A belief shared by every climate-focused venture capital firm is that lack of innovation poses a greater threat than climate change itself. Africa faces a high vulnerability to climate change, experiencing extreme weather conditions like heatwaves, heavy rains, floods, tropical cyclones, and prolonged droughts.
For a VC firm called Satgana, supporting startups that tackle Africa’s climate challenges is a fundamental mission. Founded in September 2020, Satgana invests in early-stage climate tech startups in Africa and Europe, focusing on sectors such as agriculture, carbon removal, industry, building, and mobility. Their goal is to advance climate goals on the continent while fostering job creation. To date, Satgana has invested in 17 companies, including Kubik in Ethiopia and Mazi Mobility in Kenya.
While Satgana invests in traditional climate tech sectors like energy, mobility, and waste management, the firm emphasizes investing in underserved areas within these sectors. A recent report highlighted that climate tech startups raised significant funding in 2024, with energy sector alone securing a substantial portion. Satgana is committed to investing in underserved areas to drive environmentally impactful and economically viable solutions. They are also advocating for “green discounts” to make sustainable solutions more accessible.
In March 2024, Satgana closed its first fund to support at least 30 startups. The challenge of balancing cost-effectiveness with sustainability is acknowledged by Diaz, the founder. He believes that climate tech founders should focus on solutions that reduce costs while making a significant impact.
In an interview, Diaz discusses the untapped opportunities in Africa’s climate tech sector, Satgana’s focus areas, and the qualities they seek in founders and businesses they support.
(This interview has been lightly edited for clarity)
Q: What inspired the decision to become a climate-focused VC fund?
Africa, despite contributing a small percentage of global greenhouse gas emissions, remains highly vulnerable to climate change. There is a significant opportunity for green technology development in Africa due to its increasing energy demand and entrepreneurial spirit. Satgana aims to support Africa’s growth by redirecting capital from global sources to the continent.
Q: What climate tech innovations are you most excited about?
Satgana is enthusiastic about innovations that address real-world challenges in underserved areas like sustainable agriculture, energy, and construction. They focus on solutions that promote sustainability in the face of climate change impacts.
Q: What are the underserved areas with commercial potential?
Aside from their current investments in data, upcycling, and mobility startups, Satgana is exploring opportunities in biodiversity, particularly nature-based solutions.
Q: Are there other sub-sectors Satgana plans to explore?
Satgana is currently looking into emerging trends in the biodiversity sector, with a keen interest in nature-based solutions.
Q: How do you view the scaling of nature-based solutions?
Nature-based solutions offer significant benefits but may face challenges in scaling due to traditional VC expectations. Satgana aims to explore models that bridge this gap to support the scaling of nature-based solutions.
Q: What models do you think are most scalable for climate startups in Africa?
Satgana believes in the concept of “green discounts” where environmentally friendly solutions are more affordable than traditional options. They invest in businesses that offer green solutions at competitive prices, promoting both environmental impact and cost-effectiveness.
Q: How does Satgana evaluate potential startups beyond the founder?
When assessing startups, Satgana values strong founding teams with complementary skills, visionary thinking, and execution ability. They also look for resilience, passion, and commitment in founders, emphasizing the importance of adaptability and perseverance.
Q: What factors are critical for scaling a climate tech startup in Africa?
Key factors for scaling a climate tech startup in Africa include strong teams, strategic partnerships, adaptation to the local context, and diverse sources of capital beyond equity funding.
Q: Is there a startup Satgana wishes they had invested in?
Satgana maintains a “no regret” policy regarding missed investment opportunities, focusing on supporting impactful climate solutions. While they have no regrets with their current investments, they acknowledge missed opportunities and analyze them for future insights.