Africa’s climate finance gap is often framed as a question of scale. Hundreds of billions of dollars are needed each year, yet only a fraction flows to the continent.
But focusing only on the quantity of capital misses a quieter constraint upstream: the shortage of fund managers with the track record, institutional structure, and operational capacity to deploy early-stage climate capital effectively across African markets.
Capital cannot flow at scale if the managers capable of deploying it do not yet exist, or if they lack the credibility required to attract institutional investors.
This is the challenge FSD Africa Investments (FSDAi) had in mind when we invested $3 million in Persistent Energy Capital in 2022.
Backing the team before the fund existed
Persistent had already spent more than 14 years building and investing in climate-focused businesses across Africa. Their portfolio companies had improved the lives of more than 10 million people, created over 20,000 jobs, and helped avoid more than 2 million tonnes of CO₂e emissions.
The team knew how to identify, build, and scale climate ventures. What they did not yet have was a formal fund structure capable of attracting institutional capital and scaling that model.
FSDAi’s $3 million commitment in 2022 came before the fund existed. The capital was deployed directly into climate businesses identified and supported by Persistent across sectors including solar energy, e-mobility, energy efficiency, and sustainable agriculture. But FSDAi’s role went beyond early capital, working closely with the Persistent team to establish the institutional infrastructure required to manage a larger, institutional-grade fund.
Those investments have now been warehoused and transferred into the newly launched Persistent Africa Climate Venture Builder Fund. The fund launches not with a blank slate, but with an existing portfolio already built, tested, and validated, and a team with the systems, structures, and capability required to absorb and deploy institutional capital at scale.
Most funds don’t begin this way. It reflects FSDAi’s integrated approach to investment, combining capital with manager capacity strengthening and ecosystem building to establish a track record and create the conditions for institutional investors to follow.
“For many emerging fund managers, the challenge isn’t just proving a strategy, but building the capacity to manage institutional capital at scale,” said May Yego, Investment Manager at FSDAi. “Our work with Persistent reflected FSDAi’s mandate to test, accelerate and mobilise — combining early capital with hands-on support to strengthen investment processes, governance and readiness for larger capital. That integrated approach de-risked the opportunity and positioned the fund to attract follow-on investors.”
A fund designed to crowd in capital
The Persistent Africa Climate Venture Builder Fund has now reached a $52 million first close, against a $70 million target.
FSDAi’s $10 million anchor commitment sits alongside the Nordic Development Fund (NDF) and the African Development Bank’s Sustainable Energy Fund for Africa (SEFA) as co-anchor investors.
Additional investors include JICA, deploying capital under its new Blended Finance Window for the first time, alongside the Soros Economic Development Fund, Impact Fund Denmark, and the Schmidt Family Foundation.
This investor base is no coincidence. It reflects a fund structure intentionally designed by FSDAi and Persistent to give institutional and commercial investors the confidence to follow catalytic capital.
Through a blended finance architecture that provides first-loss protection and priority returns, the structure reduces the perceived risk of allocating to an early-stage African climate fund and opens the door for a broader set of investors to participate.
This first close demonstrates that early-stage climate funds in Africa can attract institutional capital when both the manager and the fund structure are intentionally built to meet investor expectations. The result is a vehicle designed not only to deploy catalytic capital, but to crowd in significantly larger pools of private investment.
A venture builder for climate businesses
The fund invests from pre-seed through Series A across three transition themes: energy, agriculture, and resources. It also retains the flexibility to deploy follow-on capital to support the growth of high-performing portfolio companies.
Alongside the investment fund sits a $5 million Venture Building Facility, funded by NDF and FMO, which provides operational support to portfolio companies. This combination of capital and hands-on venture support makes the model more than a fund. It is designed as a company-building engine for climate innovation in Africa.
The impact ambition
Over the life of the fund, the Persistent ACV Fund is targeting:
- 17 million tonnes of GHG emissions mitigated
- 7 million beneficiaries reached, with 50% women
- 60,000 direct jobs created, with 50% women
- 420,000 households gaining new or improved electricity connections
- $450 million in downstream investment catalysed
These are ambitious targets.
But they are grounded in a foundation many early-stage climate funds do not yet have: a proven team, an existing portfolio, and over a decade of operational experience building climate ventures across Africa.
Gender inclusion is also embedded in the design of the strategy. Persistent’s portfolio construction aligns with the 2X Challenge, ensuring that women are both beneficiaries and participants in the growth of climate enterprises.
What this proves
The $52 million first close answers a question FSDAi asked in 2022: Is there demand for a well-structured, manager-development-focused early-stage climate fund in Africa?
The participation of NDF, AfDB, JICA, SEDF, and others suggests the answer is yes.
For FSDAi, the Persistent ACV Fund represents more than a single investment success. It is part of a broader effort to build the financial market infrastructure required for Africa’s climate transition.
Our portfolio includes InfraCredit Nigeria, Ci-Gaba, ATAF, the Acre Impact Fund, and ARM-Harith’s ACT Fund. These are not isolated investments. Together they strengthen the ecosystem that allows capital to flow at scale by supporting fund managers, financing structures, institutional track records and demonstration effects.
Backing Persistent before the fund existed was a bet on a team and a model. Its first close validates that bet.
The bigger question for Africa’s climate finance ecosystem is how many other teams like Persistent’s are out there, building track records without the institutional backing required to scale them.
Finding them earlier and supporting them sooner is the work we are in.
