Africa’s startup ecosystem raised nearly $5 billion in venture capital (VC) funding last year, twice as much as in 2020.
For Zekarias Amsalu, founder and CEO of investment advisory firm IBEX Frontier, this growing attractiveness can be attributed to an awakening in the international investment community to the significant return on investment that doing business on the African continent has to offer.
“The misconception about risk that is being debunked as successful international investors show [others] record return on investment [they’ve made so far]Amsalu told PYMNTS in an interview.
Read the interview: Global startup uncertainty spurs mega-investments in Africa’s booming tech scene
Overall, African FinTech players tend to dominate the space and accounted for 41% of all mega deals signed last year – the highest across all sectors. But while the sector is attracting the most venture capital funds, other industries are emerging and benefiting from growing investor interest.
See more : African FinTechs are the “least affected” by Global Tech Funding Winter, but for how long?
Overall, FinTech companies primarily dominate the African startup landscape, but outside of the continent’s booming fintech sector, other industries are also benefiting from growing investor interest.
The agribusiness sector is one of them and, according to one report released last month by AgFunder, in partnership with the Dutch development bank and British International Investment, more than $480 million was invested in African AgriFoodTech companies last year. It represented a 250% year-on-year increase that even surpassed the impressive growth recorded by the continent’s FinTech funding over the same period.
Read also: African startups are balancing the trade-off between lower valuations and bigger funding rounds
Some of the biggest fundraisers in the space have been raised by intermediary tech companies that situate their technology between producers and end-retailers, including startups that digitize food supply chains and optimize trade between suppliers. and traders.
These include a $55 million Series A funding round by Egyptian company MaxAB, a business-to-business (B2B) e-commerce platform that connects informal food and grocery retailers with suppliers. .
Nigeria’s TradeDepo, which to date has raised $123 million in funding, offers a similar solution, providing a digital marketplace for importers and manufacturers to sell to traders. On the retail side, the company also offers buy now, pay later (BNPL) to help retailers buy more products and maintain cash flow.
This year, the trend of technology investments in the supply chain has continued, with pan-African B2B company Wasoko raising a $125m Series B round in March. Like TradeDepot, the company, which recently moved to Zanzibar, offers trade finance in the form of BNPL loans to traders under its consumer goods marketplace platform.
Learn more: B2B Marketplace Wasoko, Zanzibar Team to Build Innovation Center
As Wasoko CEO and Founder Daniel Yu told PYMNTS, “Anything that can be done to improve efficiency and ultimately improve the affordability and availability of [essential goods] for a billion and a half people is going to be a huge undertaking.
See more : African B2B Marketplace Wasoko Tackles Supply Chain Inefficiencies
Since its launch in 2016, the business has grown into a regional marketplace with over 50,000 informal retailers in its network in Kenya, Tanzania, Rwanda, Uganda, Ivory Coast and Senegal.
At the other end of the supply chain, startups across the continent are also creating digital solutions to financially empower farmers and producers.
Earlier this year, for example, Nigerian company AgriTech ThriveAgric secured $56.4 million in debt financing to grow its base of more than 200,000 farmers and expand into new African markets, including Ghana, Zambia and Kenya.
Related: Beyond VCs, public investments drive Africa’s digital transformation agenda forward
ThriveAgric has built what it calls a “farm system,” comprising a sales and payment system for smallholder farmers to enable them to access local and global commodity markets while maximizing their harvest through data-driven insights and access to capital.
Ultimately, Africa’s VC landscape paints a picture of the continent’s unique agribusiness challenges and opportunities. While AgriFoodTech’s investments in Europe and America focus on categories such as alternative proteins and online grocery stores, these take up a much smaller share of venture capital dollars in Africa.
More on this: Technology creates a sustainable food system for green consumers in the EU
Instead, technology that seeks to streamline food commerce and connect fragmented supply chains has proven to be the clear winner in the space so far.
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