Founders Factory Africa Partners with Small Foundation to Boost Agritech Startups

Johannesburg-based Founders Factory Africa (FFA) has announced a new collaboration with Small Foundation, geared towards the selection of 18 agritech startups for an intensive acceleration and incubation program.

Small Foundation’s Commitment to African Agriculture

Small Foundation, a philanthropic organization headquartered in Dublin, concentrates its efforts on the rural and agricultural sectors within sub-Saharan Africa. Through this partnership, the Foundation is providing an undisclosed investment to FFA, aiming to foster the growth and expansion of agritech ventures across the continent.

The collaboration is expected to significantly impact the African landscape by empowering agritech startups to innovate and enhance service delivery to smallholder farmers and micro, small, and medium-sized enterprises within the agricultural industry.

Program Details and Funding Opportunities

Founders seeking early-stage support are encouraged to apply for inclusion in either the Founders Factory Africa Venture Scale or Venture Build portfolios. Successful applicants will gain access to funding ranging from $100,000 to $250,000, alongside comprehensive, hands-on technical assistance.

This represents an evolution from FFA’s initial launch in 2018. As an extension of the broader Founders Factory organization, FFA has previously invested in over 130 companies globally.

FFA’s Expansion and Previous Investments

In its early stages, FFA initially focused on fintech, partnering with Standard Bank – the continent’s largest bank – to invest in fintech startups. Notable companies from this initial wave include Bwala, LipaLater, MVXchange, and OkHi.

The following year saw South African healthcare company Netcare Group join as an investor, leading to investments in health-tech startups such as RxAll, Redbird, and Wellahealth.

Investment Amounts and Program Structures

Previously, startups participating in FFA’s Venture Scale accelerator program received a £30,000 cash investment complemented by £220,000 in support services. Those in the Venture Build program were allocated £60,000 in cash and £100,000 towards support.

For this latest partnership, FFA will allocate a total of $300,000 in cash and hands-on support to companies within its Venture Scale program. Startups accepted into the Venture Build program will be eligible for funding of up to $250,000.

Venture Scale vs. Venture Build

The Venture Scale program is designed to support existing startups operating in the seed to pre-Series A stages. Conversely, the Venture Build program caters to founders who are looking to launch a startup in Africa, even without a fully formed concept or idea.

Current Portfolio and Future Growth

Currently, FFA’s Scale and Build portfolios encompass 23 companies, primarily originating from Ghana, Kenya, Nigeria, and South Africa. These startups have collectively secured over $7 million in funding both during and after their participation in the program.

FFA intends to expand this number to approximately 90 startups by 2024. Alina Truhina stated that FFA aims to build, scale, and invest in 88 startups with its existing investors – Standard Bank, Netcare, and Small Foundation – by 2024.

She further indicated plans to continue attracting new investors and maintain operations on the continent indefinitely.

Agritech and Broader Investment Landscape

While FFA is now dedicating a specific fund to agritech startups, it has previously invested in ventures with agritech solutions, such as Nigeria’s Foodlocker. Foodlocker utilizes machine learning to forecast foodstuff demand and facilitates procurement from smallholder farmers, though FFA initially categorized this as a fintech investment.

“Foodlocker was a company we selected and invested in under our Fintech portfolio, as the startup has a financial component,” explained Truhina. “With Small Foundation, we are establishing a new dedicated agritech sector.”

Small Foundation joins Standard Bank and Netcare in providing specialized assistance to FFA portfolio companies, offering sector expertise, continental reach, and access to clients, proof-of-concepts, and pilot programs.

African Startup Funding Trends

Although fintech has garnered significant attention from both local and international investors, the same level of investment hasn’t been seen in health tech and agritech. According to Briter Bridges, fintech accounted for 31% of the total $1.3 billion raised by African startups.

Health-tech startups secured 9% of the funding, while agritech startups represented a smaller share of just 7%.

Small Foundation’s Vision for Africa

Small Foundation aims to address this imbalance and contribute to its broader goal of “ending extreme poverty in sub-Saharan Africa by 2030.” Conor Brosnan, the CEO and chair of the foundation, believes that tackling the sector’s key challenges in collaboration with FFA will bring the company closer to achieving this objective.

“This is a pivotal time to invest in the growing area of agritech in Africa, which has transformative potential for local livelihoods,” he stated. “We are excited to see FFA’s highly skilled teamwork with immensely talented African entrepreneurs to deliver scaled solutions to some of the biggest challenges faced by the sector.”

Future Outlook for FFA

Over the past three years, Founders Factory Africa has successfully secured the support and funding of three influential partners. With 55 more startups to invest in before 2024, increased investment activity and additional partnerships are anticipated to fund ventures in other sectors.

Furthermore, the firm is currently raising a $35 million “Africa Seed Fund” to provide follow-on capital to select portfolio companies, operating alongside FFA.