The Covid-19 pandemic has given rise to one of the critical conservations i.e., global agrifood systems. Post-pandemic and rise in global poverty led the world to talk about the need for transformation in global food systems. With the development of the African Common Position, Africa has been the centre of venture capitalists’ attention to robust the continent’s agricultural transformation.
Africa’s tech start-ups are providing fertile grounds for investors as funding for the sector increases ten-fold in five years Since 2021, nearly 120 agrifood tech start-ups raised about US$482.3 million, representing a 250% increase from 2020 and this year they have reportedly raised roughly US$400 million in the first half of the year 2022- highlighting the rising attractiveness of these ventures to investors.
Globally, food and agriculture (agrifood) is a $7.8 trillion industry, responsible for the food on the planet. While gains for the sector are positive in Africa, yet funding for agrifood tech represents just 10% of all venture capital coming into the continent and less than 1% of global agrifood tech VC.
According to the AgriFoodTech Investment Report by venture capital fund, AgFunder in collaboration with the Dutch Entrepreneurial Development Bank (FMO) and British International Investment (BII), African agrifood tech start-ups secured more than US$1 billion dollars since 2017.
The report also states that out of 119 agritech and food tech raised funds during the past year only three countries on the continent captured 87.6% of these operations. Kenya, Nigeria, Egypt and South Africa – closed 92.2% of the capital. Egypt holds US$186.1 million, while Nigeria and Kenya landed US$147.8 million and US$88.5 million respectively. South Africa claimed the smallest share of the four totalling US$22.1 million.
“Many new promising innovations to secure and improve the world’s food supply are starting to gain traction globally, as well as in African markets,” said Dutch lender, FMO ventures, in the report.
In 2021, some of the largest fundraising by midstream start-ups included a Series A funding raise of US$ 55 million, by Egyptian e-commerce startup MaxAB and US$ 50 million in Series C funding by Kenya’s Twiga Foods.
Agrifood Fintech start-ups that are easing financial inclusion for farmers, agribusinesses, food vendors and retailers are also becoming as the next biggest category to watch after midstream tech startups, having raised US$ 23.6 million last year. It is set to grow more with the inclusion of investment plans like Scaling Digital Agriculture Innovations which is a nine-month investment readiness program by Germany’s Federal Ministry for Economic Cooperation and Development.