- Kenya is emerging as a leader in attracting capital for agritech and food startups in Africa, with significant investments in solar energy and precision agriculture, alongside Nigeria and South Africa as key hubs for innovation.
- Over 800 investors have supported climate and food innovators across Africa since 2014, with venture capital firms accounting for 29% of funding deals and venture debt rising as a vital financing option, resulting in over $1.1 billion raised in 2023.
- The investment landscape is evolving, driven by a growing demand for sustainable solutions, with Nairobi at the centre of Eastern Africa’s startup ecosystem, having raised over $2.5 billion in funding over the past decade.
- Looking forward, the African green bond market is projected to reach $5 billion by 2025, and impact investing is expected to grow by 25% annually, while $100 billion is needed to enhance digital infrastructure and support the adoption of new technologies in agriculture.
Kenya is establishing itself as a frontrunner in attracting capital for Agritech and food startups across Africa.
While approximately 60% of funding for African startups originates from international sources, mainly the United States and the United Kingdom, Kenya, Nigeria, and South Africa remain the primary hubs for innovation and investment on the continent.
Kenya’s growth in this sector is significantly fueled by substantial investments in solar energy solutions and precision agriculture. According to a report by Katapult Africa, titled “Evolution of Investment in Food and Climate Tech in Africa,” these three countries continue to dominate in both the volume and total investment figures.
Since 2014, over 800 investors have participated in funding climate and food innovators across Africa, often collaborating on single deals.
In this competitive landscape, Kenya, Nigeria, and South Africa are the leaders in securing funding for sustainable agricultural and climate solutions.
Venture capital firms are the foremost sources of funding, accounting for 29% of all deals. Additionally, venture debt is emerging as a critical financing tool for climate tech startups facing challenges accessing traditional equity financing.
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In 2023, African startups raised over $1.1 billion (Sh142 billion) in venture debt, reflecting a doubling from the previous year and a growing preference for flexible financing options.
Impact investments accounted for 11% of deals, while corporate investments made up 10%. In contrast, financing from governments, banks, and private equity remains less favoured.
The report highlights the evolution of the investment landscape in African food tech and climate tech, driven by rising demand for sustainable solutions and innovative funding mechanisms.
Emerging technologies and innovation hubs, such as Silicon Cape in South Africa and iHub in Kenya, are nurturing entrepreneurial ecosystems that provide essential access to funding, mentorship, and collaborative networks.
Nairobi is emerging as the epicentre of Eastern Africa’s startup ecosystem, particularly for agritech and fintech ventures, with incubators and accelerators like iHub and Nairobi Garage providing vital support.
Over the past decade, Eastern Africa has raised more than $2.5 billion (Sh322.8 billion) in funding across 540 rounds for climate and food startups, followed by Western Africa with over $1 billion (Sh129 billion) and Southern Africa with $230 million (Sh29.6 billion).
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