What happened to one of Pakistan’s biggest climate investment plays?
The quiet exit of prominent VC firm Sarmayacar from Pakistan’s flagship $50 million climate fund underscores the complexities of aligning venture capital with institutional climate finance—highlighting a strategic gap in the country’s evolving startup and investment ecosystem.
In what was meant to be a landmark public-private partnership for climate innovation in Pakistan, the $50 million climate startup finance project backed by the United Nations’ Green Climate Fund (GCF) is now undergoing restructuring following the exit of Sarmayacar, the private venture capital (VC) firm originally named as fund manager.
The project, spearheaded by the National Rural Support Programme (NRSP), was designed to mobilize $25 million from GCF and match it with an equal amount of private capital. A key component of the project, the Climaventures Fund, was structured to deploy up to $2 million each to 15–20 growth-stage climate-tech startups. A venture accelerator supporting up to 100 idea-stage startups with smaller grants was also part of the overall pipeline.
Sarmayacar was initially announced as the executing partner for the fund. However, following a confidential due diligence process and prior to the signing of the Funded Activity Agreement (FAA), the partnership did not move forward. Both NRSP and Sarmayacar have confirmed the development but have not disclosed further details, citing nondisclosure agreements and confidentiality clauses.
The GCF has since granted a six-month extension to NRSP to finalize the FAA, during which a new fund manager may be identified. NRSP has also confirmed that the search for a replacement is not limited to Pakistan-based funds.
With few domestic VCs experienced in managing institutional climate finance at this scale, the development highlights the growing need for capacity building in Pakistan’s venture ecosystem, especially for sector-specific funds tied to development finance and global partnerships.
While the project’s broader goals remain intact, this development signals the challenges of executing blended finance models and structuring early-stage capital pipelines for climate innovation in emerging markets.
As of now, no new fund manager has been publicly announced, and further updates are expected as NRSP works toward fulfilling the GCF’s conditions for disbursement.
