Twiga Foods, the Kenya-based food logistics startup, has raised $23.7 million in a Series B round led by US investment bank Goldman Sachs. The round also saw participation from existing investors TLcom Capital, International Finance Corporation and Creadev. The company also raised an additional $6 million in debt. The latest funding follows a $10 million round last November.
Here Is The Deal
- The public disclosure of the deal today will also reveal an additional Sh618 million ($6 million) debt from the Overseas Private Investment Corporation (Opic) and the Switzerland-based AlphaMundi, which specialises in impact investing.
- The deal Goldman Sachs’ quest for deals in Africa and international institutional clients looking to invest in the continent as the investment bank grapples with a slump in revenue.
- It marks Goldman Sachs first major deal in a Kenyan firm.
- Twiga, which buys produce from a network of farmers and delivers it to thousands of informal vendors, has recently become a magnet for foreign investors, making it one of the most funded start-ups in the region.
- The new round of equity funding will scale up Twiga Foods’ use of technology and inject efficiency into its food distribution model, ultimately boosting consumption of fresh, quality produce while lowering their cost.
- The earlier fundraising plans saw IFC invest Sh1 billion in Twiga Foods, which upped its food handling processes to global standards.
Why The Investor Invested
“Goldman Sachs is getting a stake and it will be the lead institutional investor in Twiga. It is providing the bulk of the $23.75 million, said Peter Njonjo, who became the company’s chief executive in March after stepping down as president of Coca-Cola West and Central Africa.
“This funding enables us to invest in our technology and organisation to tackle the inefficiencies in Africa’s domestic food production and distribution,” he added.
IFC, which is the World Bank’s investment arm, TLCom Capital, and Creadev are already existing shareholders having injected hundreds of millions of shillings into Twiga.
Opic supports US businesses investing in emerging markets by offering loans and guarantees.
French-based investor Creadev is controlled by Mulliez family, one of the richest in the world, had earlier in the year bought a Sh500 million stake in Twiga Foods.
Venture capitalist TLCom Capital prefers to invest in tech companies in their early to growth stages, and its deal with Twiga comes as the Kenyan start-up plans to beef up technology in its next phase of growth.
Goldman Sachs reckons that food distribution will be big business in Africa given that its population is set to double over the next three decades, creating the need for affordable food sources and guaranteed markets for farmers.
“We are delighted to be backing Peter and the highly capable team as they scale operations and drive sustainable access to lower quality food on the continent,” said Jules Frebault, the Africa head at Goldman Sachs in a statement.
Goldman Sachs is beefing up its African operations as global rivals scale back.
Other investment banks, including Credit Suisse and Barclays, have slimmed down or exited their African operations altogether.
What Twiga Foods Does
Twiga was established in 2014 and runs a cashless platform where it receives fruit and vegetables from 17, 000 farms for direct delivery to more than 8,500 vendors.
Twiga’s business model offers famers predictable rate for their produce, timely payments, escape the troubles of delivering to the market and avoiding the network of middlemen. Vendors, on the other end of the supply chain, are assured of a reliable supply of produce.
Since succeeding co-founder Grant Brooke as CEO earlier in this year, Mr Njonjo has focused on raising additional capital to help ensure that the company consolidates its Kenya operations while laying the groundwork to spread its wings into other African markets.
“We are using technology to get all these retailers onto a platform so that when they order, we can consolidate that buying power,” Mr Njonjo said.
Besides fresh produce, Twiga has in recent months ventured into processed foods like rice, maize flour, cooking oil, milk, juice and sugar following demand from manufacturers keen on tapping into the firm’s technology-based distribution network.
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