Image credit: Farmerline

10 startups join Endeavor & FMO’s cohort to accelerate agrifoodtech in Africa

February 23, 2022

FMO is a supporter of AFN’s coverage of agrifoodtech in Africa. For more information, read our press release about the partnership.

Venture capital investment in Africa is off to a roaring start, surpassing $1 billion in just the first seven weeks of the year. One sector that isn’t getting as much traction as it needs to: agrifoodtech.

“This is a challenging sector,” Maurice Scheepens, senior investment officer of Dutch development bank FMO, tells AFN. “There are many smallholder farmers and consumers on the African continent, yet supply chains are completely fragmented. Everyone is losing at the moment.”

“Investments in solutions that combine a high-tech angle with a high-touch approach with farmers are particularly effective in addressing these challenges,” he continues, adding that increased investment in such technologies “should help to increase farmers’ income, reduce food losses, and improve food safety and traceability for consumers.”

To prime the VC pipeline, 10 startups have been selected to participate in an agrifoodtech investment readiness program hosted by Endeavor South Africa, with support from FMO. The companies, which hail from five African countries and the US, will participate in a year-long program that has been designed to address African agrifoodtech ventures’ unique challenges and opportunities, particularly capital access.

“Our focus was on finding African agrifoodtech businesses that have unique tech-enabled solutions, are addressing a global problem with a proven business model and have the ability to scale quickly,” adds Alison Collier, managing director of Endeavor SA’s.

She says the program also screened for businesses that are “at an inflection point, where access to the right business mentor or investor is going to fast-track growth.”

Creative tech solutions

Agriculture is the leading provider of livelihoods on the African continent and one of the biggest contributors of GDP. Yet agrifoodtech companies supporting the productivity, efficiency and impact of the sector are woefully underinvested: agrifoodtech accounts for about 5% of African venture capital.

Part of the reason for this underinvestment is because of the sector’s relative nascency to, say, fintech, which accounts for roughly 50% of African VC. The sector’s complex physical, logistical and infrastructural challenges also deter investors.

Such challenges are precisely what the agrifood entrepreneurs in Endeavor SA’s newest cohort are trying to solve.

Uganda-based EzyAgric is a digital platform working to bridge the information, inputs and service delivery gap between farmers and agribusinesses. Ghana’s DigiExt is improving smallholder farmers’ awareness of what is happening on their farms and access to advisory services through remote sensing and weather analysis. Farmerline, also in Ghana, is an agribusiness marketplace with a mission to provide farmers with access to quality inputs, fair credit, continuous training and market access.

“The food security of African markets is so dependent on small-scale farmers,” observes Collier. “The majority of the entrepreneurs in the cohort are addressing this issue, equipping farmers’ to increase their yields and reduce post-harvest loss to feed their nations. They’re solving complex issues with hundreds and thousands of fragmented stakeholders, and the only way to do that commercially at scale is to use technology.”

Across the value-chain

The range of issues the cohort is addressing reflects the diversity of agrifoodtech in Africa and its nascent ecosystem.

At the farm level, Ghana’s TROTRO Tractor is effectively an Uber for Tractors. Nigeria’s Farmz2U is connecting farmers with data, resources and loans to improve their productivity and livelihoods, while Winich Farms, also in Nigeria, and Agromovil in the US are connecting Africa’s farmers to agri-processors and off-takers.

Several of the companies are serving both ends of the agricultural value chain. Cameroon’s Jangolo is addressing information asymmetry and market transparency by serving as a “search engine,” sourcing and logistics platform for farmers and food businesses. Nigeria’s Traders of Africa is a B2B e-commerce platform for traders, manufacturers, and producers of African goods, including food products.

South Africa-based ArcAqua is addressing food safety issues with a natural sanitizer produced from tap water and ozone.

All of the startups in the cohort are reaching the pre-Series A and Series A investment stages, which Endeavor SA and FMO identified as a critical inflection point for agrifoodtech companies in Africa.

“Africa is generating a lot of interest from the global VC market, particularly over the past year. Investors are interested because of Africa’s growth prospects,” Collier says. Investors are struggling to identify “investment ready” agrifoodtech companies, however.

“Existing infrastructure still poses serious barriers to growth for some entrepreneurs,” she continues. “In many ways, this is why the tech sector is so attractive: it provides new, creative and scalable solutions that bypass or even take advantage of the lack of infrastructure.”

Priming the pipeline

FMO and Endeavor SA announced their partnership late last year to help Africa’s early growth-stage agrifoodtech startups overcome business and investment readiness challenges and troubleshoot infrastructural obstacles to unlock their growth potential.

The year-long program will build on Endeavor SA’s “Local Scale-Up” model, which was designed for companies with proven business models but which are not quite at the regional or global-growth stage. It is being modified to support the pan-African cohort hone and grow their business models in their current markets.

“Endeavor’s sweet spot is working with growth-stage businesses” that are often leading players in their home markets or expanding into new markets explains Collier. “This is a growth-catalyst program. It’s about providing these businesses with access to the expertise and networks that they don’t otherwise have to accelerate their growth.”

Facilitating access to capital is also a key focus. About six months of the program will concentrate on investment readiness and capital raising. The cohort will have the benefit of accessing Endeavor’s global network of investors and business mentors.

FMO and Endeavor SA hope the program will help cohort members gain traction in the VC community and access to early-stage growth capital, while proving to VC investors that there are opportunities in agrifoodtech in Africa.

“The reasoning behind this program is two-fold: firstly, it is part of our ecosystem building activities to strengthen the African agrifoodtech space; and, secondly, it helps to address the mid-term agrifoodtech pipeline for the VC community,” explains Scheepens.

He adds: “Ultimately we want to see more agrifoodtech businesses from African markets and working in African markets scaling and closing deals, while at the same having a positive impact on food security in general, and on the livelihoods of smallholder farmers in particular.”

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