The U.S International Development Finance Corporation (DFC) has made equity investment to the tune of $25 million in a new fund by Pan-African venture capital firm Novastar Ventures, to back founders building agriculture and climate solutions.
The DFC revealed details of the transaction, and Novastar’s new investment vehicle, the Africa People + Planet Fund, during its latest update detailing the transactions it had approved over the last few months.
TechCrunch could not establish the details of other limited partners that made commitments, however, sources familiar with the fund said that the Nairobi and Lagos-based VC firm targets to raise over $200 million, making it one of the largest funds in the region.
The Africa People + Planet Fund is Novastar’s third pool after the $108 million Africa Fund II, which saw it widen its geographical reach to include West Africa. The East Africa Fund – a $80 million fund with a $12.5 million co-investment facility – was its maiden kitty that invested in 15 startups within the region.
Novastar’s two previous funds have financed tech-enabled startups serving the mass market in various sectors including agriculture, education, and off-grid renewable energy. TradeDepot; an e-commerce scaleup, Turaco; an insurtech, Moniepoint (formerly TeamApt); a fintech, mPharma; a healthtech, MoKo; a furniture startup, and iProcure; an agtech are among Novastar’s investees.
“Going forward, we are looking to build on this experience and use the same tools and strategies to support sustainable, planet-positive, mass-market business models across Africa that the rest of the world can learn from,” Novastar co-founder and managing partner Andrew Carruthers, told TechCrunch.
The VC firm said, with the new fund, it will invest in climate techs, cleantechs, marketplaces, and initiatives that contribute to community resilience through the delivery of financial, and supply chain services.
“We see opportunities in all three categories, driven by the clear megatrends such as immense population growth, rapid urbanization, and the vast amount of arable land on the continent,” said Carruthers.
The target startups include marketplaces, financial and supply chain services that will “enable access-to-market and resilience in the face of climate change for the many.”
The cleantechs the VC firm plans to back include those dealing in clean utilities, clean construction technologies, electric mobility, smart logistics, the circular economy, alternative materials, that will “help decarbonize the growth that we will see on the continent in the next 10 to 20 years,” said Carruthers.
Novastar will also back climate techs that use innovative business models “to deploy regenerative forestry, agriculture and aquaculture, biofuels, and biochar, that protect biodiversity, improves soil health and captures carbon,” while generating more opportunities for smallholder farming. The VC firm is availing more funding for cleantechs in Africa, which were the second most funded startups in the region last year, after fintechs.
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Annie Njanja