seed checks and growth capital from its limited partners. Nijhad Jamal, the managing partner, believes these sectors provide significant untapped market opportunities for investors to make a positive environmental and social impact.
“The challenge for many of those larger funds and international investors is that they tend to come in when things have already been de-risked and proven out. At the seed and Series A stage, there is a shortage of capital and institutional investors supporting companies at that stage of their life cycle and journey,” remarked Jamal.
“The hope is that by investing at these stages, we can mobilize capital at Series B and growth equity stages from large regional funds, global climate tech funds, and corporations excited about the sector and region.”
Before joining Equator, Jamal worked for asset manager BlackRock and Impact investment firm Acumen Fund, overseeing the firm’s cleantech group.
Jamal made seed and Series A investments across several sectors at Moja Capital, a personal fund he founded, including those central to Equator’s strategy: clean energy, agriculture, and mobility. Jamal invested in SunCulture, a Kenya-based off-grid solar technology for smallholder farmers. SunCulture and other startups backed by Equator’s operators, including Morgan DeFoort, partner at Equator and founder of Factor[e] Ventures; Apollo Agriculture; Odyssey Energy Solutions; and Roam, received follow-on funding.
“Climate change and income inequality are proven to be directly correlated. Data shows that the gap between the economic output of the world’s richest and poorest countries is 25% larger today than it would have been without global warming,” Jamal remarked.
“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.”
Equator says it will participate in round sizes of $10 million or less, typical for pre-Series B cleantech startups in Sub-Saharan Africa. It hopes to make up to 15 investments over the fund’s life cycle. The clean tech VC invests between $1 million and $2 million in seed stages and between $2 million and $4 million in Series A stages.
Factor[e] Ventures, an organization of venture builders and pre-seed investors, will also support the firm, which has teams in Nairobi, Lagos, London, and Colorado. While Equator and Factor[e] operate independently, they collaborate on deal sourcing and due diligence and share a post-investment support platform to provide value to portfolio companies as they scale.
“We’re optimistic about the role that we have to play in this ecosystem. I hope this is the first of many funds that continue to follow in these footsteps because more capital, talent and innovation are needed to develop more holistic solutions to the challenges in the climate space.”
Equator intends to capitalize on the present shift in the global narrative about the importance of climate technology and its impact on climate change. Despite lagging far behind fintech, investments in the sector are gradually channeled into lowering the cost of technologies such as solar systems and batteries while enabling better access for individuals and businesses through pay-as-you-go models.
