Investors update: Equator gets $40m fund pledge for climate startups in Africa

Equator gets $40m fund pledge for climate startups in Africa

Highlights

• Equator, a climate tech venture capital firm focused on sub-Saharan Africa, has reached an initial close of its first fund with $40 million in commitments.
• The company backs seed and Series A startups across energy, agriculture, and mobility sectors with partners that include BII, the Global Energy Alliance for People and Planet, and the Shell Foundation.
• After getting the commitments, Equator hopes to make up to 15 investments throughout the new fund’s life cycle.

Source: TechCrunch

Our Takeaway

The benefits of increasing climate-focused funds targeting Africa are profound. Per a UN report, Africa will need between $50 and $100 billion annually by 2050 to adapt to the effects of climate change, such as droughts and floods, which can have devastating impacts on lives and economies. Supporting innovative startups and entrepreneurs who are working on climate solutions can drive technological advancements and help build resilient and sustainable communities while also leading to the creation of sustainable jobs and new industries, boosting economic growth and reducing poverty.

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SA fintech Peach Payments raises $31m Series A funding

Highlights

• South African fintech startup Peach Payments has raised a $31 million Series A funding round from Apis Partners to accelerate its growth across the continent and grow its product offering.
• Founded in 2012, Peach provides a toolkit to help businesses accept, manage and disburse payments through the web and mobile. It is the second-largest online payment gateway in South Africa with operations in Kenya and Mauritius.
• The company intends to use the investment—still subject to the approval of the Competition Commission—to accelerate its expansion across new African markets, deepen its product offering, and reinforce its core merchant value proposition.

Source: Disrupt Africa

Our Takeaway

The informal business sector in Africa offers a lot of promise for startups looking to digitize B2B payment flows. The cash-dominated space is rife with late payments and stunts the growth of commerce. In an estimated $800 billion informal trade economy comprising more than 56 million micro, small, and medium-sized businesses, most merchants operate offline. And a survey covering 3,500 companies across 6 countries found that 23% of small businesses experience delayed payments. This explains why merchant acquisition is proving to be the “new” scramble for payment services in Africa.

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MFS Africa partners Access Bank to expand remittance corridors

Highlights

• MFS Africa, the largest digital payments network in Africa, has announced a partnership with Access Bank, Nigeria’s largest bank, to expand its AccessAfrica remittance corridors. 
• The partnership will enable real-time, cost-effective cross-border payments for individuals and businesses who want to send financial support to their families abroad or facilitate trade transactions. 
• More so, AccessAfrica customers will also be able to receive payments from all over the world through MFS Africa partners.

Source: Ventureburn

Our Takeaway

For African startups, there’s a major market opportunity in the massive diaspora remittances business. Remittances accounted for nearly 4% of Nigeria’s GDP as of 2020 and Africa received $49 billion in inflows last year. Yet, sending money from places like the US and UK to the country remains invariably expensive, with fees at an average of nearly 9% (the highest rate in the world and 3x the SDG target of 3%. The cost of international remittances within Africa is even higher. Although most of the traditional players that charge high commission rates still dominate the space, fintechs are now wrestling market share with lower fees.