In a remarkable stride towards a greener future, the E3 Low Carbon Economy Fund for Africa (E3LCEF) has achieved its first close, securing an impressive sum of $48.1 million. This groundbreaking fund is a collaboration between early-stage venture capitalist E3 Capital (formerly known as Energy Access Ventures) and Lion’s Head Global Partners, a prominent investment bank focusing on emerging markets.
Among the limited partners of E3LCEF are esteemed organizations such as FMO, the Dutch entrepreneurial development bank; Swedfund International AB, the Swedish development finance institution; Proparco, a subsidiary of the AFD Group dedicated to private sector development investment; and KfW, a development bank in partnership with BMZ, the German ministry for economic cooperation and development. With their support, the fund aims to reach a remarkable target of $100 million, joining the growing ranks of investment vehicles dedicated to supporting startups in Africa’s climate technology sector.
The E3LCEF is set to provide crucial initial and follow-on funding to startups operating within the realm of low-carbon economies. These startups include solar providers and electric vehicle (EV) companies that hold great promise in paving the way for sustainable development in Africa. Recognizing the potential of African businesses to create a significant impact within the low-carbon economy, Paras Patel, the founder and managing partner of E3 Capital, expressed his admiration for the quality of emerging entrepreneurs in the region. He stated, “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.”
Read also : South African Fintech e4 Acquired For $52.5M
With a shared commitment to fostering innovation and scalability, Patel further emphasized, “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.”
Vladimir Dugin, partner at E3 Capital, disclosed that the venture capitalist typically invests between $500,000 and $3 million in seed to Series A startups. With the establishment of the new fund, E3 Capital aims to support businesses across sub-Saharan Africa, adding to its active investment portfolio in the region, which includes the successful management of the €75 million Energy Access Ventures Fund I (EAVFI). The latter has already made 15 investments in decentralized energy enterprises across East, West, and Southern Africa.
Lion’s Head, a reputable asset management firm, currently manages a substantial portfolio worth $700 million. Additionally, its subsidiary offers corporate finance advisory services to governments, multilateral organizations, and private companies. Clemens Calice, CEO of Lion’s Head, expressed enthusiasm for supporting low-carbon businesses in Africa, especially as they begin to exhibit substantial potential for growth. He commended the expertise of the E3 team in working with early-stage companies throughout the continent, noting their existing portfolio’s success in identifying promising ventures.
Amidst a challenging capital landscape, the E3LCEF and other climate-focused funds in Africa play a pivotal role in providing crucial funding to visionary founders spearheading energy transition efforts. These funds also aim to offer solutions that mitigate the effects of climate change and help communities adapt to the rapidly evolving environmental landscape. Notable among these emerging funds is the $200 million Africa People + Planet Fund by Pan-African venture capitalist Novastar, which supports founders dedicated to developing agriculture and climate solutions across the continent. Equator, a climate technology venture capital firm, has also reached the initial close of its fund, focusing on supporting seed and Series A startups in the energy, agriculture, and mobility sectors.
Read also : African Lion 2023 Begins
Furthermore, various other investment vehicles with a focus on climate initiatives in Africa have successfully raised capital in recent times. Examples include Satgana, AfricaGoGreen Fund (AAGF), which concluded the second tranche of its fundraise in February, and the Energy Entrepreneurs Growth Fund (EEGF), which raised over $110 million last year. Recognizing the need for venture debt in this space, Oxfam Novib and Goodwell launched a new fund specifically designed to provide such support to startups dedicated to addressing climate challenges.
These developments signify a transformative shift in Africa’s investment landscape, with a resolute focus on sustainability and climate action. As the E3LCEF and its counterparts continue to mobilize substantial funding, African entrepreneurs are provided with unprecedented opportunities to drive innovation, foster economic growth, and make a profound impact on communities across the continent. Together, these initiatives form a formidable alliance that heralds a new era of environmentally conscious entrepreneurship in Africa.
E3 Low Carbon Economy Fund