Novastar Ventures has closed its Africa People and Planet Fund III at $147 million, marking a meaningful step for one of the continent’s more established venture firms as it pushes deeper into climate and sustainability investing.
The final size came in below the fund’s original $200 million target, a sign of the tighter global fundraising climate that has made venture capital more selective across markets.
Even so, the new vehicle is still 40 percent larger than Novastar’s second fund, which puts the close in the category of a solid expansion rather than a retreat. Since launching in 2014, the firm has built up more than $200 million in assets under management and now operates from Lagos and Nairobi.
Fund III also broadens Novastar Ventures’ geographic reach. The firm has historically concentrated on East and West Africa, with Kenya, Rwanda, and Nigeria forming the core of its deployment strategy.With this fund, it is formally extending its mandate into North and South Africa for the first time, with Egypt and South Africa now part of the map.
That wider footprint is already showing up in its portfolio. Novastar has started deploying capital into Breadfast in Egypt, Chowdeck in Nigeria, ARC Ride and Greenwheels in electric mobility, MoPhones in device financing, and Sistema.bio in biogas infrastructure.
The mix points to a clear view of where African climate and sustainability opportunities are maturing, especially in sectors tied to everyday consumption, urban movement, and cleaner energy access.
The bigger story is the funding gap Novastar is trying to address. Africa still faces a massive shortfall in climate finance, with estimates pointing to about $2.8 trillion needed between 2020 and 2030 to meet Nationally Determined Contributions, while only a fraction of that has been committed so far.
That gap has kept many private investors cautious, especially where currency volatility, politics, and weak exit markets raise the perceived risk.
That is where the Green Climate Fund’s $40 million equity commitment matters. It serves as anchor capital and helps de-risk the vehicle for other institutional investors.
In an African venture, that kind of catalytic backing often makes the difference between an attractive thesis and a fund that can actually close.
Alongside the expected development finance institutions such as BII, Norfund, Swedfund, Proparco, and COFIDES, the fund’s LP base includes a notable wave of Japanese corporate and institutional investors.
SMBC, MOL, Mitsubishi Corporation, SBI Investment, and JICA all feature in the lineup, which shows more interest in Africa’s sustainability economy, moving beyond lending and infrastructure into equity-backed venture exposure.
Japanese participation in African VC is still uncommon enough to signal intent, and Novastar Ventures’ close shows how climate investing on the continent is starting to draw a wider class of capital.