Africa’s Agritech Sector Funding Raises $1.1 Billion, A Ten-Fold Increase In Five Years

An investment report has indicated that African agrifood tech startups raised a whopping $1.1 billion USD in five years, a ten-fold increase within the period. The report further showed venture capital on the continent was boosted by investments in companies that connect farmers and food producers to midstream technologies, the retailers.

Investments in agrifood tech by African startups in 2021 had hit about $482.3 million USD from the $185 USD it raised in 2020, with 61 percent of the figure going to midstream technologies alone.

AgFunder, a venture capital firm in its maiden Africa Investment Report 2022 asserted that startups employed the use of software to fill critical infrastructure gaps like agribusiness marketplaces last year raised $293.7 USD, effectively indicating the enchanting appeal of the ventures to investors.

Durch lender, FMO ventures had in the report highlighted the inroad of agrifood into the African continental space when it said:

 “Many new promising innovations to secure and improve the world’s food supply are starting to gain traction globally, as well as in African markets”.

FMO ventures noted that the use of technology allows more cost-and resource-efficient ways of addressing the African continent continuous dependence on importation of food, even as it deals with food insecurity.

 “We believe emerging agtech solutions have the potential to address challenges in current food production and distribution, and target end users ranging from the smallholder farmer to agri enterprises to the final consumer,” said the firm.

Last year, midstream startups had some of their largest fundraising coming from a Series A funding raise of US$ 55 million, by MaxAB, an Egyptian e-commerce startup and a US$ 50 million in Series C funding by Kenya’s Twiga Foods, a business-to-business (B2B) platform that gives rural farmers the opportunity of supplying fresh produce to small and medium-sized vendors and retailers.

Also, TradeDepot, a Nigerian startup raised US$ 42million in Series B funding, in addition to US$ 68 million in a debt round.

The largest funding value in midstream startups had this year skyrocketed more than twice after another startup, Wasoko raised US$ 125 million in series B funding, before relocating it operational base from Kenya to Zanzibar. The fundraise by Wasoko is just about 30 percent of the US$ 400 million raised by agrifood tech startups in the first half of 2022, representing more than 80 percent of all  sector funding for last year.

In the ‘Big Four’ startup markets in Africa, Egypt has the highest with US$ 186.1 million, and this is followed by Nigeria who has US$ 147.8 million. Kenya is third withUS$88.5 million, with South Africa having the smallest share of the four, with US$ 22.1 million.

The tech deals have also almost tripled from a paltry 51 in 2017 to 150 in 2021.

The next biggest category to watch after the midstream tech startups will be the Agrifood Fintech startups, coming from a US$ 23.6 million it raised in 2021 to the facilitation of financial inclusion for farmers, agribusinesses, food vendors and retailers.

The launch of a nine-month investment readiness program by Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) in early 2022 implies that agrifood tech startups will ideally receive more funding going forward.

Known as Digital Agriculture Innovations through Startups (SAIS), the program picks out five startups every year that has solutions for the populace of the agricultural or agrifood sector to increase their income.

“The GIZ-SAIS investment Readiness Program is aimed at entrepreneurs who have developed and brought to market a digital product that solves a specific problem in the agricultural and agrifood value chain,” according to their website.

Culled from a TechCabal article.