Covid-19 no doubt caused disruptions for a whole lot of activities, including agricultural outputs. However, the year 2021 was a recovery year for many, as businesses, especially those in the agricultural space, started to get back on, and some even waxed stronger than they had before the pandemic.
While agriculture continues to play a crucial role in economic growth across many nations around the globe, the continuously growing population and rising demand for agricultural output indicate the need for investments in agricultural technology (agritech) solutions.
Agritech, the application of technology to enhance agricultural production as well as bring about production efficiency, has been growing at an impressive pace worldwide and Nigeria is not left out of the list of countries exploring the space. To further traverse the ecosystem, agritech entrepreneurs are securing funds to advance areas like the software part of agriculture, registration, and connecting farmers to markets.
Major agritech firms that secured funding in 2021
The year 2021 saw some agritech firms raise funds to scale their businesses. Nairametrics highlights some of these as follows:
Releaf is an agritech start-up founded by Ikenna Nzewi and Uzoma Ayogu, with a focus on developing proprietary hardware and software solutions that make African farmers and food factories more efficient and profitable.
The firm recently raised $2.7 million in a seed funding round led by Samurai Incubate Africa, Future Africa, and Consonance Investment Managers, with participation from Stephen Pagliuca, Chairman of Bain Capital, and Justin Kan (Twitch).
In addition, Releaf also secured $1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID, making a total of $4.2 million in seed funding and grant.
Agricorp is a Nigerian spices manufacturer and exporter founded by Kenneth Obiajulu and Wale Omotimirin.
The firm recently raised $17.5 million in a Series A funding round to help increase its production capacity to 7,000 metric tonnes in a funding round led by Vami Nigeria. Other investors include One Capital LLC and AFEX and investors who empowered the startup with working capital financing.
Vendease was founded by Tunde Kara, Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju to solve Africa’s food supply chain problems by automating procurement procedures, storage operations, logistics, and providing flexible payment systems to help food businesses grow.
The agritech platform recently raised $3.2 million seed funding to transform Africa’s food supply chain in a funding round led by Global Founders Capital with participation from Y Combinator, Hustle Fund, Liquid 2 Ventures, and Soma Cap.
The funding comes seven months after the company, along with nine other African entrepreneurs, participated in Y Combinator’s winter batch.
ThriveAgric was founded by Uka Eje, and Ayodeji Arikawe to provide access to finance, premium markets and data-driven advisory for smallholder farmers.
The company secured a $1.75 million grant to support 50,000 smallholder farmers growing rice, maize, and soybean in Nigeria. The grant is provided by the West Africa Trade and Investment Hub, a project funded by the United States Agency for International Development (USAID) to improve food security in the country.
Controversies that characterised the agritech space in 2021
While there are cases of improvement recorded in the sector coupled with successful funding secured by agritech startups to scale operation in 2021, there were a few controversies that arose in the industry especially with regards to financing.
According to research by GSMA, the financial ecosystem required to develop and support new ventures in Nigerian agritech space is not mature enough to nurture long-term success as the country’s financial infrastructure still struggled to support investments that involve multi-year risk-taking and unproven business models.
This mere fact forces startups to generate revenue from the onset, rather than focus on research and development; developing their value proposition and demonstrating a viable business model, hence, causing a lot of agritech in Nigeria to crash even before getting to maturity stage.
In recent times, lots of agritech companies in Nigeria have tumbled after garnering funds from investors with promises to pay back along with returns on investment. The year 2021 presented nothing short of this as the year saw several cases of agritech firms – especially those raising funds through crowdfunding – unable to go on after a while due to unavailable cash.
In terms of implementing agricultural advisory required financial investment, farmers faced the added challenge of accessing financial services. In 2021, the absence of an enabling regulatory environment for digital financial services in Nigeria continued to present a major challenge to both smallholder farmers and other agricultural value chain players who need access to financial services to invest in their businesses.
Similarly, there were issues around banditry, kidnapping, and general insecurity on farmland which caused farmers to abandon their farms, thereby, fueling hunger, social insecurity and threat to the peace of the state.
What they are saying
Speaking on factors responsible for growth in agritech in recent years, Kenneth Obiajulu, Agricorp founder, in an interview with Nairametrics said they were due to the combination of challenges and opportunities in the space.
He said, “Growth is a function of the entrepreneurs that are able to capture the opportunities and ensure that what they are doing is commercially viable. Also, looking at the level of investment coming into the agricultural space year on year, it is enough for a lot of entrepreneurs to begin to think through how they can recreate or create from scratch, a new system that allows them to take up these opportunities.”
Describing the future of agritech in Nigeria, he said the country was still at infancy stage, though there was a lot of fascination about how tech could be aligned with agriculture. He added that what was in play currently was technology-based companies focusing on the software part of agriculture, registration, and connecting farmers to markets, though the country was evolving into core technology.
He said, “I think agritech would play a major role in expanding these opportunities in Africa because Africa is still very new to the use of technology in this industry. I think the next ten to twenty years will be a boom especially for those that are able to get it now and add value to the system.”
Also speaking on how the fund would help to transform the agricultural industry, Ikenna Nzewi, CEO and co-founder of Releaf, said the funding allowed for the development of technology with smallholder farmers.
“Nigerians spend about 60 per cent of their income on food and Africa’s population is set to increase by 100,000 people per day over the next three decades, we’re presented with an incredible opportunity to feed more people, reduce consumer costs, and supply the fastest-growing food market in the world,” Nzewi said.