Why AgriTech Investments in Africa Should Not Be Overlooked

So you’ve heard some things about agritech investments in Africa but is it something you should be looking into more seriously?

Agriculture technology, or agritech as it’s more commonly referred to, has become a key area of focus for many investors globally and certainly for impact investing in South Africa. Why? With a wave of new technologies cropping up to help all parts of the agriculture process – from farmers applying these new technologies on the farm, to distributors applying them after harvest, to even food companies applying it during processing – the opportunities available within the agritech sector continue to grow at an unprecedented rate.

According to Dealroom, the top 5 equity AgriTech investments in Africa for 2020 were spread across the following verticals:

  1. Financial services — Apollo agriculture — $6m Series A
  2. Farm robotics — Aerobotics — $17m Series B
  3. Farm equipment — Sunculture — $14m Series A
  4. AI/Farm management software — Gro Intelligence — $85m Series B
  5. Farm management & market access — Komaza — $28m Series B

If you’re considering agritech investing, here’s why you should not overlook it.

First, What Is Agritech?

Technology has always been a part of agriculture – from the first tractor, to the invention of fertilizer – but recent technological advancements have created a new wave of innovation within the industry. Some have called it Food System 5.0 or the third green revolution.

Agritech includes any new opportunities for technology and products that can be used from the field to the plate, which will help improve yield, efficiency and profitability throughout the sector.

Some of the primary production areas covered by agritech includes:

· Agriculture

· Horticulture

· Apiculture

· Forestry

· Pipfruit

· Viticulture

· Aquaculture

One of the main premises of agritech is the ability to grow more food – for a growing global population – with fewer, environmentally damaging resources.

Most of the technologies being used to innovate agriculture, were originally developed for other industries. However, entrepreneurs are finding new ways to use these same technologies and apply them to agriculture.

Some of the most common technological areas that are being utilised to create improvements and large scale business opportunities are:

· The use of sensors and “internet of things” or precision agriculture

· Supply chain and logistics software

· Big data

· Robotics and automation

· Biotechnology

· Software

· UAVs, their supporting software, hardware and sensing technology

Due to this, the agritech sector continues to undergo an exciting transformation, and is pushing some parts of the world towards the forefront of global agricultural innovation.

Why Should Investors Be Interested in Agritech investments in Africa?

With a limited amount of arable land to farm on, agritech is going to be essential to help farmer increase the productivity of their operators. While traditional agriculture still dominates the sector, these emergine technologies are already accounting for a third of the agritech output, and is forecasted to overtake traditional methods in term of food output by 2030.

Agricultural challenges in Africa according to the World Bank

agritech investments in Africa

Companies that are pushing technology forward in the food system stand to grow rapidly and can become the new cornerstone of the industry – providing a plethora of potential avenue for investors.

However, it is still early days for agritech in terms of the public market. But there are some publicly-traded agribusinesses across the value chain. Given the increased interest in the growing sector, there are more and more opportunities for investment in both the private and public sector. Several of the large agribusinesses, like Monsanto and Syngenta, are already investing quite heavily in new innovation through their own venture capital arms. Additionally, venture capital funds provide access to a basket of early stage, private agritech companies – which will provide you with both a diversified exposure to the asset class, but with the risk/return of the venture class.

How To Find Agritech Investment For Your Business

For agritech business owners in Africa, securing investment is a critical step towards fostering innovation, scalability, and sustainable agricultural practices. This guide outlines a strategic approach for agritech entrepreneurs seeking investment, emphasizing key principles such as understanding the agricultural landscape, researching potential investors, and leveraging advisory services for guidance and support.

  1. Understand Your Agritech Solution:

    Before seeking investment, ensure a thorough understanding of your agritech solution. Clearly articulate how your technology addresses specific challenges in agriculture, enhances productivity, and contributes to sustainable farming practices. A well-defined value proposition forms the foundation for attracting investor interest.

  2. Research Potential Investors:

    Conduct in-depth research on potential investors who specialize in agritech and have a focus on Africa. Identify impact investment firms in Africa, venture capitalists, and angel investors with a track record of supporting innovative solutions in agriculture. Explore their investment criteria, portfolio, and commitment to sustainable practices.

  3. Participate in Agritech Events and Forums:

    Actively participate in agritech events, conferences, and forums. These platforms provide opportunities to showcase your agritech solution, network with potential investors, and gain insights into the evolving landscape. Engaging with industry stakeholders enhances visibility and opens doors to potential investment partnerships.

  4. Utilize Online Platforms:

    Explore online platforms that connect entrepreneurs with potential investors. Platforms dedicated to agritech investments or general crowdfunding can broaden your reach and attract a diverse range of investors interested in agricultural innovation.

  5. Build Relationships within the Industry:

    Cultivate relationships with key players in the agritech and agricultural industry. Engage with farmers, agricultural associations, and industry experts. Establishing credibility and support within the industry can enhance your appeal to investors who value partnerships with stakeholders embedded in the agricultural ecosystem.

  6. Leverage Government Initiatives:

    Investigate government initiatives and grants that support agritech innovation. Many governments in Africa have programs aimed at fostering technological advancements in agriculture. Leveraging these initiatives can provide a financial boost and demonstrate alignment with broader agricultural development goals.

  7. Highlight Social and Environmental Impact:

    Emphasize the social and environmental impact of your agritech solution. Investors, especially those focused on impact, are keen on supporting ventures that contribute to sustainable agriculture, enhance food security, and improve the livelihoods of farmers.

  8. Prepare a Robust Business Plan:

    Develop a comprehensive business plan that outlines your agritech solution, market potential, revenue model, and growth strategy. A well-prepared business plan serves as a crucial document during investor presentations and due diligence processes, instilling confidence in potential backers.

  9. Engage with Advisory Services:

    Consider engaging with advisory services that specialize in agritech investments. Firms like Caban Capital provide valuable insights, financial expertise, and strategic guidance tailored to the African business context. Advisory services can enhance your financial acumen and positioning when engaging with potential investors.

  10. Demonstrate Scalability and Market Potential:

    Investors seek ventures with the potential for scalability and significant market impact. Clearly articulate how your agritech solution can scale, penetrate the market, and adapt to different agricultural contexts. Highlighting the broad market potential can attract investors looking for high-growth opportunities.

For agritech business owners in Africa, finding investment requires a strategic and proactive approach. By understanding your solution, researching potential investors, participating in industry events, utilizing online platforms, building relationships, leveraging government initiatives, emphasizing social and environmental impact, preparing a robust business plan, engaging with advisory services, and demonstrating scalability, you can navigate the investment landscape with confidence. The collaboration between agritech entrepreneurs and investors is pivotal in driving agricultural innovation and contributing to sustainable farming practices across the continent.

Whichever way you do decide to invest, just simply investing in the agritech sector is an opportunity you should not pass up. While it is still early days in terms of investing in the sector, getting in early allows you to get involved in some of the startup ideas that are going to end up revolutionising our food industry. Investing early in this exciting and quickly growing industry will ensure that you not only help grow this much needed sector, but that you can also capitalise off its success.

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Matthew Musgrove

Matthew Musgrove

Matthew is an entrepreneur and business Advisor with a passion for change management and social empowerment. With a background in business accounting and advisory, as well clinical research project management, he strives to find strategic and sustainable solutions to business problems.

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MARK VAN HOFF

Mark Van Hoff comes from background of technical & production planning, budgeting & scheduling of major live events. As the first production co-ordinator at M-NET for Outside Broadcasts, Mark has managed major local and international productions including Miss South Africa, Miss World, multiple music events and major sports events, including the PnP Cycling Tour.​Mark co-founded Van-Man Productions in 1994, Page to Picture in 2000 and Move Media Networks in 2007. All three companies have achieved domestic success and have been well-regarded in the South African production industry.

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OLUWASEUN ADEWUYI

Oluwaseun Adewuyi who is the Group Chief Finance Officer (CFO) at Caban, is a Certified Chartered Accountant, with Fellowship status at both the ACCA as well as the Institute of Public Finance and Accountancy, a UK Based industry body with a specific focus on the management of charities, not-for-profit organisations and NGOs.. Oluwaseun comes with strong business acumen and 20+ years of progressive experience in finance and operations management within well-reputed and high growth organisations Including Next Plc and Royal Mail. He has been heavily involved in impact investment across Sub-Saharan Africa and has been instrumental in the creation of a series of community schools in West Africa. Throughout his career, he oversaw a broad range of operations, including Business Strategy and Business Reorganisation, summarising the organisation’s financial status, and coordinating the preparation of tactical plans, financial forecasts, and budgets. Adept at developing and implementing effective internal control framework to maintain sound financial accountability.

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TIM SCHOLTZ

Tim Scholtz, who's is the Chief Operating Officer (COO) at Caban Investments, is experienced in implementing corporate governance guidelines, formulating risk management structures, process and cost optimization. Tim has a strong corporate background, having worked as COO at the South African Tourism board, was COO at the Nelson Mandela foundation and as a internal audit manager at Arthur Anderson earlier in his career.

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Ben Botes is Entrepreneur, VC, co-Founder, Author and Academic with a strong social conscience. Ben Involved with early stage and growth firms for the past 20 years and has been Co-founder of 9 separate businesses across Africa. Ben has directly and indirectly been involved in impact investment and the support of charities and non profits for the last 30 years. Ben is a regular speaker at the African Investment Conference in London and has been featured in Wall Street for Europe, The Guardian Small Business, BBC, the Mail and Guardian in the UK and BizCommunity, Channel 3 TV, Investors Weekly, The Cape Times, Radio 702 with John Robbie and Good Hope FM in South Africa

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DAVE ROMERO

Dave Romero is a venture capitalist and entrepreneur with a passion for making an impact. A qualified Professional Accountant, Dave has been a director in multiple financial institutions and was once the youngest Chairman on the JSE, in addition to being listed as one of Business Times’ Top 100 companies and the 40th fastest-growing company in South Africa. Dave is a core founder of the Caban Group, which aims to provide a comprehensive service offering to small businesses in return for equity. With a passion for nurturing entrepreneurs, Dave can often be found outside of the boardroom – offering advice, creating innovative funding solutions and building communities through sustainable practices.

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Dr Ruben Richards is a truly inspirational South African leader. Through his peace-building seminars for criminal gangs, Dr Ruben has facilitated the longest ceasefire in the history of gang warfare on the Cape Flats. In addition to being Chairman & Founder of the non-profit Ruben Richards Foundation, Dr Ruben is an ordained cleric, company director, non-executive Chairman of Visual International Limited and was once the Deputy Director-General of the now-disbanded Scorpions.