Africa has seen a substantial increase in the volume of venture capital entering the continent. While the majority of investment is going to Africa’s booming fintech sector, agribusiness startups are also seeing a surge in investor interest.
Last year, $482.3 million was invested in the agribusiness industry in 2021, a 250% increase from 2020, according to AgFunder’s first Agribusiness Investment Report in Africa, prepared in partnership with the Dutch development bank FMO and British International Investment (BII).
The African agribusiness startup scene has raised over $1 billion since 2017.
This year is on track to beat 2021, with agribusiness startups raising around $400 million in the first half of 2022.
The gains for the sector are positive, but agribusiness technology financing accounts for only 10% of all venture capital entering Africa and less than 1% of global agribusiness technology venture capital.
Nearly 120 African agribusiness startups raised funds in 150 deals in 2021. Africa’s “big four” markets – Kenya, Nigeria, Egypt and South Africa0 – landed 92.2% of the capital. Egypt claimed $186.1 million, while Nigeria and Kenya were awarded $147.8 million and $88.5 million respectively. South Africa claimed the smallest share of the four.
Nigerian, Egyptian and Kenyan startups all totaled similar deals: 38 in Nigeria, 36 in Egypt and 32 in Kenya had 32.
The number of year-over-year deals increased by 50% in 2021, compared to 99 in 2020 and 51 in 2017. Notably, 121 of the 150 deals were seed rounds, signifying the early nature of the industry African agribusiness. Egyptian online grocery and delivery platform Rabbit topped the seed funding chart with an $11 million seed round.
Series A investments record just 16 deals, while there has been only one small “late-stage” funding round, claimed by South African agribusiness fintech firm Nomanini, which raised a large number of small rounds.
Sectors of interest to investors in Africa differ from global trends. Midstream Technologies, which supports the movement of food and goods between farmers and consumers, raised $293.7 million or 61% of all African agribusiness VCs.
Kenya’s Twiga Foods has claimed the largest funding round – $50 million in Series C funding – for a Midstream Tech venture. The B2B platform was founded in 2014 to streamline fresh produce supply chains, delivering produce from rural farmers to small and medium-sized vendors and retailers. The company has since established its own commercial farming unit called Twiga Fresh to ensure the supply of local staples like onions.
The second and third ranking categories were cloud retail infrastructure and online grocery platforms, raising $57.3 million and $44.3 million respectively.
Egypt appears to be a hotspot for e-grocery business – the world’s most popular agribusiness in 2021 – with companies like Rabbit, Appetito and Breadfast all raising funding rounds last year. .
A growing category to watch in Africa is Agribusiness Fintech, which includes companies whose primary mission is to facilitate financial inclusion for farmers, agribusinesses, food sellers and retailers. Companies in the category raised $23.6 million last year.
Kenyan startups Apollo Agriculture and Pula also secured $11 million and $6 million in funding respectively last year. Earlier this year, Apollo closed a $40 million Series B funding round, backed by British International Investment and others.
Many companies in the agribusiness, mid-tech, and in-store retail technology market sectors also offer “integrated” financial services as part of their services. The Zambian company Good Nature Agro, for example, has recently developed financial services. Many consider these services necessary to gain traction in the market.
“Investments that fall into well-defined categories in the United States and Europe are less clear in Africa, where supply chains are shorter, markets more nascent, and successful entrepreneurs require tackling multiple challenges simultaneously. many obstacles in the value chain”, we write in our introduction. “We hope to shed light on the nuances of some of these issues and give readers a sense of the agribusiness opportunity on the world’s youngest and fastest growing continent.”