Spain is investing $10 million in Novastar Ventures’ Africa People and Planet Fund III, a move that demonstrates growing confidence in African entrepreneurs tackling climate change and social challenges. The commitment, made through Spain’s Fund for Sustainable Development, highlights a new approach to development finance: backing market-driven solutions that can scale quickly and deliver measurable impact. The fund, managed by Nairobi-based Novastar Ventures, will support technology-enabled businesses across the continent that address urgent environmental and social needs while generating sustainable commercial returns.
Novastar Ventures, headquartered in Nairobi, manages the Africa People and Planet Fund III, a $200 million vehicle focused on early-stage, climate-focused and socially impactful businesses across the continent. The fund aims to back around twelve companies that are capable of delivering strong commercial returns while generating meaningful development impact.
Targeting Climate Solutions and Inclusive Growth
The fund is designed around sectors that intersect climate action and inclusive economic development. Key areas of focus include renewable energy, e-mobility, smart logistics, circular economy models and regenerative agriculture. Each of these sectors is critical to supporting climate adaptation, mitigation and resilience in African communities while improving livelihoods.
By prioritizing companies that operate at the intersection of environmental sustainability and social impact, the fund seeks to create businesses that can thrive commercially while addressing pressing challenges. The technologies and models supported by the fund are intended to increase access to essential goods and services for vulnerable populations, especially those living on or below six dollars per day.
The fund is expected to reach significant milestones over its lifetime. Projections include over 30 million tonnes of greenhouse gas emissions avoided or removed, more than 8 million tonnes of waste managed sustainably and upwards of 25 million people benefiting from products and services that improve resilience and economic security. The fund will operate primarily in East and West Africa, targeting markets such as Kenya, Nigeria, Rwanda, South Africa and Egypt.
Spain’s Strategic Role in Development and Climate Finance
The investment is made through the Spanish Agency for International Development Cooperation (AECID), Spain’s primary development cooperation agency. Operating under the Ministry of Foreign Affairs, AECID focuses on poverty reduction and sustainable human development through technical cooperation, budget support, grants to civil society and humanitarian action. Its programs are closely aligned with the UN Sustainable Development Goals, including climate action, gender equality and environmental protection.
Through the Fund for Sustainable Development, AECID is channeling patient capital into high-impact projects beyond traditional aid. This approach allows Spain to support market-based solutions that can scale faster than conventional grant-funded programs while remaining anchored in development objectives. By investing in Novastar’s Fund III, Spain is extending its toolkit to include venture capital as a strategic instrument for development.
Building a Global Coalition for Impact
The move also aligns with a growing coalition of global backers committed to African climate and impact entrepreneurship. Other institutional investors in the fund include the Japan International Cooperation Agency, which committed $10 million and the Green Climate Fund, with a $40 million investment. Together, these investors are helping to crowd in additional public and private capital, reinforcing the idea that African founders can drive clean, inclusive growth for the continent.
By supporting Novastar Ventures Africa People and Planet Fund III, Spain is signaling confidence in African entrepreneurs who are tackling complex social and environmental problems with innovative, scalable solutions. The fund’s portfolio of technology-enabled, climate-focused companies will provide affordable, sustainable products and services while generating economic opportunities for millions of people.
The $10 million commitment underscores a broader trend: international development agencies are increasingly leveraging venture capital to achieve social impact. In doing so, they are helping to create a new generation of African businesses capable of producing measurable environmental benefits, strengthening local economies and fostering a more resilient and low-carbon future.
Novastar Ventures’ Africa People and Planet Fund III is now positioned to deploy capital into businesses that address Africa’s most urgent climate and social challenges. With Spain’s backing, the fund strengthens the bridge between development finance and market-driven solutions, helping African entrepreneurs build a sustainable, inclusive and commercially viable path forward.
