Novastar Ventures Hits USD 147m Final Close for Third Fund as Japanese Capital Backs African Climate Tech
Novastar Ventures, a prominent fixture in the African venture capital landscape, has completed the final close of its "Africa People and Planet Fund III" at $147 million. While the total falls short of the firm’s initial $200 million target—reflecting a broader global tightening in private equity and venture fundraising—the vehicle still represents a robust 40% expansion over its predecessor fund.
Since its inception in 2014, Novastar has grown its assets under management (AUM) to over $200 million. This latest capital injection signals a deepening of the firm’s commitment to climate-related and sustainable technologies, moving beyond its traditional strongholds in East and West Africa.
Strategic Geographic and Sector Expansion
Historically focused on the high-growth markets of Kenya, Nigeria, and Rwanda, Novastar is using Fund III to formally extend its mandate into North and South Africa. The firm has already begun deploying capital into a diverse array of portfolio companies, including Egypt’s Breadfast, Nigeria’s Chowdeck, and several electric mobility and biogas infrastructure plays such as ARC Ride and Sistema.bio.
The "Japan Inc." Factor and De-risking Capital
A standout feature of this fundraise is the notable influx of Japanese institutional and corporate capital. The LP (Limited Partner) base includes heavyweights such as Mitsubishi Corporation, SMBC, MOL, SBI Investment, and JICA. This surge in Japanese interest marks a transition from traditional lending and infrastructure support toward equity-backed venture exposure in the African tech ecosystem.
The fund’s ability to attract private institutional capital was significantly bolstered by a $40 million anchor equity commitment from the Green Climate Fund (GCF). This catalytic "de-risking" capital, alongside participation from European development finance institutions (DFIs) like BII, Norfund, and Proparco, provided the necessary security to draw in commercial investors.
Market Context: The Climate Financing Gap
Novastar’s fund arrives at a critical juncture for the continent. Current estimates suggest Africa requires approximately $2.8 trillion in climate finance between 2020 and 2030 to meet its Nationally Determined Contributions (NDCs). Despite this massive demand, private investment has remained cautious due to currency volatility and political risk.
By successfully closing Fund III, Novastar aims to bridge this financing gap, proving that climate-focused mandates can attract a diverse, global class of capital despite a challenging macroeconomic environment.
Norbert Gehrke
