Dominic Michel, Investment Director at Novastar Ventures, writes:
Africa is on the front line of the climate crisis, but it is also on the front line of climate innovation. It is here that some of world’s most urgent challenges present an opportunity. A chance to build new systems that are not only relevant locally, but can shape pathways to a cleaner and more inclusive world.
Across Africa, entrepreneurs are seizing this opportunity. From new models of electric mobility to regenerative food systems, they are demonstrating that climate action and economic opportunity can be mutually reinforcing.
Against this backdrop, I am proud that the Green Climate Fund (GCF) has approved an investment of up to USD $40 million in Novastar Ventures Africa People and Planet Fund III (NVIII).
More than a milestone for our fund, this is an endorsement of early-stage innovation as a driver of Africa’s green growth, and a catalyst for unlocking private sector capital in Africa’s climate tech ecosystem.
Why GCF’s backing matters: filling a critical gap in Africa’s climate finance landscape
When Novastar launched its first fund in 2014, there were almost no institutional VCs investing in Africa. Over a decade later, the ecosystem has grown significantly, with a new wave of local and global investors, Development Finance Institutions and corporates, including our Japanese partners SBI Investment, Mitsubishi, MOL, SMBC and Mitsui O.S.K Lines.
Still, the African climate-tech ecosystem is nascent and funding for climate innovation in Africa remains far below what is required. To meet 2030 climate goals, annual climate finance must rise from $30bn to $277bn, yet only 14% of current flows come from the private sector.
Most of the climate finance that does reach Africa is directed to public sector programmes, or large-scale green infrastructure projects. Very little supports early and growth-stage climate technology ventures, despite the extraordinary innovation happening at this stage.
We are intentionally targeting this gap with NVIII, for which a key objective is to mobilise private sector capital into African climate technology ventures and, in so doing, strengthen Africa’s climate innovation ecosystem.
Supporting an entrepreneurial revolution for people and planet
At Novastar, we see our work as more than investing. Our role is to connect ideas, capital and talent around a shared belief in the power of Africa’s entrepreneurs to build a clean and inclusive development path for the continent, and for the world.
This approach was a key factor in securing GCF’s backing. They recognised that NVIII is not only backing businesses but also shaping the enabling environment around them, convening stakeholders and sharing our own experience and learnings. We are proud to be one of the first Africa-focused VC funds to be backed by GCF.
With GCF’s partnership, NVIII will partner with businesses that have the potential to transform markets and sectors, align climate and economic interests and scale across borders.
More importantly, we hope this is the beginning of a broader realignment, one where private sector capital recognises the unique role Africa can play in shaping a sustainable future for all.
