AgDevCo Ventures, a new early-stage investment vehicle within the AgDevCo group, has reached a first close at $49m. The fund will invest between $1m and $3m in farming and agri-processing SMEs across East Africa, targeting a segment that has struggled to attract long-term capital.

The first close brings together $10m in subordinated debt from the International Fund for Agricultural Development (IFAD), $11.25m from a consortium of senior lenders led by the Isenberg Family Charitable Foundation, and a $28m equity injection from AgDevCo using funds from the UK’s Foreign, Commonwealth & Development Office (FCDO).

The senior lender consortium includes the Small Foundation, A to Z Impact, the Rabo Foundation and the Netri Fundación Privada.

AgDevCo Ventures was created to complement AgDevCo’s main strategy, which focuses on later-stage companies with larger capital needs. The new vehicle addresses a gap that has historically made it difficult for early-stage agribusinesses to access patient, long-term financing.

The fund is led by Christine Mwangi, who has spent six years with AgDevCo’s East African team in Nairobi. Its board and investment committee include East African investors Maurice Nduranu, Ezra Musoke, Kim Kamarebe and Abel Boreto.

AgDevCo Ventures said it expects to announce its first investments later in 2026. Over the next decade, it projects benefits for more than 128,000 smallholder farmers and the creation of approximately 2,900 full-time jobs. The portfolio will target a high proportion of Black African-owned and led businesses, as well as businesses owned and led by women.

The transaction is structured to attract private capital into early-stage agriculture by layering different risk tranches. AgDevCo’s equity, sourced from FCDO funds, sits in a first-loss position. IFAD’s subordinated debt comes next, followed by the senior lender consortium. This structure is designed to reduce risk for private and institutional investors while stretching development finance further.

Stefan Freeman, head of investments at Ceniarth and a member of the senior lender consortium, said the vehicle “fills a critical financing gap for high-potential but underserved agri-SMEs”.

“Its approach to supporting these businesses is unique in the sector, combining an early-stage focus with long-term, flexible mezzanine financing and tailored technical assistance,” Freeman said. “This is precisely the gap that patient, concessional capital and blended finance are built to close.”

Daniel Hulls, AgDevCo CEO and AgDevCo Ventures chair, noted that the initiative returns the group to the part of the market where it began almost two decades ago. “We’re especially pleased to be bringing private investors into this round, which makes development finance go further,” he said.

The UK government is a major shareholder in AgDevCo through FCDO. Kirsty McNeill MP, the UK minister of state for international development and Africa, framed the investment as part of broader efforts to strengthen food security and supply chains.

“The UK is backing ambitious agribusinesses in Africa to get the investment they need to grow, create jobs, and strengthen food security and supply chains,” McNeill said. “We’ve done just that with AgDevCo Ventures, helping to bring on board other investors to back Africa’s growing companies and expertise.”

IFAD associate vice-president Donal Brown said the institution expects the fund’s investments to “support rural transformation in East Africa” and complement its existing work.

Early-stage agri-SMEs in East Africa face a well-documented financing gap. Commercial banks typically require collateral and shorter tenors than agricultural businesses can support, while microfinance institutions provide amounts too small for capital-intensive agri-processing operations. Impact investors have historically gravitated toward later-stage deals with clearer exit pathways and stronger balance sheets.

AgDevCo Ventures is one of a small number of vehicles explicitly targeting this middle space with flexible mezzanine capital. The fund’s ability to deploy patient capital without demanding rapid exit timelines could prove significant, but it will also face the familiar challenges of sourcing investable businesses, managing agricultural risk and building technical capacity across dozens of portfolio companies.

The fund did not disclose expected financial returns or the specific countries it will prioritise within East Africa, though AgDevCo’s existing portfolio spans Tanzania, Uganda, Kenya, Rwanda and Zambia.