African ClimateTechs Are On Fire

Welcome to The Afro Pivot Point

Showing You What’s Art and What’s Not in African Tech

Hello to the gentle readers joining us since the last edition. You’ll love it here ❤️

If you haven’t already, please subscribe and join 2000+ curious minds reading about tech and culture in Africa.

African climate-tech has been the hot thing for a minute now.

And recently, it’s almost as if an African climate startup announces a successful funding round every week.

Globally, climate continues to be one of the most pressing problems facing current and future generations.

And so we were incredibly lucky to partner with a few good men for this edition — to talk about the creative ways they are using tech to solve this problem.

We start with a commentary on the current state of climate-tech in Africa from a CEO who has been at it for quite a minute now- Dami Olawoye of Payhippo (YCS21).

Next, Jaffer Hassan, a software engineer at Verst Carbon, talks about how to put the tech in climate-tech (And why data is the secret ingredient to Africa becoming an unlikely winner in climate-tech)

Finally, Florent Nduwayezu from ClimateHack tells us what VCS look for before investing in climate-tech + what climate-tech startups can take advantage of during their next fundraise.

As usual, do not forget to subscribe if you like my writing (Or me as a person. A win is a win 😎).

Enjoy!

Before joining Payhippo, Dami had extensive experience in private equity. And it wasn’t that long after joining Payhippo when he transitioned to the role of CEO. Apart from the many wins the company has achieved under his leadership, the most remarkable one has been transitioning Payhippo into a clean energy fintech.

Dami tells me that before the pivot, they were simply a fintech company offering loans to SMEs.

But, they quickly noticed that the biggest challenge facing their customers in Nigeria was inefficient electricity supply.

Customers would often take loans to buy generators to power their businesses, at a great cost to the environment.

And the team began to look at ways they could help their customers be more efficient without jeopardizing the environment.

Now, Payhippo is a certified clean tech operator that gives loans to consumers to buy solar systems.

For so long, Nigeria has been running on generators thanks to the electricity crisis. But recently, deregulation in the petroleum industry affected fuel prices, paving the way for other affordable energy sources (Like solar).

Dami notes that the market has been shifting to clean energy since over a year ago. Seeing a solar panel in homes and businesses has almost become normal in Nigeria (And a good number of those are Payhippo customers).

If Nigeria is anything to go by, Dami thinks that favorable policies will be pivotal in pushing for a cleaner and sustainable African future, but he also thinks that public perceptions about climate change inform the success of climate-techs a great deal.

“Climate change is real. At this point, a lot of Africans have already experienced some consequences of climate change whether it’s drought, floods, or even diseases. And because of this, more people are open to embracing more climate-friendly options.”

On how climate startups can approach VC funding, Dami says that founders have to remember that VCs are not charities — so it’s important to make sure there’s a good balance between impact and profit when pitching.

“You need to be very clear on why you are specifically solving climate using tech. Communicate why you are solving climate and not a more pressing African problem like hunger or poverty”.

There is a lot of potential in climate. And if we do it right in the next couple of years, Africa has the capacity to have at least 90% of its total energy being clean energy just like Brazil.

Dami hopes that in at least 5 years, carbon markets in Africa will be more developed. He notes that the carbon credits space in East Africa has incredible promise, and that agri-tech will provide one of the best use-cases for the importance of clean energy in Africa.

But, innovation, capital, and infrastructure are still largely non-existent in the space, just like we saw in the past with telcom, and fintech.

Dami urges founders to see this as an opportunity rather than a setback.

“If the infrastructure is nonexistent, we have the opportunity to build it from scratch. This means we can leapfrog even faster because there aren’t traditional players that stifle growth”.

Payhippo is capitalizing on this by making sure that in the next few years, they will shake up the carbon credits space, award renewable energy certificates to customers, and diversify their financing solutions.

Dami is certain that more successes in the space will encourage investment. And so his parting shot to founders is “Chase growth, but remember that financial sustainability is key. Do not chase headline growth. Instead, try to get to profitability as quickly as you can.”

Now that Dami has set the stage on the current landscape and the possibilities, let’s talk about how to put the tech in climate-tech.

The Tech Of It All

Jaffer defines Verst Carbon as a climate enabler — which is a fancy way of saying that among other things, they are a climate advisory offering digital monitoring solutions such as carbon reporting.

In the 2 years Verst carbon has been in operation, they have successfully handled over 30 climate projects.

According to Jaffer, people are exaggerating impact which leads to inaccurate reporting on climate. And he strongly thinks that the sustainable way to solve climate would be having credible impact analysis.

And he might be right. Despite the funding surge in African climate-techs, there’s still a huge financing problem.

However, he thinks data will solve this pain point effectively.

“If there’s enough data to back up viability and a way to assess impact using technologies like blockchain, then I think the data will easily bring more capital.”

For now though, he says that the scale is still too small to make sense.

“Carbon financing requires masses. What we are seeing now is a lot of small players who don’t make sense individually — but a solid aggregation framework that relies on tech can solve this.”

For the tech part of the equation, Jaffer insists that IoT, Data analytics, AI, and Blockchain show the most promise in tackling climate issues in Africa.

“We are currently using IoT to measure impact and conduct satellite imaging to understand forest cover. Data analytics will help a great deal in mapping, understanding energy sectors, policies, and getting information on carbon markets. Obviously AI helps in data-driven decision making through predictive analysis.”

While they still haven’t gotten into blockchain at Verst Carbon, he argues that the technology will be crucial in ensuring transparency by providing immutable records for reliability and impact visibility. He also thinks tokenizing carbon credits will solve so many challenges in regulation and policy formulation.

Particularly, Jaffer mentions that IoT is the technology that is best-suited to adapt to varied environments across the continent — thanks to its ability to handle onboard memory and implement fragmented smart meters.

But if we’re gonna win this climate war; we need more expertise and good implementation teams.

And there’s hope for the future — if the current funding wave is anything to go by.

I asked Jaffer what he was most excited about seeing in African climate-tech in the next few years.

“I’m excited about seeing more measurable usecases. With this, I think more funding is coming because its measurable, and IoT will show the most important cases. We can use IoT down to the household level — where we build clean cooking tools with using IoT assistance.”

“This will help us assess consumption and improve cooking habits, which will ultimately influence policies on subsidies, cash rebates or tokens. We can effectively balance electricity loads using IoT sensors and meters to prove a case for subsidies on importation of these devices — and data will help us plug and play the AI models.”

As a software engineer, Jaffer wants VCs to know that there’s a lot of technical potential in African climate-tech startups.

“Tech is a powerful enabler — and there’s opportunity to use philanthropy to achieve ESG goals and track impact.”

The ROI on renewable energy is particularly massive, and he thinks that Africa could set a new standard in agri-tech and forestry globally.

“Smart metering isn’t happening on a global scale to understand impact. It is mostly used for smart home living; but we can use predictive data to drive electricity generation.”

For engineers interested in climate-tech, Jaffer thinks that the most important thing you could do is expose yourself to the climate sector beyond just coding.

“It is very niche and you need to be aware of the pain points effectively, ideate and then execute.  If you can, learn the carbon project development lifecycle entirely, and refine your data analytics skills.”

And for the governments, he thinks that improving university research centers might make all the difference.

“Nurturing research and development is the only way to ensure we have reliable data — and in the end, data is the secret ingredient to winning the climate wars.”

Jaffer has impeccably laid out the tech to use to stand out as a climate-tech, but how do we get to the bag faster? Hear it straight from one of my favorite African VCs ever!

Talk Money To Me

Florent isn’t your typical uptight VC. He is a ball of energy that is bullish about Africa.

He is also a great supporter and friend of this newsletter.

And with his admirable experience in early stage investing, I thought he’d be the icing on the cake for this edition — to talk about what founders should know before seeking that coveted VC cheque.

Here’s what he had to say.

“Why climate-tech? I think that Africa has all natural resources and it is a privilege to be using them for the greater good. For instance, 80% of the energy grid in Kenya is climate friendly — and that is impressive by any standards.”

But beyond the standard pitch metrics, he digs deeper to understand what hasn’t worked before investing in a climate-tech startup.

“Are we just building software without solid impact measurement? How can we justify financing with shaky data? You see, banks in Africa would still rather prioritize investing in government bonds because startups are just too risky.”

“And typically, VCs hate making long-term investment decisions. They will always go for the investment that guarantees returns in the shortest time possible.”

“So there’s a gap here that we need to address.”

One of Florent’s investments in this space is Uganda’s Sio Valley Technologies; whose first product to market is Kafresh. The solution reduces food wastage by through eco-friendly food storage.

 “Refrigeration is heavy CapEx. And so having climate friendly ways of mitigating the food crisis in Africa at competitive prices makes a lot of difference.”

Florent is adamant that founders should adapt high-level thinking, review sample studies and assumptions before proceeding to validate and test the thesis.

“This top-down approach goes a long way in helping you be more-specific in problem-solving. And you have better chances of gaining investor confidence because it positions you to be capital-efficient from day one”

The most common mistake Florent has seen climate-tech founders make when presenting to VCs is having a misaligned team.

“People invest in the kind of team you have not just your idea. Always start with studying the market and identifying the challenge. Once you find the gap, clearly articulate what every person on the team can do — and any milestones you have achieved.”

Additionally, Florent wants African founders to build for longevity and global competitiveness.

“Having an IP is obviously one of the best ways to solidify your competitive advantage. But most VCs will also look at your speed of execution, learning, implementation, and pivoting.”

Also, projects built where there’s underlying infrastructure are low CapEx, which makes them easy to implement and scale from a VC POV.

Florent corroborates Jaffer’s claim that data will be the magic ingredient needed to improve efficiency and reduce energy costs at a global scale.

“If we have clean and reliable data, there are so many ways to use it-including selling it. The possibilities are endless. We will see more investments in African energy infrastructure, which may decentralize energy in the national grids.”

“More small players will offer solutions that leverage efficient resource use for startups and help companies control their energy spend. Think of Battery-as-a-service for businesses like local barbershops and cafes.”

With AI, whoever has the best data will be the winner because they’ll be better-positioned to provide targeted solutions.

Florent also thinks we will begin to see a shift from the SaaS business model to hardware business models in climate-tech. Alan Kay is famous for saying that people serious about software should make their own hardware.

And isn’t NVIDIA’S success in the AI rush an evident truth of that statement?

“Africa has the capacity to improve agricultural efficiency for its over 6 million farmers in a climate-friendly way through providing access to organic fertilizers, coaching, and consolidation. And our competitive advantage lies in our young and strong population, our natural resources, food production, and energy output.”

His parting shot?

“I think Africans should be bullish about climate-tech and the possibilities it carries. The proof of the pudding is in the eating. And startups will only thrive where under feasible environments”

More partnerships in the private and public sectors will encourage automation, digitization of the energy space, and collection of data.”

If nothing else, I hope that this edition will motivate you to build and invest in African climate-tech. I hope you learnt a thing or two and that you feel more confident about what the future holds.

Special thanks to Dami, Jaffer, and Florent for creating time to chat with me and share their wisdom.

And to my brilliant audience, thank you for learning with me week in, week out ❤️

I’d love to hear your thoughts on today’s edition. Did it make you happy or did it piss you off?

• Talk to me: [email protected]

• Follow me on X

• Connect on LinkedIn

• Reply to this email

And if you haven't already, please subscribe to get this in your inbox next week.

Till next time, cheers!