Twiga Foods, a Kenyan-based startup that connects smallholder farmers to retail vendors, has secured $10 million capital from investors led by the International Finance Corporation (IFC) – a member of the World Bank Group, Venture Capital TLcom and the Global Agriculture and Food Security Program (GAFSP).
Participants in the round include Twiga’s previous investors DOB Equity, 1776, Adolph H Lundin and Warmda Capital. The startup said it plans to use the new investment to expand its “operations and offer new services” such as including fast moving consumer goods (FMCG) and processed food to its product lineup.
Twiga Foods is a business-to-business distribution platform that uses mobile phone technology to match buyers for farm produce with the suppliers in a number of fruit and vegetable markets in Africa. Vendors order fresh produce from Twiga’s m-commerce directly from farmers across Kenya. The system takes care of pricing, quality control, payment, and logistics across both parties – vendors and farmers – in a subtle win-win scenario. Twiga delivers the produce at the doorsteps of the vendors for free, while the farmers enjoy a guaranteed access to a transparent and fairly priced mobile marketplace where they easily sell of their produce. Matching the demand and supply substantially allows Twiga to reduce waste and crucially reduce food prices for end consumers.
The $10 million investment is issued in the form of convertible notes and will later be available as equity, said IFC regional head Wale Ayeni who will join the startup’s board with TLcom Founder and Managing Partner Maurizio Caio, as part of the deal.
Ayeni identified that IFC is happy with Twiga’s accomplishments and creativity so far; its use of a digital platform to serve a mass market in a sector that has “not really been touched.” He also admired Twiga’s position to create more revenue by expanding to other consumer products in the B2B supply chain.
Since it became operational in 2014, Twiga has grown its network to around 13,000 farmers and 6,000 vendors in Kenya. It kicked off with matching banana farmers to vendors, but now includes other produce like tomatoes, potato, mango, onion, and cabbage. Parties coordinate good exchange on the mobile app and making payments via M-Pesa mobile money. The company generates revenues from profits on each product it buys and sells. It could buy mangoes at 13 Shillings ($.13) a kilo and sell at 23 Shillings ($.23) a kilo.
Agtech has become a top sector for startups in Africa. Nigeria’s Farmcrowdy and Ghana’s Agrocenta are some of the companies that have raised capital from various investors for mobile-based apps that coordinate logistics, payments, and capital across food markets and farmers in the continent.
Earlier this year, Twiga Foods went into a deal with IBM Africa to introduce blockchain to its client network. Last year, the startup raised $10.3 million investment in a round led by Wamda Capital.
The new investment and proposed product expansion will allow Twiga Foods to explore offering additional services, co-founder and CEO Grant Brooke said. “We will continue in our mission to provide affordable, quality, and safe food to Kenya’s urban consumers, and reliable markets for farmers across the country.” However, Brooke added that the company is researching and dabbling in Tanzania.