In Ghana, financing for agrifood tech ventures can be scarce as many agrifood tech options do not receive the required funding.
FREMONT CA: Desmond Koney, the owner of Complete Farmer, anticipated that raising funds for his startup will not be an easy task. His company operates an agribusiness marketplace for Ghana's under-financed and under-resourced farmers. Compared to fintech, multifarious agrifood tech solutions do not receive the requisite funding, claims Koney.
Fintech ventures on the continent raised USD 2.3 billion in funding, accounting for more than half of all venture capital invested in African startups. Last year, Ghanaian firms received only USD 3 million of the USD 160 million in agrifood tech funding that went to African startups. Fortunately, Complete Farmer received $400,000 in a seed round from Africa-focused venture fund Ingressive Capital.
Agriculture is the best sector in Africa for venture capitalists aiming for economic and social gains. Over 70 percent of Africans work in the agrifood value chain, which accounts for roughly 20 percent of the continent’s GDP. Koney attributes the scarcity of capital to the agriculture sector’s reliance on infrastructure. Agriculture, unlike
financial services, causes the production, processing, and movement of tangible items, making it more asset and capital intensive.
In a market like Ghana, where the entrepreneurial ecosystem is younger than the major markets like Nigeria, Kenya, South Africa, and Egypt, fundraising is difficult. Investors find fewer or few large-ticket opportunities. According to Dennis Matangira, managing director of Zebu Investment Partners, a private equity firm focused on Africa's agri-food industry, overcoming Ghana's agrifood tech investment requires stronger investor education around the opportunities.
Matangira explains the development of a platform that aids in the dissemination of information to help investors and private funds understand the opportunity, as well as positioning that will most likely provide them with a return on investment while making an impact. Ingressive Capital, Diaspora Ventures and AV ventures are early-stage funds that have cut early checks to Ghana’s agrifood tech startups. Founders are usually pushed to bootstrap or seek alternative types of finance, such as startup grants.
The lack of venture funding for Ghana's agrifood tech ventures is more than just a supply issue. Startup founders are unfamiliar with the intricacies of venture capital and whether it is the best option for growing an early-stage business. Agro Innova was developed by Moses Mallaghan to create basic digital tools to assist agricultural and livestock farmers in monitoring and managing their fields and animals. Since its inception in 2017, the company has sold its gadgets to hundreds of farmers. However, according to Mallaghan, the company isn't yet ready to seek venture capital.
