In a move underscoring the growing nexus between finance and technology, South African venture capital firm NEXT176 has announced a $400,000 investment in AgriTech startup Pumpkn. The deal aims to address the chronic financing shortfall faced by agricultural small and medium-sized enterprises (Agri-SMEs) across sub-Saharan Africa, which collectively seek billions in funding annually to sustain and scale their operations. With this investment, NEXT176 is betting on Pumpkn ’s ability to bridge a critical gap in the region’s agricultural ecosystem by providing innovative digital lending solutions.
The agricultural sector is vital to Africa’s economy, contributing between 20% and 40% of the continent’s gross domestic product (GDP). Despite its significance, farmers and Agri-SMEs face considerable barriers when accessing financing. Traditional lenders often perceive agriculture as high-risk due to fluctuating commodity prices, unpredictable weather patterns, and operational inefficiencies, resulting in prohibitive interest rates and limited access to affordable loans.
Pumpkn, a South African AgriTech company, seeks to disrupt this status quo by offering a streamlined platform that connects agricultural businesses with lenders. Through its digital infrastructure, Pumpkn aims to make financing more accessible and affordable, lowering the costs for both borrowers and lenders. Farmers and food processors can apply for loans ranging from R5,000 to R5 million and receive funding within 10 days — an expedited process compared to traditional banking channels.
“We are excited about this equity investment,” said Tramayne Monaghan, Chief Ventures Officer at NEXT176. “Our mission is to support disruptive businesses that empower underserved sectors with sustainable solutions. Pumpkn’s dedication to transforming the agricultural value chain, enhancing food security, and empowering women, youth, and previously disadvantaged groups perfectly aligns with our vision of sustainable impact.”
Monaghan’s emphasis on inclusivity is particularly pertinent given the socio-economic challenges in Africa’s agricultural sector. Over 90% of the businesses supported by Pumpkn come from historically disadvantaged backgrounds, while 61% are women-led. This focus on inclusivity, combined with Pumpkn’s innovative use of technology, positions the startup as a key player in addressing food insecurity, a growing crisis exacerbated by the COVID-19 pandemic. Over 57 million people in sub-Saharan Africa are at risk of hunger, highlighting the urgent need for scalable solutions in the agriculture industry.
Research conducted by Commercial Agriculture for Smallholders and Agribusiness, in collaboration with SAFIN (Smallholder and Agribusiness Finance and Investment Network), reveals that Agri-SMEs in sub-Saharan Africa collectively seek around $70 billion in financing. Yet, due to perceived risks, these enterprises often struggle to access loans. Pumpkn aims to change this dynamic by utilizing data analytics and industry insights to better assess the financial health and creditworthiness of Agri-SMEs, reducing the perceived risk for lenders.
The partnership with Moroccan-based FinTech investor First Circle Capital further strengthens Pumpkn’s position. Selma Ribica, Managing Partner at First Circle, commented on the investment, stating, “Banks and other lenders have a strong demand for Agri-SMEs with digital records and verifiable financials. Pumpkn’s founders, with their experience in finance and technology, are uniquely positioned to bring these lenders on board.”
For NEXT176, this investment reflects a broader strategy of leveraging technology to create sustainable and inclusive growth in underserved sectors. “Given the centrality of agriculture to Africa’s economy and the critical role Agri-SMEs play in maintaining food security, we believe Pumpkn can drive meaningful change,” added Monaghan.
As Pumpkn gears up to scale its platform, the startup hopes to attract more financial institutions to its ecosystem, ultimately empowering thousands of small farmers across Africa. By addressing long-standing financing challenges, Pumpkn is not just providing capital but also laying the groundwork for a more resilient and inclusive agricultural sector.
In an era where food security is increasingly precarious, this collaboration between NEXT176 and Pumpkn signals a promising step toward building a sustainable agricultural future in Africa.