Nigerian agritech Releaf secures more capital as it launches new tech for food processing • TechCrunch
Releaf, a Nigerian agritech startup that supplies ingredients (starting with palm oil) to consumer goods manufacturers and their food factories, was awarded $3.3 million in a pre- Series A oversubscribed.
The Jack Ma Foundation-backed startup, which announced a $4.2 million fundraising round (including a $1.5 million grant) in September 2021, said the funding would support the launch of two new technologies: Kraken II and SITE.
Releaf focuses on value chains where smaller factories are located close to smallholder farmers, enabling them to achieve higher processing yields and lower logistics costs. Oil palm is the first, and for now, the only crop Releaf is working on; the oil palm market is a $3 billion market that includes more than 4 million smallholder farmers. These farmers drive about 80% of the crop production using stones or inefficient equipment, responsible for the production of poor quality vegetable oil. This is why agritech has launched Kraken, its static palm nut sheller designed to process this harvest and efficiently extract “high quality” vegetable oil for farmers.
“Our seed round was basically about getting the first evolution of Kraken and proving that we can be the first company to take several species of very low quality palm nuts and turn them into high quality palm kernel oil,” Uzoma Ayogu, co-founder and CTO, told TechCrunch in an interview.
“After proving this, we needed to figure out the best way to dynamically place this technology, and over the past two months we have made progress in moving Kraken from static to portable and significantly reducing costs. [Kraken II] while adding new products [SITE] to complement the suite of technologies we already have.
Kraken II is a cheaper, mobile version of the palm nut sheller, costing half the cost and eliminating over 80% of margin erosion costs. On the other hand, SITE is a geospatial mapping application that discloses food processing assets. SITE was developed in collaboration with Professor David Lobell of Stanford University, MacArthur Scholar and Director of the Center for Food Security and the Environment, whose team refined the process for identifying the age of palm trees oil in Nigeria.
According to Ayogu, YC-backed Releaf understood that construction technology was not enough to get the best margins for farmers and manufacturers, but that the technology had to be in the right places and at the right season in different parts of Nigeria. . Hence the reason for Kraken’s portability and SITE’s placement and route planning capabilities. The combination of the two allows Uyo-based Releaf to target the best opportunities in Nigeria’s palm oil belt rather than just sourcing crops within 100 kilometers of a fixed processing site. like existing food processors.
“The biggest advantage for them [farmers] with this new evolution of Kraken and SITE is that many offer farmers mediocre prices because they have to pay dearly for logistics. But now that we can eliminate 80% of the logistics costs and process much closer to the farmers, we can pass a lot of those profits on to them while keeping more of it for ourselves while even improving the quality of the end product. said Ayogu, who co-founded Releaf with CEO Ikenna Nzewi, explaining why these new technologies are important for farmers.
In the Nigerian food processing industry, there is more competition downstream, dominated mainly by intermediaries and traders, usually individual or few companies that tend to be closer to consumers and have a better pricing power. It’s different for Releaf, which operates upstream and has less competition, at least when the application of technology is considered. Offering farmers better prices and providing working capital are two ways Releaf is gaining market share in this segment, Ayogu noted.
The startup has used its supply chain technology to process more than 10 million kilograms of palm nuts since launching Kraken in 2021. As a result, Releaf has increased its year-over-year monthly revenue 7x the other, which is expected to increase this year. following securing over $100 million in supply contracts from consumer goods manufacturers in Nigeria. With this funding, the agritech, whose valuation has tripled since its funding round, will seek to expand the regions where it processes palm and expand the types of crops it works with.
“Our information has shown that downstream is capped by supply, which is upstream,” the CTO said. “And so our focus is through first-mover advantage with differentiated technology, we can capture a significant amount of supply in a fragmented market and then verticalize over time to increase margins and market position.”
The pre-Series A funding was led by Samurai Incubate Africa, which reinvested after leading the Releaf seed round, with participation from Consonance Investment Managers. Stephen Pagliuca (chairman of Bain Capital) and Jeff Ubben (board member of the World Wildlife Fund and founder of Inclusive Capital Partners) also invested. Rena Yoneyama, Managing Partner of Samurai Incubate Africa, speaking on the investment, said, “Releaf’s success with its Kraken pilot validates their thesis, and we are excited to continue supporting their ambitious vision of building digital chains. efficient supplies in the African agricultural market.