For a business that was started in 2015, this is a big deal. But then, expect more from South Africa’s Livestock Wealth, a crowdfarming startup that allows people to invest in livestock and earn from the sale of the offspring. The startup ’s latest investment, although by way of loan, is coming from South Africa ’s AlphaCode, Rand Merchant Investment Holdings (RMI)’s investment vehicle.
“We have granted Zande and Bright On, with whom we’ve been associated for over four years, around ZAR 10 Mn in supplier development loans each and Livestock Wealth has been granted ZAR 2 Mn,’’ says the head, AlphaCode Dominique Collett
Here Is The Deal
- AlphaCode, Rand Merchant Investment Holdings (RMI)’s incubation, acceleration and investment vehicle has awarded R23 million supplier development loans to three fintech startups, Zande Africa, Bright On Capital and Livestock Wealth.
Here Is Why Shezi’s Livestock Wealth Is Not Just Your Regular AgricTech Startup
- Livestock Wealth was only started in 2015 when Shezi realized there was an untapped commercial opportunity around livestock farming in South Africa that could leverage the African community’s close links to cattle.
- Currently, the startup has a turnover of ZAR 17 Mn with 71 staff.
- So far, the startup has over 2000 cows at various partner-farms valued at ZAR 40 Mn.
- There are currently over 1200 local and international investors on Livestock Wealth’s platform.
- The KwaZulu-Natal-born electro-mechanical engineer Ntuthuko Shezi’s Livestock Wealth offers people with no access to land, time or skills the opportunity to own livestock within a professionally managed farming operation.
- The Web and mobile application allow investors to invest their money in cows rather than in unit trusts, shares or exchange-traded funds.
- Through connecting its network of small-scale partner farmers to investors, the business model allows farmers who cannot afford to scale their business to access capital, while offering the investor an opportunity to invest in assets which are not influenced by financial market trends.
- Potential investors can buy online, from the partner farmer, while Livestock Wealth facilitates and manages the assets like an investment portfolio.
- In fact, Shezi did his research well: Cattle farming in South Africa is estimated to be worth around R142 billion, behind poultry, with the local beef industry generating an estimated $144 million in exports in 2017, according to data from Trade Map. This is the opportunity he pounced on.
- The growth in the livestock business was so overwhelming that the investment startup says it has now expanded its offerings to include an array of agricultural assets that can be owned by potential investors, including sugar cane plants, macadamia trees, and maize plants, and a separate option of investing in a connected garden system which grows all types of organic vegetables.
Read Also: South Africa’s Startup Livestock Wealth Is Now Worth More Than $7 Million
Why AlphaCode Chose Livestock Wealth
According to Dominique Collett, head of AlphaCode Livestock Wealth got the approval for the funding because these type of businesses hardly get the funding they need.
“As part of our commitment to partner and grow financial services startups, we’ve leveraged our supplier development spending to support them,”she said.
Apart from granting Livestock Wealth the development loan because it belongs to a sector that is largely underfunded, it appears Livestock Wealth’s loan need was easily considered because the startup had always, at all times, been part of the AlphaCode history.
“We have been part of AlphaCode since 2015 when we won R500 000 at a pitch evening. At that stage, we only had 26 customers. We have grown to over a thousand customers. Our platform has grown to become a dependable supplier to large off-takers such as Woolworths,” noted , CEO, Ntuthuko Shezi who also revealed that the investment will be channeled to build Livestock Wealth’s team.
“We have also grown beyond cows into a platform that connects farmers with investors where the investor owns real, high value, agricultural assets. These assets grow in the farmer’s care and earn profits when the products are sold at maturity,” he said.
About other startups that secured the funding
Bright On Capital
Bright on Capital is South Africa ‘s peer-to-peer online enterprise-lending startup, serving as an online market place allowing SMEs to raise working capital with ease from traditional and non-traditional lenders.
The startup has grown its SME lending book beyond R25 million and expects the lending book to exceed R50 million by early 2020, increasing to potentially R100 million in 2021. The team has grown from the initial two co-founders, Tsepo and Koena Headbush, to six permanent staff.
Zande
Zande started in 2016 with just two founders, Siya Ntutela and Mdu Thabethe. The business provides trade and merchant finance to spaza shops to enable stock purchases. It now has a turnover of R17 million with 71 staff and it is about to open a third depot in Orange Farm, south of Johannesburg, after growing its operations in Nelspruit and Ermelo.
Siya Ntutela the co-founder of the startup said the loan will be used to improve the firm’s technology platform as well as aid the company in setting up its third depot in South Africa.
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1 United States Dollar equals 15.25 South African Rand
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.