AFRICA – Africa has seen a substantial rise in the volume of venture capital flowing into the continent, with the agrifoodtech scene seeing a bump in investors interest.
Over the past five years, according to the inaugural AgFunder Africa AgriFoodTech Investment Report in collaboration with the Dutch Entrepreneurial Development Bank (FMO) and British International Investment (BII), African agrifoodtech startups secured more than US$1 billion dollars since 2017.
Deal counts also rose consistently over the five years period, growing from just 51 deals in 2017, to 99 in 2020, to 150 last year, with some 272 investors backing them, and the more mature companies raising bigger and bigger deals.
Nearly 120 agrifoodtech startups raised a record breaking US$482.3 million in 2021, representing a 250% increase from 2020.
This year is on pace to beat 2021, with the startups reportedly having raised roughly US$400 million in the first half of the year 2022.
Gains for the sector are positive, yet funding for agrifoodtech represents just 10% of all venture capital coming into Africa and less than 1% of global agrifoodtech VC.
This is despite the fact that Africa is home to a sixth of the world’s population and the food and agriculture industries represent a significant piece of most African economies.
This is partly attributed to the relative nascency of Africa’s startup ecosystem, as well as investors’ historical risk perceptions.
Egypt leads the pack in clinching the most investments in 2021
According to data from the investment Africa’s “Big Four” markets in 2021 i.e., Kenya, Nigeria, Egypt and South Africa – clinched 92.2% of the capital.
Egypt claimed 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.
Nigerian, Egyptian and Kenyan startups all tallied nearly similar deal totals i.e 38 in Nigeria, 36 in Egypt and 32 in Kenya with South Africa having 14 deals.
Other countries included Morocco with 7 deals totalling US$15.4 million, Ghana followed closely with 5 deals worth US$2.4 million, with the rest of Africa accounting 18 deals totalling US$20m.
Notably, 121 of the 150 deals undertaken last year were seed rounds, signifying the early-stage nature of Africa’s agrifoodtech sector. Egypt’s e-grocery and delivery platform Rabbit topped the seed funding chart with an US$11 million round.
Series A investments notched just 16 deals, while there was only one small “late-stage” round, claimed by South African agrifood fintech company Nomanini, which has raised a large number of small venture rounds.
Investors flocked to startups streamlining supply chain operations
Interesting to note is, Midstream Technologies, which support the movement of food and goods between farmers and consumers, raised US$293.7 million or 61% of all African agrifoodtech VC.
They attracted by far the biggest piece of the pie as innovators and investors recognized the deeply inefficient, if short, supply chains on the continent. Big names like Kenya’s Twiga Foods, Egypt’s MaxAB and Nigeria’s Trade Depot featured in this category.
The second and third ranking categories were Cloud Retail Infrastructure and e-Grocery platforms, raising US$57.3 million and US$44.3 million respectively.
Egypt seems to be a hotspot for e-Grocery activity with companies like Rabbit, Appetito and Breadfast all raising venture rounds last year.
In-store Retail Tech, focusing on digitalization of informal, micro and small businesses, which serve as the delivery point of more than 80% of food and FMCG goods to consumers, raised US$26.6 million or 5.5% of African agrifoodtech VC in 2021.
A growing category to watch in Africa is Agrifood Fintech, which includes companies whose primary mission is to facilitate financial inclusion for farmers, agribusinesses, food vendors and retailers. Companies in the category raised $23.6 million last year.
Kenyan startups Apollo Agriculture and Pula secured US$11 million and US$6 million respectively in funding last year and Numida Uganda clinched US$2.3 million seed funding.
Other categories that received financial backing during the period under review include online restaurants (Mealkits), Home and Cooking, Restaurant Marketplaces, Farm Robotics and Mechanization, Agribusiness Marketplaces, Bioenergy/Biomaterials, Innovative Food, Farm Management Software & Sensing, Novel Farming Systems, and Agbiotechnology.
Pan-African VC Launch Africa was the most active agrifoodtech investor in 2021. Global accelerator groups like Y Combinator and Techstars also featured on the leader board, alongside other deep pocket investors such as Flat6Labs Cairo, LoftyInc Capital Management, DFS Lab, Kepple Africa Ventures, Endeavor Catalyst, Village Capital and 10 FJ Labs, among others.