The news:
- AgDevCo, a specialist investor in African agriculture, has announced raising $32 million in funding from the UK’s Foreign, Commonwealth, and Development Office (FCDO) to launch AgDevCo Ventures, a new investment initiative designed to back early-stage agribusinesses in Africa.
- This strategic move aims to develop the next generation of agribusinesses by providing crucial financial support to small and medium enterprises (SMEs) in Africa.
- AgDevCo Ventures will focus on smaller investments, ranging from $1 million to $3 million, targeting the “missing middle” — a segment often overlooked by private investors due to perceived risks and high transaction costs.
The venture hopes to create more jobs, increase smallholder farmer incomes, and build climate resilience throughout the continent by providing capital to these early-stage agribusinesses.
Initially, AgDevCo Ventures will concentrate its support on East African countries where AgDevCo already has a presence, including Kenya, Uganda, Tanzania, and Rwanda. From there, the firm plans to expand its reach to other African regions.
Its portfolio is expected to feature a high percentage of African and female-owned businesses, underscoring its commitment to inclusivity and gender equality.
AgDevCo Ventures will operate as a separate investment branch within the group, with a dedicated team based in Nairobi and expert support from across the organisation.
The firm is raising an additional $25 million in impact investment capital from development finance institutions and family offices, with plans to kick off operations by early 2025.
This new initiative marks AgDevCo's return to the early-stage SME space, where it operated between 2009 and 2017.
Per the group, the return to smaller investments is made possible by its recent profitability, which has allowed it to rebalance its portfolio towards larger investments in more established businesses.
Through the FCDO, the UK government has long supported AgDevCo's mission to expand sustainable agribusinesses throughout Africa.
Lord Collins of Highbury, the UK Minister for Africa, emphasised the importance of stable food markets, stating, "Giving hardworking farmers stable incomes, creating jobs for the youth, and helping end malnutrition are vital goals."
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He noted that the UK government would contribute more than half of the $50 million fund total for AgDevCo Ventures, with the remainder to be sourced from additional investors.
As of June 2024, the group claims to have committed $210 million to 38 investments in 11 sub-Saharan African countries, with notable investments including $7.7 million in Kenyan agribusiness Agris, $7.2 million in Pan-African Hatch Africa, and $10 million in Côte d’Ivoire’s Cashew Coast.
