Pakistan’s Climate Startup Fund Faces Setback After Sarmayacar Exit

Pakistan’s ambitious climate startup fund has hit a major roadblock as Sarmayacar, the private fund initially tapped to manage the $40 million Climaventures initiative, has exited the project. The $50 million climate-focused programme, backed by the United Nations’ Green Climate Fund (GCF), now faces uncertainty as the National Rural Support Programme (NRSP) scrambles to find a new private-sector partner.

Originally presented as a groundbreaking public-private partnership, the climate startup fund is now in limbo with no fund manager, no institutional venture capital backing, and no clear path forward. While NRSP has secured a six-month extension from GCF to finalize the Funded Activity Agreement (FAA), the project is effectively stalled.

Sarmayacar, which was announced as the executing entity for Climaventures, was meant to distribute up to $2 million each to 15-20 scaling climate-tech startups. These would be selected from a pipeline of early-stage ventures funded through the associated accelerator programme, offering up to $50,000 to 100 startups. However, after a confidential due diligence process, the partnership with Sarmayacar collapsed before the fund could launch.

Neither NRSP nor Sarmayacar has disclosed reasons for the fallout. NRSP declined to comment on the due diligence report, and Sarmayacar confirmed it signed a non-disclosure agreement before the review began.

The absence of a fund manager poses not just a logistical issue, but a strategic one. The climate startup fund was built on private capital mobilisation, not government guarantees. It aimed to bring institutional credibility to climate-tech in Pakistan through a market-led approach. But few active VCs in Pakistan have experience managing a $25 million fund or deploying it into climate startups, let alone navigating the complexities of development finance.

While GCF’s structure allows time to raise the remaining $25 million in private funding, a general partner must first be secured. Most local VCs are still early-stage and lack the track record needed for such a specialised fund. Foreign-domiciled VCs like Gobi Partners, i2i Ventures, Zayn VC, and Indus Valley Capital remain potential options, as NRSP clarified they are not restricted to domestic firms.

What was intended to be a flagship public-private climate partnership is now in jeopardy. With no official communication on the next steps and silence from stakeholders, the future of Pakistan’s most ambitious climate startup fund remains unclear.