VC firm Novastar seeks African cleantech investments

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 10 May 2024
Steve Beck, co-founder and managing partner at Novastar Ventures.
Steve Beck, co-founder and managing partner at Novastar Ventures.

African venture capital (VC) firm Novastar Ventures is looking to accelerate cleantech investments on the continent, especially in e-mobility.

The VC firm recently attended the African Venture Capital Association conference hosted in South Africa. The event unites investors, entrepreneurs, policymakers and business leaders for a common purpose – to showcase the investible opportunities across the continent.

Novastar is one of the first and largest VCs in Africa, working from Nairobi, Lagos and London.

Since inception, Novastar has raised over $200 million from global institutional investors and is now investing from its second fund.

In an interview with ITWeb, Steve Beck, co-founder and managing partner at Novastar Ventures, says the big highlight from the conference was seeing and sensing the tremendous growth of the African venture capital ecosystem in a relatively short time period.

“When we started investing our first fund in 2014, there was no VC asset class. Now there is a small but rapidly-growing ecosystem with many more seed and VC investors with an African mandate and European DFIs [development finance institutions] that have dedicated venture teams. This bodes well for the future of entrepreneurship in Africa,” says Beck.

Asked about future investment prospects, he says: “Our first two funds are focused on backing transformative businesses that provide essential goods and services in new and innovative ways. In this process, we have backed planet-positive companies from seed to growth across diverse sectors, including clean transportation, regenerative agriculture and forestry, weather forecasting, clean cooking, renewable energy access and circular economy solutions.”

Going forward, Beck says the VC firm is looking to build on this experience and use the same tools and strategies to support sustainable, planet-positive, mass-market business models across Africa that the rest of the world can learn from.

He points out that Novastar sees the market opportunity across the African continent in three broad categories.

Firstly, services that enable access-to-market and resilience in the face of climate change for the many. This includes businesses such as financial services, supply chain services and marketplaces.

Secondly, cleantech that helps decarbonise the growth expected on the continent in the next 10 to 20 years. This includes clean utilities, clean construction technologies, electric mobility, smart logistics, the circular economy, alternative materials and so forth.

Thirdly, climate tech that uses the abundant natural assets on the continent to generate more opportunities for indigenous (smallholder) farming. This includes innovative business models to deploy regenerative forestry, agriculture and aquaculture, and biofuels and biochar that protect biodiversity, improve soil health and capture carbon.

“We see opportunities across all three categories, driven by the clear megatrends − unprecedented population growth, rapid urbanisation, the vast amount of uncultivated arable land on the continent, and the relative lack of vested interests in an unsustainable hydro-carbon-based economy.”

Novastar has backed BasiGo, the East African electric bus company transforming Africa’s public bus transport sector by making it affordable and convenient to own and operate electric buses, Beck adds.

He explains that BasiGo’s solution entails bespoke electric bus design, local assembling and an innovative battery subscription model that includes the provision of reliable charging infrastructure, service and maintenance.

BasiGo is accelerating the adoption of electric buses in Africa and is helping to reduce carbon emissions and health issues caused by air pollution, and improve air quality.

“We have also backed MAX, the largest vehicle subscription platform for low to zero emission vehicles in Africa. There are over 13 000 MAX drivers operating in nine cities and two countries in West Africa.”

Beck notes that Africa has demonstrated that it can leapfrog outdated technologies, such as fixed-line telephony, grid power connectivity and traditional finance, jumping straight to mobile telephony, decentralised power solutions and mobile banking.

“With the right investments, partnerships, regulation and technical support, Africa is poised to take a leading role in the electric mobility sector.”