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Africa’s agrifood venture capital ecosystem is entering a decisive phase in 2025, as investors, founders, and policymakers reassess how innovation should scale across the continent. At a time when less than 5% of global venture capital flows to Africa, leading voices in the sector argue that replicating the Silicon Valley growth trajectory is neither realistic nor desirable for African food and agriculture startups. Instead, the focus is shifting toward commercial viability, capital efficiency, and solutions rooted in local realities.
This perspective was outlined by Sherief Kesseba, managing partner at the Climate Resilient Africa Fund (CRAF), in a recent interview with AgFunderNews, where he analyzed the state of the market, investment dynamics, and the opportunities emerging from deep structural inefficiencies across Africa’s agrifood systems. According to Kesseba, while impact remains essential, relying on impact alone is not sufficient to build a sustainable startup ecosystem.
Africa is gradually moving away from a model dominated by grants and donations toward one that requires startups to be venture-investable and financially sound. This transition, he noted, is happening in parallel with rapid changes in the agrifood sector, driven by climate pressure, food security needs, and evolving global supply chains. The combination creates conditions for significant growth, but only if companies can demonstrate that their business models work at the unit level.
From an investment perspective, 2025 proved to be a difficult year for African startups. Capital flows remained constrained, with much of the available funding coming from development finance institutions (DFIs). These institutions have played a critical role in de-risking investments in Africa, but Kesseba emphasized that they cannot be the sole source of capital if the ecosystem is to mature.
For sustainable growth, commercial capital must enter the space. That shift would allow DFIs to focus on their intended role as providers of concessional and catalytic capital, supporting early-stage innovation and absorbing risk that private investors are unwilling to take alone. Without this balance, the ecosystem risks stagnation.
Despite these headwinds, the agrifood sector continues to attract attention due to the scale of the challenge it addresses. Africa faces an annual agricultural financing gap estimated between $75 billion and $100 billion, reflecting underinvestment across production, logistics, processing, and market access. For many venture capitalists, these inefficiencies represent not only obstacles but also venture-scale opportunities.
One of the most notable shifts in recent years has been the emergence of sector-focused funds with deep expertise in agriculture, climate, and food systems. In the past, Africa’s startup ecosystem was shaped largely by generalist investors who applied models developed in the Global North. According to Kesseba, that approach often failed to account for the realities faced by African farmers and agribusinesses.
Today, a new generation of investors is grounding its strategy in an understanding of farmer needs, supply chain constraints, and local market dynamics. This has led to a growing recognition that Africa does not need hypergrowth at all costs. Instead, startups must prove that unit economics are viable before pursuing scale.
“The idea that faster growth automatically leads to success has been challenged,” Kesseba explained. Startups that expand too quickly without controlling costs often see margins erode, particularly because the first mile and last mile of agricultural supply chains remain expensive and complex.
CRAF focuses on early-stage startups working at the intersection of food systems, climate solutions, and the nature economy. In 2025, the fund participated in several deals that illustrate its investment philosophy.
One of them was Winich Farms, a Nigerian agritech company providing financial services to smallholder farmers and small-scale offtakers. By facilitating access to credit and formal financial systems, the company has helped increase user revenues and integrate informal actors into the broader economy. According to Kesseba, this type of inclusion can have a significant multiplier effect on growth.
Another investment was in Sea Gardener, an Egyptian startup that developed an innovative aquaculture system enabling the production and sale of shellfish domestically and for export to Europe and North America. The investment highlighted the untapped potential of Egypt’s extensive coastline. While countries such as Morocco and Tunisia export roughly $1 billion worth of shellfish annually, Egypt has historically lagged behind despite its natural advantages.
Although CRAF’s ticket sizes—ranging from $100,000 to $200,000—are relatively small, the fund views these investments as strategic entry points into scalable markets with strong fundamentals.
Beyond funding, regulatory change emerged as a key driver of innovation in 2025. New European regulations around traceability, deforestation, and environmental impact are reshaping global supply chains, forcing agrifood companies to meet stricter standards.
This shift has created opportunities for African startups that can provide data-driven solutions. Kesseba pointed to companies like Vais, an Egyptian firm using satellite technology to deliver actionable insights to farmers. These tools help producers align with international requirements while improving productivity and sustainability.
In this context, technology alone is no longer sufficient. Startups must also demonstrate the ability to integrate their solutions into complex supply chains and comply with evolving global norms.
Expectations for 2026 center on a more targeted approach to growth. Investors are increasingly interested in models that organize clusters of smallholder farmers, raise incomes, and connect producers to markets and credit. Supply chain innovations—ranging from logistics and cold storage to processing infrastructure—are also high on the agenda.
Climate-smart agriculture remains another priority, particularly solutions that improve resilience while offering a clear path to scale. For venture capitalists, the inefficiencies embedded in Africa’s agrifood systems are not deterrents but signals of opportunity.
When assessing potential investments, Kesseba stressed that founders remain the most critical factor. Investors look for teams with a clear vision, strong execution capabilities, and a commitment to capital efficiency rather than assumptions of abundant funding.
Impact is still important, but it must be paired with sustainable unit economics. The high mortality rate among African agrifood startups, he argued, is often linked to neglecting margins in favor of headline growth. Startups that solve one part of the value chain through technology but ignore cost structures frequently struggle as they scale.
The emerging consensus among investors is that Africa’s agrifood ecosystem does not need to mirror Silicon Valley to succeed. By focusing on realistic growth, efficient use of capital, and solutions tailored to local contexts, the sector can unlock its vast potential and attract a broader range of long-term investors.
