A decade ago, a wave of startups started showing up in Kenya, India and other emerging markets tackling the issue of fragmented, under-resourced, under-financed food supply chains. They came into the market with tech, apps, logistics and financial services to reduce waste and recapture value.
A number of the early attempts couldn’t make their financials work, especially once the pandemic hit, and scaled back, like Brazil’s Frubana, or shut down, like Peru’s Favo and India’s Doodhwala. (Kenya’s Twiga falls somewhere in between.)
Venture capital investors seem to recognize that solving supply chain inefficiency in emerging markets remains a potentially lucrative opportunity. Tech-enabled “marketplaces” that connect food supply chains, from farmer to consumer, and deliver critical goods and services throughout the chain, were the top funding category for venture capital firms focused on agriculture and food startups last year, according to AgFunder’s“Developing markets agrifoodtech investment” report, out this week.
Of the $3.7 billion VC firms committed to emerging market food and ag startups, $561 million went to marketplaces and agriculture-focused fintech ventures. Indian rural lender SarvaGram raised a $67 million Series D equity round. Arya, also in India, secured $29 million to provide warehouse space and post-harvest credit to smallholder farmers. Brazil’s Agrolend, an agribusiness credit provider, raised a $53 million Series C round.
This year, Vietnam-based Techcoop’s closed a $70 million Series A equity and debt round to connect agribusinesses and farmer collectives to markets, supplies and financing.
Domestic vs. export
Founders and investors are bracing for turbulence from the Trump administration’s chaotic tariff rollout.
“Tariffs imposed by the US will disrupt established supply chains leading to increased costs for imported agricultural inputs and equipment,” said Avaana Capital’s Shruti Srivastava. “They will also trigger more volatility in global agri-commodity prices, potentially increase consumer food prices, and hurt margins for agrifood enterprises and their ability and willingness to innovate.”
They could also present an opportunity to focus on local and regional market needs. Techcoop has largely focused on high-value crops for export, like coffee and cashews. One of the new strategies it’s pursuing is climate insurance for farmers in its network. Kenya’s FarmWorks has found that there’s better, more reliable business in the sourcing and delivery of key local produce staples, like tomatoes and onions, over higher-value crops that get exported overseas.
From VC to SME
Investors are having to shift also. Investing in emerging market food supply chains requires a different approach than in more developed markets, where the agriculture sector has more large, commercial producers, generous government subsidies, and efficient logistics.
“Evolution of the agrifood venture capital space will induce a shift toward a [small business] fund structure rather than the Silicon Valley VC model,” predicted Sherief Kesseba of Cairo-based Climate Resilient Africa Fund.
