E3 Capital and Lion’s Head climate fund hits first close at $48M to back African startups
The E3 Low Carbon Economy Fund for Africa (E3LCEF), a fund by early-stage VC E3 Capital, and emerging markets-focused investment bank Lion’s Head Global Partners, has hit the first close at $48.1 million.
The E3LCEF limited partners include FMO, the Dutch entrepreneurial development bank; Swedfund International AB, the Swedish development finance institution; Proparco, an AFD Group subsidiary and private sector development investor, and KfW, a development bank, in partnership with BMZ, the German ministry for economic cooperation and development.
The fund targets to close at $100 million, joining the growing list of funds backing startups in Africa’s climate tech sector. The fund will provide initial and follow-on funding to startups supporting low carbon economies such as solar providers and EV startups.
“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,” E3 Capital founder and managing partner, Paras Patel, said in a statement.
“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,” said Patel.
E3 Capital partner Vladimir Dugin told TechCrunch that the VC, which backs seed to Series A startups, typically invests between $500,000 and $3 million. The new fund will invest in businesses across sub-Saharan Africa.
E3 Capital, an active investor in Africa, currently manages the €75 million Energy Access Ventures Fund I (EAVFI), which has made 15 investments in decentralized energy businesses in East, West, and Southern Africa.
Asset manager Lion’s Head has $700 million under its portfolio, and has a subsidiary that provides corporate finance advisory services to governments, multilaterals, and private companies.
“We feel this is a great time to back low-carbon businesses in Africa which are starting to see potential for substantial scale. The E3 team brings unique expertise working with early-stage companies across the continent and have demonstrated this ability with their existing portfolio which is starting to show signs of clear winners,” said Lion’s Head CEO, Clemens Calice.
The E3LCEF and other climate-focused funds in Africa are providing the much needed funding amid the capital crunch to founders leading energy transition efforts, and providing solutions that mitigate or help communities cope with the effects of climate change.
Recently-emerging funds include Pan-African VC Novastar’s $200 million Africa People + Planet Fund, which backs founders developing agriculture and climate solutions on the continent. Climate tech venture capital firm Equator also reached the initial close of its fund to back seed and Series A startups in the energy, agriculture and mobility sectors.
Other African climate-focused investment vehicles that have raised capital recently include Satgana, AfricaGoGreen Fund (AAGF), which closed the second tranche of its fundraise in February, and the Energy Entrepreneurs Growth Fund (EEGF), which raised over $110 million last year. Oxfam Novib and Goodwell launched a new fund to provide venture debt to startups in this space, as well.