Why FSD Africa Backs Africa Climate Ventures with $1.2M

Why FSD Africa Backs Africa Climate Ventures with $1.2M

FSD Africa Investments (FSDAi) has invested $1.2 million in Africa Climate Ventures (ACV), a visionary venture builder dedicated to combating climate change while tapping into the continent's immense potential for carbon markets. This investment sets the stage for ACV to build a $45 million portfolio of climate-positive startups, foster job creation, and drive sustainable economic development across Africa.

ACV is breaking new ground on multiple fronts, from its entirely Africa-based founder team to its exclusive focus on carbon mitigation, capture, and removal. With its permanent capital structure based in Kigali, ACV embodies the continent's rapidly evolving carbon ecosystem and positions itself as a catalyst for capital mobilization in climate action. By 2030, ACV aims to eliminate one million tonnes of carbon annually, enhance the lives of 50 million Africans, and create a minimum of 5,000 jobs throughout the continent.

The venture aims to establish a portfolio of 15 climate-positive businesses across Africa over the next four years. ACV plans to achieve this by bringing proven global climate technology to the continent, supporting the expansion of successful technologies and business models, and integrating carbon revenue streams into existing African enterprises with the potential for scaling climate solutions.

ACV's portfolio already boasts two ventures: KOKO Networks Rwanda, a partnership between ACV and KOKO Networks, which provides sustainable bioethanol cooking fuel to over 900,000 Kenyan families and seeks to reach one million Rwandan families by 2027, and Great Carbon Valley, a Kenya-based clean energy developer focused on direct air capture and permanent carbon storage.

ACV's pipeline showcases a diverse array of opportunities that underscore the venture builder's versatility. Ranging from biochar and enhanced rock weathering technologies to biodigester and e-mobility businesses, these ventures possess the transformative power to reshape African economies and make a substantial impact on climate change. However, realizing their potential requires risk capital and hands-on venture builders to facilitate scaling, attract further investment, and unlock their full value.

More about FSDAi's Investment in ACV

FSDAi's investment in ACV takes the form of a $1 million convertible loan, which will facilitate ACV's formalisation and the creation of additional ventures to attract investment from larger funds. In addition, FSD Africa will provide $75,000 in grant funding to support the development of premium carbon credits and the marketing efforts of portfolio and pipeline companies. Looking ahead, FSDAi has secured the right to invest up to $8 million in ACV's planned 2024 close.

As the investment arm of FSD Africa, a specialised financial development agency funded by the UK government, FSDAi is committed to supporting ACV as it actively contributes to Africa's transition to a net-zero future. FSDAi's investment aligns with the emerging priorities of African policymakers, who will convene in Kenya this September for the Africa Climate Summit to coordinate a unified, pan-African approach to the discussions at the upcoming COP28 in Dubai.

Anne-Marie Chidzero, the CIO of FSD Africa Investments, expressed confidence in ACV, stating, "In backing the ACV partners, FSDAi sees a tremendous opportunity to galvanize global investment and finance to promote Africa's status as the pre-eminent climate investment destination." James Mwangi, CEO of Africa Climate Ventures, welcomed FSDAi's support and emphasized the critical role the organization will play in ensuring ACV's success.
Rachel Turner, Director of International Finance at the Foreign, Commonwealth & Development Office, lauded the enterprising partnership between FSD Africa and ACV, acknowledging the need to mobilise climate finance for Africa and highlighting the potential for the developing carbon market ecosystem to raise capital for productive, sustainable, and inclusive uses.

With this investment, Africa Climate Ventures is poised to redefine Africa's role in combating climate change, capitalising on carbon markets, and spearheading sustainable growth. This landmark partnership stands as a testament to Africa's ingenuity, ambition, and unwavering commitment to shaping a greener and more prosperous future for the continent and the world at large.