As food security becomes a pressing issue, investors and governments are increasingly recognising the importance of agritech solutions in ensuring sustainable food production. African agritech startups are transforming agriculture with innovative solutions, but securing funding remains a major challenge. However, there are various sources of capital available, including venture capital, grants, government programs, and impact investors. This article explores where agritech startups in Africa are securing funding, featuring real-life examples, key statistics, and useful resources. If you are an agritech entrepreneur looking for capital, this guide will help you navigate the funding landscape effectively.
Introduction
Agriculture is not just an industry in Africa; it is the backbone of the continent’s economy. According to Grow Africa, it accounts for around 32% of Africa’s GDP and provides employment for its people. Beyond supporting livelihoods and ensuring food security, agriculture plays a vital role in economic development. Projections by AGRA, a proudly African-led institution focused on scaling agricultural innovations that help smallholder farmers towards increased incomes, better livelihoods, and improved food security, indicate that the value of agriculture and agribusinesses in Sub-Saharan Africa could soar to $1 trillion by 2030, a significant rise from $313 billion in 2010.
This study reveals how African agritech startups are financing their growth, with a focus on key funding rounds and investor contributions. Whether you are a startup founder, an investor, or simply interested in the sector, read on to discover the top sources of funding available for African agritech startups.
1. Venture Capital (VC) Funding
Venture capital is funding provided by investors to support startups and small businesses with high growth potential. Venture capital firms have become a major funding source for African agritech startups. In 2022 alone, African startups raised over $5 billion, with agritech taking a significant share.
Twiga Foods (Kenya)
Twiga Foods is a Kenyan agritech startup that connects farmers with urban retailers to improve food distribution and reduce post-harvest losses. By leveraging technology, Twiga ensures a seamless supply chain between small-scale farmers and vendors in cities.
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Since its founding in 2014, Twiga Foods has raised over $100 million from investors, including Creadev, Goldman Sachs, and IFC. In its Series C funding round in 2021, the company secured $50 million, allowing it to scale operations across Kenya and expand into new markets in Africa. Twiga’s digital platform helps farmers sell their produce at fair prices, eliminating middlemen and improving their earnings.
Key VC Investors in African Agritech:
Venture capital firms seek high-growth startups with scalable business models. If you have a strong business plan and a proven concept, VC funding might be the right path for you.
2. Grants and Non-Profit Funding
Many agritech startups in Africa secure capital through grants from international organizations, NGOs, and development agencies. Unlike loans or equity investments, grants do not need to be repaid, making them attractive for early-stage startups.
Hello Tractor (Nigeria)
Hello Tractor is a Nigerian agritech startup providing a “Uber for tractors” service. The company uses IoT technology to connect smallholder farmers with tractor owners, allowing farmers to access affordable mechanised services. This innovation helps increase agricultural productivity and reduce manual labor costs.
The startup has received funding from several organizations, including the USAID Development Innovation Ventures and the African Development Bank (AfDB). In 2022, Hello Tractor secured a $1 million grant from Heifer International to expand its operations across Africa. The funding allowed the company to introduce advanced AI-driven tractor fleet management systems, enhancing efficiency.
Notable Grant Providers:
3. Government and Development Bank Funding
African governments and development banks provide financial support to agritech startups through loan schemes, subsidies, and innovation grants.
Farmcrowdy (Nigeria)
Farmcrowdy is a Nigerian digital agriculture platform that connects smallholder farmers with investors and consumers. Founded in 2016, the platform allows individuals to sponsor farming activities and earn returns from agricultural yields.
The Nigerian government, through the Central Bank of Nigeria’s Anchor Borrowers’ Programme(CBN-ABP), has provided financial support to Farmcrowdy, helping the company scale its operations. In 2020, Farmcrowdy acquired Best Foods Livestock and Poultry Ltd, expanding into livestock farming and agribusiness supply chain management. The company has successfully partnered with the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) to offer low-interest loans to farmers.
Funding Sources:
4. Angel Investors and Startup Incubators
Angel investors and startup incubators play a crucial role in nurturing early-stage agritech startups.
Releaf (Nigeria)
Releaf is a Nigerian agritech startup focused on mechanising palm nut processing. The company developed a proprietary machine that cracks palm nuts ten times faster than manual methods, increasing productivity and reducing waste.
Releaf secured funding from Y Combinator, an international startup accelerator, as well as Sam Altman’s investment fund. In 2021, the company raised $4.2 million in a seed funding round to scale its processing technology and support local farmers. Releaf’s innovation is helping Nigeria’s palm oil industry become more efficient and sustainable.
Top Agritech Accelerators in Africa:
5. Crowdfunding and Alternative Finance
Crowdfunding platforms allow startups to raise small amounts of money from a large number of people, often in exchange for equity or rewards.
Thrive Agric (Nigeria)
Thrive Agric is an agri-fintech company that connects smallholder farmers with funding and markets for their produce. The startup uses crowdfunding to raise capital, allowing thousands of individuals to invest in agricultural projects and earn returns.
In 2021, Thrive Agric secured $56.4 million in bridge funding from investors after facing liquidity issues due to COVID-19. The company has since recovered and continues to leverage crowdfunding and digital financing solutions to support African farmers.
Popular Crowdfunding Platforms for African Startups
Conclusion
African agritech startups are securing funding from multiple sources, including venture capital, government programs, grants, and crowdfunding. With the right business model and strategic partnerships, agritech entrepreneurs can access capital to scale their businesses and contribute to Africa’s agricultural transformation.
For more insights, check out our articles on “Role of Agritech in Attracting Global Ag Investments in Africa” and “Agri-Investment Hubs: Bridging Farmers and Investors“.
