Twiga Foods, a Nairobi-based agritech business that has been utilizing technology to establish supply chains in food and retail distribution on the continent, starting with Kenya, has raised $50 million in a Series C financing round to expand its efforts in the East African country and neighboring countries.
The latest funding included the majority of the startup’s Series B investors from 2019. Creadev, a family office and private equity business based in Paris and Nairobi, led the Series C round this time. Follow-on checks were also written by Africa-focused businesses TLcom Capital, IFC Ventures, DOB Equity, and Goldman Sachs’ offshoot Juven. OP Finnfund Global and Endeavor Catalyst Fund, both first-time investors, also took part.
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This fundraising follows the company’s $30 million Series B round in 2019, which included $23.75 million in equity and $6.25 million in debt. Twiga has raised approximately $100 million in loan and equity investment rounds, according to Crunchbase.
Twiga’s cap table was also consolidated in this round, with prior investors getting some liquidity via a $30 million secondary offer.
Twiga will invest a portion of the funds in a proof of concept to establish a new way of producing food on the continent that covers both ends of the traceability spectrum and on a large scale.
Twiga also intends to use some of the money to launch low-cost manufactured food and non-food goods under its own brand before the end of the year.
Why The Investors Invested
Twiga Foods’ existing traction is a crucial deciding factor for investors in this round. According to the company, over 100,000 clients use the B2B e-commerce food distribution platform in Kenya, which delivers over 600 metric tons of merchandise to 10,000+ stores every day.
Despite being impacted by the coronavirus pandemic, which forced Twiga to pause its projected pan-African expansion by Q3 2020, the startup made the best of the situation, according to Njonjo, and quadrupled its revenues between April last year and August 2021.
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Before the end of the year, the company, which already has over 1,000 employees, plans to expand to additional East African regions, including Uganda and Tanzania.
“We are deeply convinced in Twiga’s potential to revolutionize informal retail across Sub-Saharan Africa,” said Pierre Fauvet, Africa director at Creadev, in a statement.
“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.”
The company’s strong team has also been instrumental in the latest fund-raise. Before taking over from Grant Brooke, Njonjo was the most senior Kenyan at Coca Cola Company where he worked for 21 years, leading the multinational’s West and Central Africa business unit as President.
A Look At What Twiga Foods Does
Twiga, which was founded in 2014, had been busy connecting sellers and outlets with farmers via an app to get various agricultural produce for the majority of its operational lifetime.
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However, in order to grow revenue, the company began connecting FMCGs and manufacturers with Kenyan retailers in 2019, putting it in competition with regional rivals such as Sokowatch and MarketForce.
“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,” CEO Peter Njonjo said in an interview.
Nevertheless, Twiga’s efforts, according to Njonjo, are still centered on smallholder farmers. However, after years of working with them at scale and distributing fresh product, the Kenyan firm has noticed some issues, particularly in the traceability of some produce, such as tomatoes.
Twiga now intends to personally handle the value chains of some produce where traceability may be an issue in the future.
“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,” the CEO said, “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.”
The company is addressing this by creating a proof of concept that hopes to lower the price of popular domestic plant-based food products by more than 30%.
If the company succeeds in setting it up, Njonjo believes the model may be split off as a new company to continue a more asset-light expansion strategy.
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It is currently collaborating with development financing partners to determine how to grow its proof of concept, in which it will function as an off-taker to sell horticulture crops across East Africa beginning in February 2022.
Twiga intends to grow into other markets in the future, including Cote d’Ivoire, DRC Congo, Ghana, and Nigeria.
Twiga Foods Series C Twiga Foods Series C
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning write