The Catalyst Fund has marked a significant achievement by securing the initial closing of its ambitious $40 million fund, dedicated to supporting climate-focused startups in Africa. In an announcement, the fund proudly revealed an initial capital infusion of $8.6 million, courtesy of backing from FSD Africa Investments (FSDAi), Cisco Foundation, USAID Prosper Africa, and the tech-savvy investor Andrew Bredenkamp.
With a clear mission in mind, the Catalyst Fund has charted a course to invest in an array of sectors crucial to addressing climate challenges. These sectors encompass agtech, insurtech, climate fintech, as well as startups specializing in fishery management, food systems, cold chain logistics, waste management, and water management. Operating across the African continent, this pan-African fund has set its sights on nurturing pre-seed startups. Notably, it has already extended its support to ten promising startups spanning six African nations, including Egypt, Senegal, and Morocco. The fund is resolute in its commitment to back 20 startups this year, with a long-term vision of supporting a total of 40 such enterprises.
Underlining its dedication to catalyzing early-stage growth, the Catalyst Fund is poised to provide pre-seed startups with an initial investment of $200,000. This initial capital injection paves the way for subsequent follow-on investments, with up to $500,000 available during the seed stage and an impressive $1.5 million earmarked for Series A rounds.
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Maelis Carraro, Managing Partner of Catalyst Fund, articulated the strategy behind these investments, stating, “In essence, our commitment of approximately $2.2 million per startup makes sense because we enter at a very early stage to act as the catalyst for other investors. At the pre-seed stage, we utilize a standard SAFE (Simple Agreement for Future Equity) instrument.” Carraro further emphasized that pre-seed investments will also include an invaluable $100,000 allocation for “dedicated technical support from a team of experts and operators, spanning all the functions essential for a startup’s growth.”
The Catalyst Fund’s journey began in 2016 as a pre-seed accelerator, aiming to address challenges such as funding, talent acquisition, and market access for startups. It achieved this through philanthropic collaborations with organizations such as the Bill & Melinda Gates Foundation and the UK Foreign Commonwealth and Development Office (FCDO).
However, the fund underwent a transformation last year, transitioning from an accelerator to a venture capital fund. Carraro explained that this shift was a natural progression, enabling the fund to offer longer-term support to founders. She noted, “The transition from an accelerator to a VC fund for us was quite a natural one. We have a unique model because we will continue to provide hands-on venture-building support at the pre-seed stage.” She further emphasized that this transition was motivated by a recognized need for ongoing capital and support, unlike the time-bound nature of grant accelerators.
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The Catalyst Fund is part of a growing wave of capital pools dedicated to addressing climate change in Africa. Other notable initiatives include the Africa People + Planet Fund by Novastar Ventures, Equator, and Satgana.
Carraro underscored that the imperative of climate change challenges naturally steered the fund toward solutions focused on resilience and adaptation. The fund’s broad sectoral focus reflects its belief that every facet of the economy must adapt to climate change impacts. Some of the startups backed by the fund include Octavia Carbon, a direct air carbon capture startup, and Sand to Green, which is pioneering the transformation of deserts into arable land.
Carraro concluded, “Our latest fund is entirely geared toward supporting tech startups dedicated to building a climate-resilient future. We are laser-focused on climate adaptation solutions across sectors, with the overarching goal of enhancing communities’ resilience to the effects of climate change. The first closure of our venture fund is an extraordinary milestone, as very few philanthropy-originating accelerators can make this transition.”
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard