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FSDAi Backs Africa Climate Ventures with £1m

Anna Lyudvig
June 12, 2023, 3:27 p.m.
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FSD Africa Investments (FSDAi) has invested £1m in Africa Climate Ventures (ACV), a pioneering venture builder working to build a $45m portfolio.

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FSD Africa Investments (FSDAi) has invested £1m in Africa Climate Ventures (ACV), a pioneering venture builder working to build a $45m portfolio.

The convertible loan will support the venture builder’s formalisation and build additional ventures as demonstrations to attract investment from larger funds.

On top of this investment, FSD Africa will provide £75,000 in grant funding to support the development of premium carbon credits and the marketing of portfolio and pipeline companies.

Moving forward, FSDAi has secured the right to invest up to £8m in ACV’s planned 2024 close.

Anne-Marie Chidzero, CIO of FSD Africa Investments, said: “In backing the ACV partners, FSDAi sees a tremendous opportunity to galvanise global investment and finance to promote Africa’s status as the pre-eminent climate investment destination.’’

ACV will catalyse the carbon asset class in Africa by building innovative businesses focused on solving our generation’s greatest challenge and at the same time capturing a significant share of global carbon markets in Africa.

The venture represents a series of “firsts” in Africa: from its entirely Africa-based founder team and its permanent capital structure based in Kigali, to its exclusive focus on carbon mitigation, capture and removal, the continent’s fastest evolving sector.

ACV represents a historic evolution in Africa’s carbon ecosystem and will contribute directly to capital mobilisation in climate action.

AVC team is working to build a portfolio of climate positive businesses across Africa, with the ultimate aim of launching and scaling 15 ventures in the next four years. ACV is seeking to build this portfolio by investing to: i) bring proven global climate technology to Africa, ii) accelerate and de-risk the continental expansion of technologies and business models that have gained traction in one or a few African market(s), and iii) add carbon revenue streams to existing African businesses with the potential to scale climate positive solutions.

ACV has adopted a structure more in-line with a global north venture studio in which the vehicle is structured as a permanent capital vehicle which sells equity rather than securing fund management mandates. This has allowed ACV to begin building ventures in parallel with fund raising, which the founders believe is paramount given the urgency of climate change, and the need for Africa to quickly establish itself as part of the solution.  

There are already two ventures in the portfolio: KOKO Networks Rwanda, a co-venture between ACV and KOKO Networks which already provides sustainable bioethanol cooking fuel to over 900,000 Kenyan families and aims to reach a million Rwandan families by 2027, and Great Carbon Valley, a Kenya based developer of direct-use clean energy applications currently focused on developing a direct air capture and permanent carbon storage site in Kenya.

James Mwangi, CEO of Africa Climate Ventures, said: “We are thrilled that FSDAi has joined us in building ACV.  The involvement of FSDAi has already been invaluable in refining the ACV model. As we work towards ambitious objectives, we believe FSDAi will be a key partner in ensuring our success.”

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