In the last five years, tech companies in Nigeria have raised over $2 billion in investments and agritech companies have only received $300 million of this funding. This is despite the increased activities in the segment often associated with the fintech industry.
In the same period, there have been more agritech companies offering solutions across the value chains and in so doing creating opportunities for employment and growing the number of young Nigerians involved in the agric business. The only challenge, according to Jennifer Onyebuagu, co-founder and chief commercial officer of agritech firm Voriancorelli, has been convincing investors to increase the size of their investments as they have done across other segments of the tech ecosystem.
This is the case in countries like India where investors are increasingly recognising the potential of agritech ventures to yield returns. Growing at the rate of 25 percent year-on-year, India currently hosts more than 450 startups in the agritech sector. According to a report, as of June 2019, the sector has received more than $248 million. In 2021, companies like Zomato which has been listed on the Indian stock exchange are among the unicorns in the country.
Read Also: Rufus Udechukwu: Building agritech business that solves market problems
Experts at the Agritech Decoded, a webinar conference hosted by Voriancorelli, an agritech that bridges the gap between businesses within the agricultural ecosystem, said Nigerian startups in the sector can scale their valuation with some tweaks in how they approach the business.
Sidhartha Samal, Vice President, Global Lead, eCommerce and Digital Customer Engagement, Olam, said one of the approaches is to fully embrace digital technology to improve farming and food processes as well as for customer engagement.
“Solve a genuine problem. What are the linkages that exist and how can you integrate them into a system that works,” Samal said.
Embracing digital also means deploying data-based solutions to challenges in the sector says Kunal Prasad, co-founder and COO of CropIn, an Indian agritech company. By leveraging data, agritech startups can create new products that address the gaps in the agricultural sector.
Babatunde Obrimah, COO of the Fintech Association of Nigeria (FintechNG) said the opportunities that tech companies have are many and the market in the agric value chain is large.
“Agritech companies can look at areas where they can produce an impact and they can collaborate with other fintechs like in insurance and payments,” Obrimah said.
While addressing market problems and collaboration are important, Anish Jain, Chief Treasury Officer, ETG Group, an African-focused agribusiness company, said liquidity is critical to the success of startups in the sector. Having ready cash is what determines how quickly the company is able to access sufficient farm produce with high quality that is ready for the market and export.
Apart from liquidity, startups should be able to anticipate the risks in the market and use them to their advantage.
“Keep strong partners with you to provide short-term funding to meet cash flow,” Jain said.
