AgDevCo, a prominent investor in African agriculture, has raised $32 million from the UK’s Foreign, Commonwealth, and Development Office (FCDO) to launch AgDevCo Ventures. This new initiative aims to support early-stage agribusinesses across Africa by providing much-needed financial backing to small and medium enterprises (SMEs).
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. By supporting these early-stage businesses, the venture seeks to create jobs, boost smallholder farmer incomes, and enhance climate resilience across the continent.
Initially, AgDevCo Ventures will focus on East African countries where the company already has a presence, including Kenya, Uganda, Tanzania, and Rwanda, with plans to expand to other regions. The initiative is particularly committed to inclusivity, with a high proportion of investments expected to go to African and female-owned businesses.
Operating as a separate investment arm within AgDevCo, the Ventures team will be based in Nairobi, supported by experts across the organization. The firm is also raising an additional $25 million in impact investment capital from development finance institutions and family offices, aiming to kickstart operations by early 2025.
AgDevCo’s return to early-stage investments comes after years of focusing on larger businesses, following the company’s recent profitability. The firm initially operated in the SME space between 2009 and 2017 and is now refocusing on smaller investments to diversify its portfolio.
The UK government, through the FCDO, has long supported AgDevCo’s efforts to promote sustainable agribusiness in Africa. UK Minister for Africa, Lord Collins of Highbury, emphasized the importance of stable food markets and income for farmers, noting the UK’s commitment of more than half of the $50 million total for AgDevCo Ventures, with the remainder expected from additional investors.
As of June 2024, AgDevCo has committed $210 million to 38 investments across 11 sub-Saharan African countries, including notable projects such as a $7.7 million investment in Kenyan agribusiness Agris, $7.2 million in Hatch Africa, and $10 million in Côte d’Ivoire’s Cashew Coast.
This new initiative promises to strengthen the continent’s agribusiness sector and foster long-term growth, creating economic opportunities and tackling climate challenges in Africa.