Description

CRAFT, from the Lightsmith Group, is the first commercial investment vehicle to focus on expanding the availability of technologies and solutions for climate adaptation and resilience. As a growth equity fund, CRAFT aims to invest in small and medium-sized enterprises (SMEs), located in both developed and developing countries, including in Africa, which have proven technologies and solutions for climate resilience and have demonstrated market demand and revenue. The fund is not purely energy sector focused, but many potential SMEs have energy sector relevance including SMEs that support energy availability and reliability and that develop risk forecasting to reduce energy sector climate risk.

Stage of Implementation

CRAFT reached first close with investments from the Rockefeller Foundation, KfW, and EIB alongside other public and private investors in 2019 and is fundraising towards final close. CRAFT has also identified 20 relevant climate resilience market segments totaling USD 130 bn+ of current spending and mapped more than 700 companies within these segments.

Actors Involved

• Development finance institutions & government agencies: The fund is structured with developing and developed country sleeves and the developing country sleeve will target public investors including multilateral and bilateral development banks and government ODA agencies for non-concessional equity and concessional equity and grants.
• Institutional investors: The fund targets institutional investors such as pension funds, insurance companies, endowments, foundations, and family offices.
• SMEs: There are many 100s of SMEs across Africa that have valuable adaptation solutions and have developed viable business models to implement those solutions. These SMEs include cooling technology developers, off-grid energy providers, and weather information providers to support infrastructure resilience.

Criteria

CRAFT is targeting countries with high climate vulnerability and relatively low investment risk. Low investment risk is assessed based on a VC/PE attractiveness core, average domestic credit to the private sector, net DFI as a % of GDP, lending interest rate, and currency volatility criteria, among others.