Shell-founded startup fund receives $13 million from Canadian DFI to accelerate clean energy access in Africa
FinDev Canada has injected $13 million into Energy Entrepreneurs Growth Fund (EEGF), which invests in early and growth-stage energy startups in sub-Saharan Africa. Part of the funding will go toward increasing access to clean energy for off-grid households and businesses in the region.
The $120 million EEGF, which was founded in 2019 by the Shell Foundation -- and co-funded by UKaid and the Dutch Entrepreneurial Development Bank FMO, extends financing in the form of debt (catalytic or mezzanine) or equity to businesses in the energy sector. The EEGF is managed by Triple Jump; an impact investment manager and advised by Persistent; a climate venture builder.
FinDev Canada participated in fundraising through 2X Canada, an impact investment facility driving the economic empowerment of low-income and underserved populations in sub-Saharan Africa, Latin America and the Caribbean.
FinDev Canada vice president and chief investment officer Paulo Martelli said in a statement the funding will help accelerate innovation in the clean energy industry after the Covid-19 slow-down.
“The pandemic has slowed down electrification in Africa, which was already behind before the health crisis. By increasing EEGF’s capacity to invest in this sector, FinDev Canada and its 2X Canada facility support energy companies committed to expanding access to clean and reliable energy for African households and businesses, leading to inclusive and sustainable growth and the improvement of millions of lives,” he said.
The fund invests in at least half of companies that explicitly address the energy needs of women consumers and entrepreneurs in Africa, and those offering renewable energy solutions to businesses and households. It is estimated that sub-Saharan Africa accounts for 75% of the world’s population without access to electricity and renewable energy solutions could be taken up to bridge that gap.
“A just and inclusive energy transition, one that alleviates energy poverty and mitigates climate change, requires an understanding of the financing needs of entrepreneurs, who we are depending on to deliver the world’s energy access goals,” said Shell Foundation’s operations director, Gareth Zahir-Bill.
“FinDev Canada’s investment into the fund will help it expand its provision of flexible financing solutions for entrepreneurs, accelerating access to clean and reliable energy for millions of lives in Africa.”
Last year the EEGF invested in Baobab+ and Yellow, both offering pay-to-own solar energy solutions, and Redavia, which designs and installs mobile solar farms for businesses.
Redavia, which has clients in Ghana, Kenya and Tanzania, received $3.7 million mezzanine investment from the fund. The startup targets to install more than 85 MWp of solar power across the continent. By September last year it had installed “close to 90 solar units, for 7 MWp of solar capacity.”
Yellow, which has operations in Malawi and Uganda and allows households and small businesses to pay for solar systems through installments, received $4 million, while Baobab+ got $2.3 million. Baobab+ has operations in Mali, Senegal, Madagascar and Côte d’Ivoire, and is planning to enter Nigeria and the Democratic Republic of Congo markets.