A New Chapter in Agricultural Investment
AgDevCo, a specialist investor focused on African agriculture, has announced the launch of AgDevCo Ventures, a new initiative aimed at fostering early-stage agribusinesses across the continent. Backed by $32 million in funding from the UK’s Foreign, Commonwealth, and Development Office (FCDO), this initiative is designed to provide crucial financial support to small and medium-sized enterprises (SMEs) in Africa’s agricultural sector.
Targeting Overlooked Opportunities
AgDevCo Ventures will concentrate on smaller investments, ranging from $1 million to $3 million, specifically targeting the “missing middle”—a segment often neglected by private investors due to perceived risks and high transaction costs. This strategic focus aims to fill a critical gap in the market, providing much-needed capital to early-stage agribusinesses that have the potential to drive significant economic growth.
Fostering Sustainable Development
The venture's broader mission includes creating jobs, increasing incomes for smallholder farmers, and building climate resilience across Africa. By focusing on early-stage agribusinesses, AgDevCo Ventures hopes to stimulate sustainable agricultural practices that can withstand the challenges posed by climate change, while also providing stable livelihoods for farmers and their communities.
Expanding Reach Across the Continent
Initially, AgDevCo Ventures will direct its investments toward East African countries where AgDevCo already has a strong presence, including Kenya, Uganda, Tanzania, and Rwanda. The firm plans to gradually expand its reach to other African regions, leveraging its established networks and expertise to support agribusinesses across the continent.
Empowering African and Female-Owned Businesses
AgDevCo Ventures is committed to fostering inclusivity and gender equality within its investment portfolio. A significant proportion of the businesses receiving support are expected to be African and female-owned, reflecting the initiative's dedication to empowering underrepresented groups in the agricultural sector.
Operational Structure and Future Plans
Operating as a separate investment branch within AgDevCo, the Ventures initiative will have a dedicated team based in Nairobi, with expert support drawn from across the organisation. The firm is also in the process of raising an additional $25 million in impact investment capital from development finance institutions and family offices, with plans to commence operations by early 2025.
Returning to Early-Stage Investments
This new initiative marks AgDevCo’s return to the early-stage SME space, an area where it previously operated between 2009 and 2017. The shift back to smaller investments has been made possible by AgDevCo's recent profitability, which has allowed the firm to rebalance its portfolio towards larger investments in more established businesses while also revisiting its roots in supporting early-stage enterprises.
Long-Term Support from the UK Government
The UK government, through the FCDO, has been a long-standing supporter of AgDevCo's mission to expand sustainable agribusinesses across Africa. Lord Collins of Highbury, the UK Minister for Africa, emphasized the importance of this initiative, stating, "Giving hardworking farmers stable incomes, creating jobs for the youth, and helping end malnutrition are vital goals." He also 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.
AgDevCo's Track Record and Future Outlook
As of June 2024, AgDevCo has 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. With the launch of AgDevCo Ventures, the firm is poised to further its impact by nurturing the next generation of agribusinesses that will drive Africa’s agricultural development into the future.
