The Catalyst Fund has achieved the initial closing of its $40 million fund designated for investing in African climate startups

The Catalyst Fund has achieved the initial closing of its $40 million fund designated for investing in African climate startups. Today, the fund announced that it has secured an initial amount of $8.6 million with support from FSD Africa Investments (FSDAi), Cisco Foundation, USAID Prosper Africa, and technology investor Andrew Bredenkamp.

The Catalyst Fund has achieved the initial closing of its $40 million fund designated for investing in African climate startups. Today, the fund announced that it has secured an initial amount of $8.6 million with support from FSD Africa Investments (FSDAi), Cisco Foundation, USAID Prosper Africa, and technology investor Andrew Bredenkamp.

The investment fund intends to allocate capital towards agtechs, insurtechs, climate fintechs, as well as startups in the fields of fishery management, food systems, cold chain, waste management, and water management. This pan-African fund aims to support and invest in early-stage startups, having already made investments in 10 startups across six countries including Egypt, Senegal, and Morocco. The fund plans to further invest in a total of 20 startups within this year, with a long-term goal of supporting a total of 40 startups. Pre-seed startups will be provided with an initial funding of $200,000, followed by potential investment opportunities of up to $500,000 in the seed stage, and series A rounds with a maximum of $1.5 million.

"The rationale behind allocating approximately $2.2 million towards each startup is rooted in our objective of being an early catalyst to attract other investors. This level of funding allows us to enter the market at a very early stage. At the pre-seed stage, we utilize a common financial instrument known as a SAFE (simple agreement for future equity)," explained Maelis Carraro, the managing partner of Catalyst Fund.

Carraro states that the initial funding comprises $100,000 in specialized technical assistance provided by a group of knowledgeable professionals and operators who cover all the essential aspects required by a startup.

African climate-focused startups are poised to benefit from an increase in venture capital funding, as the investment landscape starts to shift in their favor.

The Catalyst Fund, established in 2016, serves as a pre-seed accelerator that focuses on addressing key obstacles faced by startups, including funding, talent acquisition, and market entry. This mission is accomplished through strategic collaborations with philanthropic entities such as the Bill & Melinda Gates Foundation and the UK Foreign Commonwealth and Development Office (FCDO).

During the duration of the accelerator program, it provided assistance to a total of 61 startups, which included Turaco, Wasoko, Cowrywise, and FarMart. These startups were operating in 15 developing markets, with India being one of them.

Last year, it made a transition from an accelerator to a venture capital fund, a strategic decision aimed at demonstrating a greater dedication to supporting founders over the long term.

Carraro stated that the transition from an accelerator to a venture capital fund was a seamless progression for them. Their model stands out due to their commitment to offering extensive hands-on venture building support at the pre-seed stage.

"The decision to undergo this transition was driven by our desire to provide sustained support to founders. As a grant accelerator, our support was typically limited to a specific timeframe, such as a six-month program. However, we recognized an ongoing demand for both capital and assistance," she explained.

The Catalyst Fund falls under the category of increasing capital funds that specifically target climate change in Africa. Additional examples in this realm include Novastar Ventures' Africa People + Planet Fund, as well as Equator and Satgana.

Carraro expressed the rationale behind the fund's emphasis on resilience and adaptation, driven by the challenges posed by climate change. With an understanding that climate change will impact all sectors of the economy, the fund aims to address a wide range of industries. Among the startups supported by the fund are Octavia Carbon, a startup focused on direct air carbon capture, and Sand to Green, which is dedicated to transforming deserts into usable agricultural land.

"We aimed to establish our most recent fund exclusively dedicated to supporting technology startups that contribute to the development of a future resistant to climate-related challenges. Our primary focus lies in endorsing climate adaptation solutions across various industries, with the ultimate objective of enhancing the resilience of communities in the face of climate change impacts. The initial completion of our venture fund marks a remarkable milestone, as only a limited number of philanthropy-backed accelerators successfully undergo such a transformation."

Congratulations to the Catalyst Fund team and hopefully malian startups can look into working with this dedicated team to push climate resilience in the sahel forward! More information on their official website : Catalyst Fund