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:
- Financial services — Apollo agriculture — $6m Series A
- Farm robotics — Aerobotics — $17m Series B
- Farm equipment — Sunculture — $14m Series A
- AI/Farm management software — Gro Intelligence — $85m Series B
- 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:
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
· 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
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.
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.