The African Agritech Landscape: A Push for Investment Readiness
In the dynamic world of African agrifoodtech, a key challenge has emerged: the need for innovators to develop business models and operations that are compelling to venture capitalists. Despite a remarkable surge in funding over the past decade—from a modest $5 million in 2013 to an impressive $636 million in 2022, according to AgFunder’s Africa AgriFoodTech Investment Report 2023—startups across the continent are often found wanting in investment readiness. Many of these enterprises operate without the radar that can guide them towards sustainable growth and scalability.
Peter Kraus of Endeavor South Africa, an organization dedicated to supporting high-impact entrepreneurs, highlighted a significant knowledge gap within the African agritech industry regarding investment readiness. This gap is precisely what the African Agritech Scale-Up Program aims to bridge. A collaboration between Endeavor and the Dutch entrepreneurial development bank FMO, the program has recently announced its extension for a second African Agritech Accelerator program, set to commence in January 2024.
The Power of Partnership
This initiative is not just a two-party affair. AfricaGrow, a fund of funds based in Germany and focused on bolstering SMEs and startups in Africa, has joined the partnership, further enhancing the program’s capacity to support emerging agritechs. The program will welcome 10 early-stage African agritechs, offering them access to global thought leaders, mentorship, and investor networking opportunities.
The inaugural cohort’s success story is a testament to the program’s efficacy. Six out of ten businesses successfully completed capital raises totaling $16 million across various funding stages. Beyond fundraising, these startups experienced a 60% growth in annual revenues, expanded into eight new markets, and created 55 direct jobs. Two of these startups were also integrated into the Endeavor SA Local Scale Up program, which supports them in their long-term growth journey.
Marieke Roestenberg, FMO ventures program manager, expressed eagerness to continue providing investment readiness services to help grow the agritech sector across Africa. The next cohort is co-funded by the FMO Ventures Program Technical Assistance Facility, with contributions from the Dutch government and the European Union.
One of the shining examples from the first cohort is Nigeria’s Winich Farms, which secured financing and joined the Endeavor SA program. The startup, which connects smallholder farmers to markets and provides financial services, closed a seed round with notable investors. Riches Attai, cofounder and CEO of Winich Farms, emphasized the support received in developing a robust marketing strategy and digitizing customer payments.
Modernizing Agriculture: An Urgent Task
Modernizing agriculture in Africa is crucial, as smallholder farmers who contribute 70% of the food supply are slow in adopting new technologies, despite facing challenges like declining productive land and climate change. The overwhelming interest in the program, with 74 startups vying for 10 spots, underscores the systemic challenges agritechs face, ranging from leadership and human resource management to marketing strategies and regulatory engagement.
Betrand Foffe, cofounder and CEO of Cameroonian agritech Jangolo, admitted that participation in the program revealed flaws in their business model. The program enabled Jangolo to rebuild its foundation, realign its team, and triple its revenues in the first quarter of the year.
The selection process for the first cohort revealed a predominance of marketplace solutions, indicating a focus on midstream challenges. However, the sector needs scalable innovations that address a broader range of agricultural challenges to enhance food security and inclusion.
A Broader Scope and a Focus on Farmtech
In selecting the second cohort, Endeavor intends to place greater emphasis on startups offering solutions in precision farming, novel farming systems, farm mechanization and equipment, and services like insurance and access to finance. Endeavor is also keen on attracting founder-led startups that are scalable, operationally established, and from a broader set of African countries.
This approach is critical as Kenya, Nigeria, South Africa, and Egypt have historically attracted 95% of the $1.76 billion in VC funding for agrifoodtechs on the continent. The continued partnership between Endeavor, FMO, and AfricaGrow promises to be a game changer, offering year-long insights on business strategy and growth, and helping agritechs become investment ready through Endeavor’s mentorship model.
Alison Collier, Endeavor South Africa’s managing director, shared her enthusiasm for driving growth in Africa’s agritech sector, enhancing food security, and fostering local revenue and job growth. The collective efforts of this partnership are poised to accelerate the growth of promising African agritechs, connecting them to a global network of founders, investors, and mentors. This support is not just about funding; it’s about preparing a new generation of agritech businesses to thrive in a competitive, rapidly evolving global market.