Equator, a venture capital firm operating in Africa, has secured $55 million for its debut fund, marking a significant milestone in the funding of early-stage climate tech startups on the continent. The firm aims to support companies navigating one of the most challenging and often overlooked phases of their journey: the early stage.
Climate tech startups in Africa face a more complex funding landscape compared to their counterparts in developed economies, where government subsidies frequently bolster green technology ventures. Instead, African startups rely heavily on development finance institutions (DFIs), foundations, and endowments, making them particularly vulnerable to shifts in global capital flows.
With international aid and development finance budgets under increasing pressure, DFIs have been deploying less capital, exacerbating the funding crunch for African startups. The situation is especially dire for climate tech firms, which typically require more capital than conventional tech startups. Equator believes its fund can help bridge this gap and support scalable solutions capable of attracting private capital.
“We are needed more than ever to invest in technology and scalable ventures tackling fundamental climate challenges,” said Nijhad Jamal, Equator’s managing partner. “These investments will help reduce dependence on aid and instead bring more global private capital into the region.”
While Equator’s ambition is to catalyze private capital inflows, its own investor base still largely comprises development institutions. The firm’s limited partners include British International Investment (BII), Proparco, and the International Finance Corporation (IFC), alongside foundations and endowments such as the Global Energy Alliance for People and Planet — backed by IKEA, the Rockefeller Foundation, and Jeff Bezos’ Earth Fund — and the Shell Foundation.
Equator plans to deploy the fund across 15 to 18 startups, writing checks of $750,000 to $1 million for seed-stage companies and up to $2 million for Series A rounds. In addition to capital, the firm aims to support founders in refining unit economics, governance structures, and regional expansion strategies. A portion of the fund will also be reserved for follow-on investments, with Equator mobilizing its LPs as co-investors to inject additional equity, debt, or blended financing into its portfolio companies.
“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 said. “Until our most recent investments, we had a 100% success rate in bringing our investors directly into the ventures we backed.”
Despite contributing less than 3% of global energy-related CO2 emissions, Africa bears some of the most severe climate impacts. Equator’s investment thesis centers on ventures addressing economic and sustainability challenges stemming from these environmental shifts.
When Equator reached the first close of its fund in 2023, Jamal emphasized the importance of backing technically adept founders in the energy, agriculture, and mobility sectors. At the time, climate tech investment had surged, making it the second-largest venture capital category in Africa after fintech. However, the investment landscape has since evolved, prompting a shift in investor priorities.
Initially, the sector’s focus was largely on impact, but today, financial sustainability has taken precedence. “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 real problems. Investors are paying closer attention to unit economics and the path to profitability, recognizing that capital can no longer be deployed indefinitely without a clear monetization strategy.”
Highlighting practical examples, Jamal cited electric vehicles that cost less than fuel-powered alternatives, climate insurance with precise extreme weather coverage, and AI-powered logistics optimization for businesses. Some of Equator’s portfolio companies, including Roam Electric, Ibisa, and Leta, are building such solutions.
Mergers, Acquisitions, and Exit Strategies
Jamal believes that today’s climate tech startups operate in a more mature ecosystem compared to the first-generation clean tech pioneers such as Sun King, M-KOPA, and d.light — companies that have collectively raised billions and are now approaching IPOs. The new wave of startups, he argues, is more capital-efficient and well-positioned for acquisitions.
Rather than targeting billion-dollar IPOs, Equator anticipates $100 million exits, which Jamal contends can still deliver strong returns for investors. The sector has already seen early consolidation, with transactions such as Bboxx’s acquisition of PEG Africa in 2022 and the merger of Equator-backed SteamaCo with Shyft Power Solutions last year.
As the market matures, Jamal underscores the importance of capital structuring. Climate tech startups attracted the highest levels of debt financing in Africa last year, and he cautions against 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 explained.
Jamal, who previously worked at BlackRock and impact investor Acumen Fund, co-founded Equator with Morgan DeFoort. Before launching the fund, he established Moja Capital, a personal investment vehicle aligned with Equator’s strategy.
One of Jamal’s early bets was SunCulture, a Kenya-based off-grid solar company backed by the Schmidt Family Foundation. Equator has since supported SunCulture alongside other growth-stage startups such as SoftBank-backed Apollo Agriculture and Odyssey Energy Solutions.
As Equator embarks on deploying its inaugural fund, the firm’s success will be closely watched as a barometer for whether Africa’s climate tech ecosystem can attract sustained private capital investment — and ultimately deliver the financial and environmental outcomes it promises.