A semi-deep-ish dive into the funding gaps, gender disparities, and strategic opportunities shaping parts of Africa's climate technology landscape.
We were honored to have contributed to Build. Commercialise. Grow: A Playbook For Financing Climatech Ventures in Africa. The rest of this post will capture and adopt a few takeaways from the playbook and blend in some of our observations which we articulated when we announced the launch of our Eco Pilot Fund I in November 2023.
The Promise and the Problem
Africa's climate technology sector is having a moment. With one-third of all venture funding in 2024 flowing to climate solutions, the continent looks to position itself as a global leader in climate innovation. From Kenya's geothermal-powered carbon sequestration to Rwanda's mandatory e-motorcycle transition, African entrepreneurs are building solutions that address both local challenges and global climate goals.
But beneath the headline numbers lies a more complex reality. While the sector has raised over $4.3 billion since 2015, just 147 climate ventures have secured funding—and just 10 companies captured more than half of that capital. For most founders, particularly women and science-based innovators, the path from garage, lab bench or studio to commercial scale remains winding and frustratingly unclear.
Three Journeys, Three Funding Realities
Understanding Africa's climate funding landscape requires recognizing that different types of ventures follow fundamentally different capital journeys. Based on extensive research across the ecosystem, three distinct archetypes emerge (against the backdrop of technical risk, market risk, people/execution risk andfunding risk):
Software Ventures: The Fast Track
Asset-light climate solutions—carbon accounting platforms, agricultural data services, climate risk analytics—can scale rapidly on traditional equity funding. Companies like Kenya’s Gro Holdings (RIP💔) which raised ~$135m and built the world’s most advanced AI-native ag data and climate risk platform before shutting down after inexplicably separating from its founder and Kenya's Amini, which raised $2 million in pre-seed funding (and an additional $4m in seed funding) for climate data solutions, illustrate how software ventures can move relatively quickly through the funding continuum.
Funding Recipe: SAFEs and convertibles notes ($100K-$500K) → Priced seed rounds ($1M-$3M) → Series A with revenue-based components ($3M-$10M).
Hardware Ventures: The Asset Puzzle
Pay-as-you-go solar systems, battery-swap networks, waste disposal, and cold-chain solutions require a more complex capital stack. Unlike software, these businesses contain two distinct value drivers: the technology (which theoretically should attract equity) and the physical assets (which optimize better with[collateralized or venture] debt or working capital financing).
Uganda's Afresco, which raised $1.5 million in 2023 for solar-powered cold storage, demonstrates this hybrid approach, using milestone-based convertible notes for technology development while securing asset financing for equipment deployment.
Funding Recipe: Redeemable preference shares ($250K-$1M) → Blended equity and asset financing ($1M-$3M) → Structured growth capital with mezzanine debt ($5M-$15M).
Science-Based Ventures: The Patient Capital Challenge
Deep-tech innovations in areas like direct air capture, alternative proteins, and bio-materials face the longest development cycles and highest technical risk. Kenya's Octavia Carbon, which raised $5 million in seed funding for direct air capture technology, exemplifies how these ventures need flexible, milestone-linked capital until pilot data de-risks the technology.
Funding Recipe: [Convertible] grants ($500K-$1.5M) → Redeemable preference shares with carbon credit options ($2M-$5M) → Blended Series A with strategic equity ($10M-$30M).
The Gender Gap: More Than Just Numbers
The funding disparity between male and female founders in Africa's climate sector tells a story that goes beyond simple bias. Women-only founding teams capture less than 1% of total funding volume, but the reasons reveal deeper structural challenges:
The Science-Gender Intersection: Women founders are disproportionately active in science-based ventures—the most underfunded archetype. They're building solutions in blue technologies, circular economy, and nature-based solutions, sectors that collectively account for less than 5% of total climate funding.
The Skills Gap: Unlike their male counterparts, women-led teams are less likely to combine scientific expertise with business acumen. They're more likely to have pure science or technical backgrounds without the commercial leadership that investors prefer.
The Instrument Mismatch: Women founders are more likely to receive grants and awards rather than equity—instruments that often lack the signaling power and network effects needed to attract follow-on investment.
The Solution: Rather than trying to force women-led science ventures into traditional VC molds, the ecosystem needs financial instruments designed for their reality—patient capital that can support longer R&D cycles while building commercial capabilities.
The Missing Middle: A $250K-$1M Problem
The Yawning Chasm: No Catalysts for Thoughtful ‘Experiments’
Perhaps the most critical gap in Africa's climate funding landscape sits between $250,000 and $1 million—the exact range where most ventures need capital to transition from proof-of-concept to commercial readiness. Less than 10% of all climate deals fall in this band, creating a bottleneck that prevents promising innovations from reaching scale. With so few investments in this band, it means capital is concentrating on the ‘consensus’ opportunities, framed by funders (and often dictated by their funders) that are often disinterested in taking the necessary risks required to build a thriving and multi-layered ecosystem.
This gap is particularly acute because:
Angels, studios and accelerators typically write smaller checks ($5K-$100K).
Traditional VCs prefer larger, later-stage rounds ($1M+). Regretfully, the scope and depth of VC risk aversion at this stage means that founders have to contort in unattractive ways to showcase too-early proofs that will attract funding. These ‘proofs’ can limit the upside of the companies. Demanding profitability in the presence of non-scale often doesn’t scale.
The bottom line is that currently available financing instruments don't match the risk profiles of the recipients. Startups and SMEs are often too early for traditional debt or too risky for most equity investors. Concurrently, financiers are too process-heavy, or more importantly, not nimble enough.
The Rwanda Model: Policy as Catalyst
Rwanda's approach to e-mobility offers a blueprint for how policy can accelerate climate venture funding. By mandating that all public transport motorcycles be electric by 2025, the government created a captive market that transformed investor perception of risk.
The results speak for themselves: companies like Ampersand, which was founded in 2016 and operates in Rwanda, have attracted significant international funding (well over $21.5 million (and possibly up to $35.7 million) in equity, debt and DIV) because investors can underwrite predictable demand rather than speculating on market adoption.
Key Policy Levers:
Mandates that create guaranteed demand.
Tax exemptions that improve unit economics.
Fast-track approvals that reduce time-to-market.
Import duty waivers that lower capital requirements.
Targeted central bank interventions.
Beyond Blended Finance: The Enabler Ecosystem
While much attention focuses on blended finance as a solution to climate funding gaps, the most successful ventures require a more comprehensive support ecosystem:
Donors and Foundations: Fund expensive validation studies, carbon certification processes, and pilot infrastructure that private investors won't support.
Development Finance Institutions: Provide first-loss guarantees that unlock commercial lending and anchor LP commitments that help new climate funds launch.
Corporates: Offer the most valuable non-cash support—launch customers, pilot partnerships, and procurement agreements that validate commercial viability.
Government: Create enabling conditions through policy advocacy, regulatory sandboxes, and public procurement programs.
The EchoVC Insight: Why ‘Traditional VC’ Doesn't Work
Our deployment experience with Eco Pilot Fund I has clearly illuminated why traditional venture capital approaches often fall short in climate sectors. As we noted in our fund announcement materials in November 2023: "Regular Africa VCs are not a good match for funding as they seek high scalability and asset-light capital efficient models."
Twenty one months later, we have the highest conviction that that remains true.
We have identified specific challenges:
Investor Fatigue: "Investors are getting 'fatigued' with certain sectors such as agritech, logistics, and e-mobility" due to previous disappointments.
Working Capital Mismatch: Often, we see companies that have to wait 60-90 days post delivery to be paid on invoices. Since it is highly inefficient to use equity funding for these capital uses, these companies need to raise debt or grants.
Scale Requirements: Banks avoid risk mismatches and need larger loan sizes than typically appropriatefor seed-stage companies.
Label Distinction: We see more high-growth SMEs and fewer startups in the conventional sense.
Our pioneering solution has been to innovate by creating EchoVC Eco as a platform, in contra to a fund, with access to multiple funding "SKUs" that can finance companies more efficiently, and stage-appropriately, than traditional single-instrument approaches.
We will be announcing our Eco Pilot Fund I portfolio in the next month and will share a bit more about our thinking, learnings and how we plan to contribute to solving the ‘missing middle’ gap whilecontinuing to offer first institutional checks.
The Mobility Sector Deep-ish Dive: What Works and What Doesn't
Africa's mobility sector offers the clearest view of how different funding approaches play out in practice:
Currently Fundable:
Asset Financing with proven unit economics (Moove's $750M valuation partially proves the model and M-Kopa is doing interesting things as well). An understated benefit of this is driving microentrepreneur employment. We have been pleasantly surprised by the not-insignificant opex reduction enjoyed by E2W and E3W operators switching from fossil fuels.
Electric 2&3-wheelers with battery-swapping networks.
Commercial fleet electrification with government partnerships (e.g. BasiGo's electric buses in Kenya).
B2B logistics platforms digitizing truck logistics (funder fatigue exists here but there are some interesting players like Kenya’s Lori Systems that continue to validate the opportunity).
‘Informal’ fleet managers like Nigeria’s Shuttlers handling increasingly massive passenger volumes.
Too Risky Currently:
Consumer four-wheeler EVs due to high costs and limited charging infrastructure:
Obtaining local capital is quite expensive and the competitive dynamics will pit startups against unbelievably well-funded competitors from Asia. The local consumption dip in China may or may not provide a limited window of opportunity for local African startups to serve the market. We have seen in the past how the policy changes there have ‘directed’ startups to focus on their local markets and put a pause on expansionary ambitions.
Heavy long distance commercial EVs requiring extensive charging infrastructure:
It’s worth noting that Dangote Industries has committed to CNG-powered trucking infrastructure to address friction-free distribution of Dangote Refinery products. While we are confident that pencils were sharpened in the TCO analysis, it’s unclear (for now) where the refueling infrastructure will be underwritten and by whom.
Investment Thesis: The Next Decade
Based on our analysis of funding patterns, policy trends, and market dynamics, we believe several key themes will define private sector funding of sustainable mobility solutions and infrastructure in Africa over the next decade:
2025-2030: The Formalization Phase
Policy-driven electrification: Rwanda's e-motorcycle mandate becomes the template.
Asset financing maturation: $3.5-8.9 billion in E2W financing by 2030.
Infrastructure buildout: Urban charging networks reach critical mass. Peri-urban and rural deployments will lag.
Local manufacturing: Transition from assembly to component production.
2030-2035: The Scale Phase
Grid integration: Smart charging with renewable energy becomes standard.
Transport-as-a-Service: Integration of formal and informal transport.
Battery-as-a-Service: Interoperable swapping networks create recurring revenue.
Rural connectivity: Last-mile logistics using E2Ws and E3Ws.
Investment Priorities:
Electric commercial fleets: Bus rapid transit expansion to 20+ urban metros.
Integrated logistics platforms: Regional consolidation across Africa corridors.
Green infrastructure bonds: Carbon credit financing for charging station networks.
Science-based innovations: Patient capital for breakthrough technologies
Our view is that Afrexim Bank should be a major source of capital and conviction.
Practical Recommendations: The Four-Step Framework
For investors looking to deploy capital more effectively in Africa's climate sector, a systematic approach may help navigate the complexity:
1. Locate: Map the Funding Gaps
Identify which stage of the Build → Commercialize → Grow continuum being targeted.
Assess local capital market depth and regulatory environment.
Map existing funding providers and their typical instruments.
2. Position: Define Your Thesis
Choose your archetype focus: software, hardware, or science-based.
Determine your risk tolerance and return expectations.
Align your fund structure with the capital intensity of your targets.
3. Apply: Match Instruments to Risk
Early stage: Convertible grants, redeemable preference shares.
Commercialization: Revenue-based financing, asset financing, SAFEs.
Growth: Preferred equity, venture debt, mezzanine structures.
4. Enable: Leverage the Ecosystem
Partner with DFIs for guarantees and co-investment.
Engage corporates for pilot partnerships and offtake agreements.
Work with donors for validation studies and impact certification.
The Path Forward: Five Strategic Principles
Separate Technology from Assets: Fund IP and software with equity, physical assets with debt and leasing structures
Back Balanced Teams: Mixed scientific and commercial expertise outperforms single-discipline teams.
Keep Cap Tables Clean: Avoid complex SAFE stacks and disputed IP that deter follow-on investors.
Plan the Full Journey: Map funding continuum from pre-seed to exit before making initial investment.
Leverage Non-Cash Value: Pilot customers, technical validation, and carbon credit pre-sales often matter more than cash.
Conclusion: From Garage and Lab Bench to Commercial Scale
Africa's climate technology sector stands at an inflection point. The innovation is there—from direct air capture in Nairobi to solar-powered cold storage in Lagos. The market demand is real, driven by both climate necessity and economic opportunity. The policy support is growing, with governments recognizing climate tech as a path to leapfrog development challenges.
What's missing is a funding ecosystem that understands the unique capital needs of climate ventures and provides appropriate financing instruments at the right scale and timing. This requires moving beyond one-size-fits-all SV VC approaches to recognize that software, hardware, and science-based ventures need fundamentally different capital strategies.
The stakes couldn't be higher. Africa faces some of the world's most severe climate impacts while also holding enormous potential for climate solutions. Getting the funding equation right isn't just about generating returns for investors, although admittedly important. It's also about unlocking innovations that will reshape both the continent's development trajectory and the global response to climate change.
The data shows that when African climate ventures get the right capital at the right stage, they can achieve remarkable results: 30-70% IRR in mobility asset financing, commercial viability in off-grid solar at scale, and breakthrough innovations in carbon capture and waste recycling. The challenge now is to systematically replicate these successes across the broader ecosystem.
For investors, development partners, and policymakers, the opportunity is clear: help bridge the missing middle, back the right teams with appropriate instruments, and unlock Africa's potential to lead the global climate transition. The continent's entrepreneurs are ready. The question is whether the funding ecosystem will rise to meet them.