So you have what you are convinced is a winning idea for an agri start-up. But what about the funding? They say that necessity is the mother of invention, and young agripreneurs reveal there is no one single model when it comes to finding the money to get a business plan up and running.
A loan from family and friends, a grant from government or donors, or even prize money from a competition. All these sources can make the difference between an agribusiness idea remaining just that an idea and becoming a real venture, with a life of its own. The secret, according to young entrepreneurs taking part in a recent CTA workshop, is to have a great product, then make sure it receives maximum visibility, to increase your chances of attracting an investor.
Agrocenta, an online platform linking small-scale farmers and large farmer organisations in Ghana to bigger markets, documented its early work through social media, earning wide recognition for its idea.
“We were doing a lot of social media posting when we started so, surprisingly our first investors came from LinkedIn,” said co-founder and Chief Operations Officer, Michael Ocansey. “We were just posting our stories on things we were doing. People interested in impact investment in Africa read some of our stories and reached out to us. That’s how our first investments came up, and we also applied for competitions and won prize money, which we have invested in the business.’
However, investors can take a long lead time to put money into a start-up, so entrepreneurs must have a back-up plan to keep the business running in the meantime, warns Ocansey. “The secret is looking for alternative funding from out-of-the way sources,” he said.
Wennovation Hub is a pioneer innovation accelerator and tech incubator in Nigeria, which helps entrepreneurs to solve economic challenges in Africa. Co-founder Wole Odetayo’s innovative idea of using technology resources and networking to empower youths, soon brought in backers who were convinced by the reputation of the young man behind the start-up.
“Trust and integrity are important in business,” said Odetayo, 34. “I did not have disposable income when we started, but my partners outside Nigeria did. We started the company together because there was trust, and they could rely on me. Integrity matters a lot, and any young person in the ACP must embrace that to be able to attract the right people who will believe in them, and trust them with their resources.”
To date, Wennovation Hub has supported more than 300 start-up teams and over 6,000 young people. It has raised €2.2 million from its network to support start-ups across Nigeria.
Letia Kirwin, founding director of Loving Islands, a sustainable development organisation in Fiji focusing on technology driven organic value chain development, says a grant is a good option to avoid risky commercial loans that can burden a start-up agribusiness. Her company obtained a grant to deliver 12 months of training and development programmes for poor communities in Fiji as a pilot.
“From there we were able to generate income through the provision of contracted training, particularly with community organic farming, business development and value addition around coconut,” Kirwin said.
Bayseddo 2.0 is an African agricultural stock exchange on a web platform that links farmers and investors. The company received seed funding from CTA and telecoms giant, Orange Senegal to launch its platform.
“We had a sellable idea which made us attractive to accessing seed finance,” said Mamadou Sall, who launched the start-up. “We have used our model to mobilise more than €189,162 for farming in Senegal, where we are working with 75 family farmers.”
However, starting on a shoestring budget can also produce results. Farm Credibly, a Jamaican online business using blockchain technology to help unbanked farmers access loans and credit, has won several Pitch AgriHack competitions, which have helped it to start its operations.
“We are probably the only company in Jamaica to apply blockchain technology in agriculture. It is another reason why it is important to attend Pitch AgriHack events that CTA organises, because these put you in conversations with other people working in a similar space,” said company founder Varun Baker.
“We have not taken out any loan as yet. It has been really about bootstrapping. Luckily, I have a team that is willing to contribute beyond what we can pay them. It is small sources of grant funding that can help us to bootstrap our operations, and help us get past this proof of concept stage, so we can fully run a pilot.”
This article was created through a CTA-led process to document and share actionable knowledge on 'what works' for ACP agriculture. It capitalises on the insights, lessons and experiences of practitioners to inform and guide the implementation of agriculture for development projects.