In a landmark move, the International Finance Corporation (IFC) has made its first investment in a venture capital fund dedicated to climate technology. The IFC announced a $5 million commitment to Equator Africa Fund I, marking its entry into the climate tech venture capital landscape. This investment, which brings the fund’s total size to $54 million, underscores the growing interest in African startups offering innovative solutions to mitigate climate change.

Equator Africa Fund I targets early-stage, technology-driven companies that operate in sectors central to addressing Africa’s climate challenges — energy, agriculture, and mobility. Launched in April 2023 with an initial close of $40 million, the fund aims to fill the persistent funding gap for climate tech innovation, particularly for Seed and Series A-stage startups in sub-Saharan Africa. The IFC’s investment was made as part of the fund’s final close and is bolstered by a $1.5 million guarantee from the Korea Green Resilient and Innovative Development (K-GRID) Program, a $30 million initiative by the Government of Korea.

Africa faces significant challenges from climate change, being one of the most vulnerable regions to its impacts. At the same time, the continent presents untapped opportunities for climate technology businesses that can provide sustainable solutions. From clean energy to agricultural innovations, climate tech holds the potential to not only address environmental issues but also promote economic development.

Equator Africa’s investment strategy is geared toward companies that can scale rapidly across the region. While the fund’s primary focus is on Kenya and Nigeria, it has already backed companies with operations in a diverse set of countries, including Côte D’Ivoire, Ghana, Madagascar, Senegal, South Africa, Sierra Leone, and Zambia.

Nijhad Jamal, Managing Partner at Equator Africa, expressed enthusiasm for the partnership with IFC: “We are thrilled to have IFC participate in our fund and support Equator’s mandate to invest in technology-enabled, early-stage ventures that are accelerating an equitable climate transition in sub-Saharan Africa. Together we hope to address a critical financing gap for climate tech companies as they scale in the region.”

The IFC’s Global Director for Disruptive Technologies, Services, and Funds, Farid Fezoua, emphasized the role that climate tech can play in Africa’s economic future. “Climate tech is an exciting area of innovation and impact in Africa, where businesses are helping economies grow while reducing emissions and resource use. IFC’s investment in Equator Africa reflects our commitment to supporting businesses delivering sustainable solutions, from renewable energy to electric vehicles.”

Equator Africa Fund I has already made strategic investments in six climate-focused companies:

• SunCulture: A provider of solar-powered energy and irrigation systems for farmers, enabling more sustainable agricultural practices.
• Roam: A designer and developer of electric motorbikes and buses, helping to reduce emissions in the transportation sector.
• Odyssey: A tech platform that facilitates investment and asset management for distributed renewable energy infrastructure.
• Apollo Agriculture: A provider of input financing and advisory services to smallholder farmers, supporting climate-smart agriculture.
• Ibisa: A provider of parametric insurance products designed to mitigate climate risks, offering financial protection to farmers and other stakeholders.
• Downforce Technologies: A company specializing in making soil organic carbon measurement technology more accessible and affordable.

In addition to the IFC, other notable investors in Equator Africa include British International Investment (BII), the Global Energy Alliance for People and Planet (GEAPP), Shell Foundation, DOEN Participaties, and Proparco. Beyond financial backing, the IFC is expected to provide support to Equator Africa on environmental and social governance as well as gender inclusion strategies.

IFC’s New Venture Capital Platform

The IFC’s investment in Equator Africa Fund I is part of a broader strategy under its new $225 million Africa, Middle East, Central Asia, and Pakistan Venture Capital Platform. This initiative aims to strengthen venture capital ecosystems in emerging markets and invest in early-stage companies that tackle pressing development challenges through technological innovations in sectors such as climate, healthcare, education, agriculture, and e-commerce.

The IFC’s decision to back Equator Africa highlights the growing recognition of Africa’s potential as a hub for climate tech innovation. With global attention increasingly focused on sustainable development, funds like Equator Africa are poised to play a key role in shaping the continent’s climate resilience.

For Equator Africa, securing the backing of a major institutional investor like IFC not only validates its investment thesis but also sends a strong signal to other investors about the promise of Africa’s climate tech sector. The fund’s investments are designed to help companies overcome the significant financing hurdles that typically stymie early-stage ventures in Africa, particularly those addressing complex issues such as climate change.

As Equator Africa continues to invest in startups across the region, the collaboration with IFC is set to accelerate the development of technologies that will not only mitigate the impacts of climate change but also drive inclusive economic growth across the continent.

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working across more than 100 countries, IFC leverages its capital, expertise, and influence to create markets and opportunities in developing economies. In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions, aiming to eliminate poverty while fostering sustainable development.

The Korea Green Resilient and Innovative Development (K-GRID) program supports projects aimed at reducing greenhouse gas emissions and fostering climate resilience. It also promotes the development and commercialization of technologies that improve climate mitigation in emerging markets.