At a time when Africa faces increasing climate risks, it is also emerging as a rising hub for climate and clean-tech innovation. 

Through this indirect investment, Swedfund aims to catalyse funding for early-stage local businesses developing solutions in renewable energy, e-mobility, smart logistics, circular economy and regenerative agriculture.

“As the impacts of climate change intensify, it is critical to support businesses building resilient, low-carbon economies. Our investment seeks to unlock financing for innovative companies across Africa that improve lives and livelihoods while reducing emissions,” says Sofia Gedeon, investment director at Swedfund.

By investing in NVIII, a fund structure with broad reach and local presence in countries like Kenya and Nigeria, Swedfund enables capital to reach a larger number of high-impact companies across the continent. This approach supports market development, job creation and access to essential services in underserved communities.

Swedfund’s investment is made alongside other development finance institutions such as Norfund and British International Investment (BII).

The investment was signed in September, 2024

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The firm plans to use the capital to support early-stage startups developing innovative solutions in energy, agriculture, and mobility.

African climate tech startups are usually hit with funding limitations compared to companies in developed economies, where government subsidies provide required support. 

Instead, African startups rely heavily on development finance institutions (DFIs), foundations, and endowments, making them vulnerable to global financial changes. 

With aid budgets shrinking, DFIs have reduced funding, increasing the pressure on African startups—particularly in climate tech, which demands higher capital investment.

With this new fund, Equator aims to bridge the financing gap and attract private investors to the region. “We are needed more than ever to invest in technology and scalable ventures tackling fundamental climate challenges,” said Nijhad Jamal, managing partner at Equator. 

“These investments will help reduce dependence on aid and instead bring more global private capital into the region.”

Equator intends to invest in 15 to 18 startups, providing funding ranging from $750,000 to $1 million for seed-stage companies and up to $2 million for those in Series A. 

Beyond capital, the firm will assist startups with unit economics, governance, and expansion strategies. A portion of the fund will also be reserved for follow-on investments, with Equator mobilising its limited partners (LPs) as co-investors to bring in additional equity, debt, or blended financing.

“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 explained. “Until our most recent investments, we had a 100% success rate in bringing our investors directly into the ventures we backed.”

Equator’s investment focus aligns with the pressing climate challenges in Africa, a continent that contributes less than 3% of global energy-related CO₂ emissions but suffers disproportionately from climate change. The firm backs startups that address both economic and environmental challenges arising from these issues.

While climate tech investments have grown, changing market conditions have altered investor expectations. Initially, the emphasis was on social impact, but today, investors demand clearer economic value from climate solutions. 

Companies must now prove profitability and strong unit economics rather than relying on impact alone.

Jamal noted key areas where climate startups are showing commercial viability. These include cost-effective electric vehicles, precise climate insurance for extreme weather, and AI-driven logistics solutions. Equator-backed companies like Roam Electric, Ibisa, and Leta are developing such innovations.

“The narrative has shifted,” Jamal said. “It’s no longer just about development and impact. It’s about mobilising private capital for scalable ventures that solve problems. The focus today is even more on things like unit economics and the path to profitability, because people know there isn’t just [enough] capital to throw at ventures to scale without thinking about monetisation, real economics, profitability or exits.”

Unlike early cleantech startups such as Sun King, M-KOPA, and d.light—companies that raised billions and are now approaching IPOs—the new wave of climate startups operates in a more structured ecosystem. This environment allows them to use capital more efficiently and position themselves for acquisitions rather than billion-dollar IPOs.

Jamal predicts that instead of massive public listings, African climate tech startups will see $100 million exits, which can still yield strong investor returns.

The industry has already witnessed some consolidation, including BBOXX’s acquisition of PEG Africa in 2022 and the merger of Equator-backed SteamaCo with Shyft Power Solutions.

To achieve sustainable exits, startups must balance capital structuring. Climate tech attracted the highest amount of debt financing last year, and Jamal emphasised the importance of managing 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.

Equator’s leadership team includes Jamal and Morgan DeFoort. Before co-founding Equator, Jamal worked at BlackRock and Acumen Fund, where he led cleantech investments. 

He also founded Moja Capital, an early-stage investment fund with a strategy aligned with Equator. Among his notable investments are SunCulture, a Kenyan off-grid solar company, as well as Apollo Agriculture and Odyssey Energy Solutions.

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