After a decade of rapid capital inflows into food systems innovation, agri-food startups in Nigeria and across the world are now navigating a significantly tougher fundraising environment, as investors become more cautious following business failures, rising interest rates, and broader market corrections.
New findings from the Financing Agri-SMEs in Africa initiative show that while investor interest in agricultural innovation remains strong, access to funding has become more selective, competitive, and highly scrutinised, particularly for early-stage enterprises.
The 2026 study, which tracked 175 Africa-focused agri-SME funds, revealed that 117 funds are currently raising capital with a combined target of about $6 billion. However, approximately $4.6 billion of that target is yet to be secured, underscoring a persistent financing gap within Africa’s agricultural sector.
The report projects that the market could eventually stabilise between $3.2 billion and $4.9 billion, depending on the level of catalytic funding required to attract commercial investors into the space. It also highlights a structural shift in the investment ecosystem, noting that two-thirds of emerging fund managers are now based in Africa, compared to just 21 per cent in previous generations.
In addition, the share of African-nationality fund managers has risen from 26 per cent to 44 per cent, while women-led funds now account for 32 per cent of those currently fundraising, up from 9 per cent in earlier cycles where funds were fully raised.
Despite these gains, the report warns that several structural challenges continue to limit financing for local agribusinesses. About 86 per cent of funds plan to invest mainly in hard currency, while 94 per cent of the surveyed funds are denominated in dollars or euros. Only 14 per cent intend to deploy capital in local currencies, exposing agribusinesses to exchange rate risks and restricting access to affordable local financing.
The study also notes a growing preference for smaller investments, with nearly 60 per cent of targeted capital directed toward deals below $2 million as investors shift focus toward early-stage ventures that were previously underserved by traditional financiers.
According to the report, about $1.15 billion in anchor investments could unlock the broader $6 billion fundraising pipeline through blended finance structures and leverage mechanisms aimed at crowding in private capital.
“Our work is not just about deploying more capital; it is about making capital work better,” the report stated.
The tightening investment climate is also being felt beyond Africa. At the F&A NEXT Summit in Wageningen, Netherlands, founders and investors described a more demanding global fundraising environment where capital remains available but scrutiny has increased significantly.
Some analysts argue that the current slowdown reflects a normal investment cycle following years of rapid expansion rather than a prolonged crisis.
According to the 2026 Global AgriFoodTech Investment Report by AgFunder, global agrifood tech funding reached $16.2 billion in 2025, remaining largely stable year-on-year but showing major shifts in where capital is flowing. Investment in upstream farm-level technologies rose 7 per cent to $9 billion, while funding for grocery delivery startups has declined sharply from previous peak levels.
Debt financing is also becoming more prominent, accounting for 18.2 per cent of total agrifood tech funding in 2025, its highest level in a decade, reflecting the increasing maturity and revenue stability of some agritech companies.
The report further shows that deep technologies such as artificial intelligence, biotechnology, and gene editing now account for between 21 and 32 per cent of global agrifood investment, signalling a shift toward science-driven innovation.
Meanwhile, the World Bank Group notes that embedded finance models are reshaping access to credit for small and medium-sized enterprises by using digital transaction data and supply-chain records, rather than traditional collateral, to assess borrower risk.
