Founders Factory Africa
Investing in agtech to catalyse change in the agriculture sector
Farm working with Synnefa in Mukurwe-Ini, Nyeri County, Kenya. Credit: Synnefa
Founders Factory Africa (FFA) and Small Foundation joined forces in April 2021 to design, build and scale 18 agtech start-ups across sub-Saharan Africa in the next five years. For FFA, this agtech initiative builds on work already underway through their initiatives in partnership with Founders Factory, Standard Bank (fintech) and Netcare (healthtech) to support, invest in, design and build successful ventures across Africa.
The partnership supports agtech entrepreneurs to innovate and improve the delivery of services to smallholder farmers and other stakeholders across the agriculture value chain.
Agtech is an underfunded sector that has historically been hard to commercialise. FFA, with the support of Small Foundation, are challenging these trends by investing in and working with agtech businesses, to demonstrate how this industry is a viable investment opportunity with the potential to improve prospects for the agriculture sector.
Our thesis is that this in turn encourages more entrepreneurs to start agriculture ventures, and more investors and other actors to support founders. Showing strong growth and promising returns allows smallholder farmers, rural clients and employees to make real improvements in their livelihoods, boosting the entire local economy.
In 2021, FFA invested in three agtech ventures, including Synnefa. FFA support combines direct cash investment with intensive, hands-on assistance to all entrepreneurs across product, design, investment, scale, and other key areas, to help them to achieve sustainable growth.
Providing targeted supports through Synnefa
Synnefa is a smart farming solutions company providing hardware and software that enable farmers to increase their yield and productivity, whilst reducing risk. Their solutions include solar-powered IoT-enabled greenhouses and irrigation systems, that provide real-time insights on farm health.
FFA supported development of Synnefa’s dashboard build and mobile app quality assurance, including hands-on software development coaching and management of third-party developers. FFA also generated a waitlist of 2,651 farmers for the project’s testing phase, and established agreements for Synnefa with a range of B2B partners, including three financial institutions, a research organisation, and farmer associations.
Through the Synnefa platform, over 6,000 farmers have been supported (both directly and through cooperatives) to increase productivity and gain better access to markets. As a result, farm revenues are expected to increase, providing income benefits to farmers and their employees.
”Building agtech in Africa isn’t easy, it’s a hard and long game. To grow and hit scale, you need a partner that understands this continent and puts in the time it will need to take you to scale. That partner is FFA and they are in it to win with you.” Synnefa, Kenya
What we’ve learned
Through the FFA and Small Foundation partnership, FFA have begun to develop a robust impact management system allowing them to assess the impact and key indicators that their entrepreneurs, and they themselves as a business, deliver on the continent.
While it is early in the partnership for meaningful impact assessment, in the shorter-term FFA is able to understand how their model is anticipated to impacts users, including smallholder farmers as a key stakeholder. This will provide a strong business case for other foundations, investors, and funders to support the ventures based on their sizeable impact.
The work of FFA will help to further understanding of under what circumstances an agtech portfolio can be commercially viable. Learnings can also be drawn from FFA’s fintech and healthtech portfolios. For Small Foundation, this work further develops our understanding of the commercial viability potential of a cash and service investment model such as FFA’s, as well as the role corporate strategic partners can play in service delivery with SMEs.