Nairobi-based food solutions startup – Twiga Foods just announced it has successfully secured a Series C round to scale the company’s efforts in the East African country that will include other neighboring countries. Today, the seven-year-old company has officially announced a $50 million Series C funding round aimed at enhancing Twiga’s supply chain technology.
Moreover, the supply chain in food and retail distribution on the continent of Africa is posing a lot of challenges, notably as a result of the fact that Africa’s retail markets are understood to be highly fragmented which consist more of small and informal retailers coupled with intermediaries. Yet, a different approach is given to this by developed countries, for instance, in the United States where consistent investment in this sphere has shaped a lot of things, hence, resulting in a drastic reduction of food items unlike Africa, precisely Kenya where a ton of tomatoes is about four times its cost in the U.S.
The latest funds come after Twiga’s $30 million Series B round, having raised $23.75 million equity and $6.25 million debt in 2019. Bringing the company’s fundraise to over $100 million in both debt and equity financing rounds, a source familiar with the matter noted.
Over the years, the subject startup has done its operation by connecting vendors and outlets with farmers via an app in order to access different agricultural produce. But this is taking a different dimension, as the company has begun to connect FMCGs and manufacturers with retailers in Kenya for the purpose of increased revenue as it competes with regional players like MarketForce and Sokowatch.
“We see ourselves as building a one-stop-shop for the informal retailer and all their needs. So that’s what we’re evolving into as a business”, Twiga’s CEO ‘Peter Njonjo’ said in an interview.
While the smallholder farmers remain key to Twiga’s operations, there are notable issues associated with these farmers that could be viewed as one of obvious concern, which was identified by Njonjo while working with the subject farmers at scale and distributing fresh produce. However, part of this is the traceability of some agricultural produce like tomatoes.
Since Twiga Foods is able to track food and produce from processing to distribution, it’s also been figured out that lapses still exist in the production end. For instance, when farmers decide to add appreciable pesticides to crops without the knowledge of B2B e-commerce food distributors, could mean unsafe consumption of such items, which, in turn, creates food safety concerns for the end-user.
In view of this, Twiga says it will spearhead the value chains of some produce where traceability could be a concern in the future. Hence, the Njonjo said:
“For us, it’s choosing value chains where you can manage the traceability issue while there are some value chains that will be harder to manage”. Adding that “The key thing is that we now have a more blended approach. It’s not just about working with small farmers; we still work with them but on some value chains. But we’re looking at having large commercial farms integrated into our supply chain”.
Further on this, the company says it’s investing in a proof of concept in order to develop an alternative way of producing food in Africa while covering both ends of traceability and mass scale. noting that this is geared towards price reduction that consumers pay precisely for popular domestic plant produce by over 30%.
In the meantime, Twiga says over 100,000 customers use its services across Kenya while delivering more than 600 metric tons of product to 10,000+ retailers on a daily basis. As the company seeks to use the funding to test out a new concept, it plans to use a part to roll out low-cost manufactured food in addition to non-food products under the company’s brand before the end of 2021.
Meanwhile, the latest funding round saw the participation of Series B investors which include others. However, the Series C round was led by Paris- and Nairobi-based family office and private equity firm Creadev. While others include Africa-focused firms TLcom, DOB Equity, IFC Ventures, and Goldman Sachs’ spinoff Juven, wrote follow-on checks too. New investors OP Finnfund Global and Endeavor Catalyst Fund also participated.
Based on this, Africa director at Creadev ‘Pierre Fauvet’ stated: “We are deeply convinced in Twiga’s potential to revolutionize informal retail across Sub-Saharan Africa”.
“Tapping into a $77 billion urban market on the continent, Twiga has gained significant traction since inception, leveraging on technology to optimize the food supply chain in African cities and constantly innovating to better tackle logistics, commercial, social and environmental challenges”.
Nonetheless, as the company seeks to expand into other East African markets, notably Tanzania and Uganda before the end of this year, efforts are also made with the development of finance partners via its proof of concept that will position the company as an off-taker that will sell horticulture crops across East Africa from February 2022.
“We’ve been fairly successful in Kenya. So, we want to consolidate our dominant position, clear out our proof of concept and expand to the neighboring countries”, the company’s CEO remarked.
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