The African AgTech funding bubble burst in 2023 after a decade of rapid growth, but nonetheless a new baseline has been set for funding in a sector that is bucking more general trends within Africa’s tech startup ecosystem.
That is according to the State of AgTech Investment in Africa 2024, the first in a series of reports utilising AgBase, a business intelligence platform offering real-time data, market insights, and a centralised hub for information on AgTech and FoodTech across emerging markets.
This initiative, backed by the Bill and Melinda Gates Foundation and The Foreign, Commonwealth & Development Office (FCDO), and hosted by Briter Bridges in partnership with Mercy Corps AgriFin, is dedicated to bolstering the knowledge framework essential for catalysing investments in digital and technology-driven solutions, with an underlying mission is to transform the lives of smallholder farmers and boost socio-economic growth.
The first report presents findings from a decade of AgTech funding on the continent, where more than US$1.56 billion was raised across over 700 deals to more than 400 AgTechs between 2014 and Q3 2024. Similar to the wider startup ecosystem, much of this funding was raised between 2021 and 2022. By 2023 this funding bubble had burst and deal flow began to decline.
The report highlights that funding has stabilised over the last 12 months with 131 AgTech companies raising US$215 million in investment across 158 deals. This is similar to the 2023 levels and while lower than the preceding two years, is about 50 per cent higher than where the AgTech ecosystem was funding-wise in 2019 and 2020. Further, the share of funding going towards AgTechs in Africa continues to increase as funding in the wider startup ecosystem continues to decline and the share of funding to agriculture startups which now account for nearly 25 per cent of all deals to Africa’s digital and technology innovation landscape.
The “new baseline” is characterised by higher deal flow, but lower funding volumes, with fewer active commercial funders. Deals from venture capital have declined by more than 40 per cent over the last twelve months.
More deal flow is being driven by impact investors, DFIs, foundations, amongst others and this is shaping where funding is going. For example, nearly all funding over the last two years has gone to startups offering solutions on-farm to smallholder farmers. Climate-smart agriculture solutions have accounted for more than 50 per cent of total funding. Further, the type of instruments being deployed are also changing as a result of this.
While 61 per cent of AgTech funding in the last twelve months has been equity-based, this is down from 80 per cent in the previous period. The share of funding from debt and grant funding also fell, replaced by non-traditional financing instruments such as bonds, convertibles and blended finance. This is also unlocking more funding from asset-heavy businesses that equity funders have traditionally shied away from.
Meanwhile, more funding in AgTech has gone to countries outside the “big four” of Kenya, Nigeria, South Africa and Egypt, to locations like Morocco, Ghana, Côte d’Ivoire, Ethiopia, Zambia and Mozambique, which have had a higher share of AgTech funding than other markets.
The challenge for the AgTech sector is how to ensure the dynamics of this new baseline do not crowd out commercial funders when they are ready to come back.
“There is a need for a holistic approach to AgTech investments that balances innovation with sustainability and real-world impact on farmers and agricultural ecosystems. An important part of this will be for non-commercial and semi-commercial funders to consider how they are crowding in, not crowding them out,” said David Saunders, Director at Briter Bridges and Programme Lead of the AgBase programme.
“AgTech solutions are driving wider transformation within food systems across Africa, but it’s still limited to a few markets and value chains. This report will act as a new baseline for which we can shape, as well as assess and evaluate the impact of different initiatives in addressing these gaps,” Collins Marita, Technical Director at Mercy Corps AgriFin and Programme Director of the AgBase programme, said.
Download your copy of the report here.
About AgBase
AgBase is a business intelligence platform offering real-time data, market insights, and a centralised hub for information on AgTech and FoodTech across emerging markets. This initiative, backed by the Bill and Melinda Gates Foundation and The Foreign, Commonwealth & Development Office (FCDO), and hosted by Briter Bridges in partnership with Mercy Corps AgriFin, is dedicated to bolstering the knowledge framework essential for catalysing investments in digital and technology-driven solutions, with an underlying mission to transform the lives of smallholder farmers and boost socio-economic growth.
https://agbase.briterbridges.com/
About Briter Bridges
Briter Bridges is a research and business intelligence company that provides strategic insights into business, innovation, and funding ecosystems in emerging markets. Briter specialises in mapping and analysing trends related to businesses, investors, and sector-specific financing models, offering valuable intelligence to corporations, governments, consultants and funders. With expertise in technology and digital transformation, Briter Bridges is committed to supporting sustainable and inclusive economic development across high impact sectors. Over the past six years, Briter Bridges’ research and data have been used by governments, donors, investors, startups and multinational corporations.
