E3 Capital, Lion's Head Global Partners Close First African Startups Climate Fund at $48m

United Nations Building | UN Financial Crisis

Early-stage Venture Capitalist, E3 Capital and Lion’s Head Global Partners have reached the first close for the E3 Low Carbon Economy Fund for Africa (‘E3LCEF’).

The fund, which will be invested in early-stage companies, targets next-generation low-carbon entrepreneurs in Africa, scaling new technologies and business models enabled by the low carbon economy. It also holds significant capital for follow-on in later rounds.

Having reached its first close at $48.1 million, the VCs target a second and final close of up to $100 million within 12 months.

E3 Capital and Lion’s Head combined forces to leverage their respective experience and footprint in Africa. E3 Capital also currently manages a €75 million fund (EAVF I) investing in decentralized energy businesses across Africa, with 15 investments in East-, West- and Southern Africa.

Lion’s Head is an established emerging and frontier market focused asset manager with over $700 million under management and through a separate subsidiary provides corporate finance advisory services to governments, multilaterals, and private companies.

Together, E3 and Lion’s Head have invested in more than $400 million in 30 African countries. E3LCEF is a Luxembourg domiciled fund for which Lion’s Head acts as AIFM and E3 Capital as Fund Adviser.

Recognising the importance of local knowledge in addition to international best practices, the investment team is based in Nairobi. The two parties are excited to leverage their deep experiences to contribute to the transition to a low carbon economy in Africa.

The fund is backed by KfW (in collaboration with BMZ, the German Ministry for Economic Cooperation and Development), FMO, the Dutch entrepreneurial development bank, Swedfund International AB (the Swedish development finance institution), and PROPARCO, with a final close targeting investors that share the belief in the innovative potential of vibrant African entrepreneurs and a commitment to an equitable and resilient global economy.

“We feel this is a great time to back low-carbon businesses in Africa which are starting to see potential for substantial scale. The E3 team brings unique expertise working with early-stage companies across the continent and have demonstrated this ability with their existing portfolio which is starting to show signs of clear winners,” said Clemens Calice, Lion’s Head CEO. “We are excited to back a new generation of entrepreneurs.”

“African businesses are starting to emerge with clear product market fit and a strong commercial potential at the core within the low carbon economy. The quality of entrepreneurs we are seeing is striking. We are passionate about helping African entrepreneurs build the next generation of innovative businesses that innovate, scale and impact the lives of all of us in the coming years,” Paras Patel, Founder and Managing Partner of E3 Capital, stated.

“My partner, Vladmir Dugin, and I are grateful for the support we have received from our investors and look forward to engaging with many existing and new entrepreneurs in the coming months.”

Stephanie Lindemann-Kohrs, Director of the Equity Finance Department at KfW Development Bank, emphasized, “With its investment in the E3 Low Carbon Economy Fund I, KfW is investing as an anchor investor in the first fund of the newly formed E3 Capital team. We are pleased to have the E3 Management team together with Lions Head as very experienced partners with a long positive track record to drive the implementation of the funds’ investment strategy. We are convinced that the investments of the Fund will make a significant contribution towards climate neutrality and climate justice in Africa”.

Linde Lassche, Investment Officer at FMO mentioned, “We are pleased to contribute to the next phase of the energy transition through anchoring the E3 Fund. The E3 team has a knowledge team on the ground with great networks across Africa. They have illustrated the capability to find talented entrepreneurs, either in new sector segments (one of the earliest investors in PAYGO solar and C&I in Africa) and/or in fragile states (Mali, Burkina Faso, Chad). Hence, they have been instrumental for innovation in the energy sector in Africa. Additionally, through three co-investments the E3 team has also proven to be a very good partner for FMO to execute on our direct VC strategy. We are excited to continue on this journey with them.”

“Proparco is proud to support E3 LCEF, one of the very few pioneer investors in the early stage energy access and climate space in Africa. Through the FISEA mandate held by AFD, Proparco is a strong supporter of young African businesses that bring innovative solutions, amongst which in the low carbon space.” Natascha Korvinus, Sr. Investment Officer PROPARCO.

“Our commitment to the fund is driven by Swedfund’s focus on providing financing to companies that are active in high-impact sectors in the low carbon economy, such as renewable energy. Digitalization is another core focus for us, given the strong link with job creation and growth, and the intersection of digitalization and the low carbon transition in developing countries is of particular interest”, says Gunilla Nilsson, Investment Director Energy & Climate at Swedfund.