EchoVC, one of Nigeria’s oldest indigenous venture capital firms, wants to be the first institutional cheque for founders building solutions in or related to climate-tech, energy, and agri-tech. This comes as fintech funding lost its dominance this year in favour of investments in energy and climate-tech companies in Africa. The $2.5 million fund dubbed Eco Pilot Fund I will invest up to $200,000 in promising climate tech. Backed by two undisclosed DFIs, the Eco Pilot Fund I will invest in 8 to 10 climate-tech and energy startups across Africa.
“As we see more mid-sized and large funds coming to market to back climate and energy startups, we have struggled to find any that are set up to take first money risk or do the work to help kickstart the companies that will later be candidates for investment by these funds,” Taiwo Kamson, a principal investment officer at EchoVC pointed out. “The continent needs these pre-seed stage companies to create and deploy the solutions necessary to meet market demand.” By being the first institutional cheque—EchoVC will invest in pre-seed companies—on a startup’s capitalisation table, EchoVC wants to build a pipeline of early-stage portfolio companies that can match the investor funds that target climate, agri-tech and energy in Africa.
“Once you get out of the fintech world you really struggle [to raise funds]… like desert work right there, ” Eghosa Omoigui, founder and managing partner of EchoVC told TechCabal on a call. “That was interesting to us because we realised that if you fund founders who are working in those spaces, they are more likely than not to be mission-driven,” Omoigui said.
EchoVC’s pilot fund will seek out technology companies that unlock agricultural productivity and market access for farmers. The pilot will also support energy storage and mini-grid technology. In Nigeria and Kenya, the firm wants to especially support e-mobility (motorcycles and auto-rickshaws) and energy solutions. Both countries have large and growing urban populations with poor urban transportation infrastructure. In Nigeria, reliable grid electricity is non-existent, while Kenya’s government has flagged off an e-mobility campaign that has seen electric bus companies like Basigo set up shop in the country.
Being the first institutional investor means taking on more risk and waiting for longer periods to realise profit from successful investments. Founded in 2011, EchoVC has deployed roughly $41 million across several funds and returned just about half (to date) from exited companies, per disclosures on their website. In African VC circles, EchoVC is seen as an investor that is both tough in due diligence and willing to roll up their sleeves and get into the weeds of operating a fledgling business with founders.
EchoVC is also raising an additional fund which it will use to back the most promising firms from its initial pilot investments. “We anticipate that our learnings from this vehicle will feed into our investments to be made from our larger 2024 Eco Fund,” Omoigui said in a press statement shared with TechCabal.