The coronavirus pandemic is enabling increasing investment in agritech, edtech, ecommerce and healthcare, and the exploration of previously ignored or underfunded territories. Just added to the list of funded startups in Africa this year is Tanzania’s agri-tech company East Africa Fruits which has remarkably closed a Series A funding round worth US$3.1 million, after a long investment-drought period of seven years as it aims to build essential supply chain infrastructure and better transport fresh produce directly from farms to urban marketplaces.

“The completion of our Series A funding opens up incredible opportunities for East Africa Fruits,” said Elia Timotheo, co-founder East Africa Fruits. “We’re eager to scale our operations, expand the reach of our smallholder farmer network and our distribution footprint, and ultimately to demonstrate real impact in the lives of local farmers and informal food vendors.”

Here Is All You Need To Know

• While $2 million came in the form of Series A equity funding from investors Goodwell, FINCA Ventures and elea, roughly $1.1 million came by the way of debt. MCE Social Capital also contributed a portion of the debt.
• With the funding, the company will acquire new machinery for its main distribution centre and build essential infrastructure and technology to collect, store and distribute produce to match demand more accurately.
• It also plans to establish collection centers in farming communities. Those centers will eventually become hubs for expanding farmer services.
• East Africa Fruits further plans to use its funding round to reach 10,000 small farmers and 6,000 vendors in the next three years.
• In 2015, the startup was a winner in the African Entrepreneurship Award’s Environment category. With $150,000 of seed funding, and with mentoring along the journey, Elia is now helping Tanzanian farmers improve their lives by improving their bottom line.

Why The Investors Invested

One would expect investors in this round to be a bit skeptical, especially in the raging coronavirus pandemic but Joel Wanjohi, associate partner and lead investment manager for East Africa at Goodwell Investments, said he had never been so excited that East Africa Fruits is now among his company’s first agricultural investments as the venture capital firm broadens its portfolio to address food security. His statement is not least expected as a similar startup in the neighboring Kenya, Twiga Foods, doing similar things like East Africa Fruits landed a $24 million funding in December 2019. 

Read also:Invasive Locusts Threaten Agriculture, Aviation in East Africa.

“Tanzania is no exception to the food security problem: the majority of produce never reaches the market as a result of food wastage caused by poor food transportation, lack of cold chain food storage and inadequate market information for farmers,” he said.

“Our investment in East Africa Fruits will help address these challenges. The substantial impact on enhancing food security and empowering the farmers through market linkage, driven by outstanding, local entrepreneurs, makes EAF a perfect match to our investment philosophy.”

According to FINCA Ventures’ Alex Evangelides, “there’s significant room for them to grow, as a profitable, sustainable, high-growth small-to-mid-sized business.” 

Read also:Nestlé Helps African Coffee Farmers Imbibe Sustainable Agriculture

A Look At What East Africa Fruits Does

Founded by social entrepreneur Elia Timotheo in 2013, Tanzania’s East Africa Fruits is a B2B e-commerce platform that works with smallholder farmers to acquire, store and deliver goods from farm to market. Its business’ basic model centers around aggregation, process and value addition, technology, distribution.

“We aggregate demand and deliver a wide range of fresh produce directly from farms to retailers, wholesalers, local vendors, restaurants and cafés, hotels and exporters,” the startup noted on its website. 

The company estimates that half of crops grown in Tanzania are wasted because of inefficient supply chains and an unreliable cold chain for storing food. East Africa Fruits says its cold trucks and warehouses cut food waste while its logistics service improves supply chain efficiency and transparency, keeping food prices down.

The seven-year-old company is profitable, but lack of working capital and growth capital have restricted it rate of expansion.

Read also: Lessons Twiga Foods Has Taught Startups About Disrupting Africa’s Food Supply Chain

A Great Win At Last For Elia Timotheo, Son Of A Former Food Entrepreneur

Quite inspiring is the story of Elia Timotheo, founder of East Africa Fruits who once had a stint at food business while young. In an interview with one of the investors in this round, FINCA Ventures, back in January 2020, Elia said his first motivation was to never be employed. 

“I wanted to run a business like my mother,” he said. “Despite not going to school, my mom began her first business in the 1980s selling fast food in the Kilimanjaro area of Tanzania. I grew up watching and helping her, a hardworking single mother, who now has five restaurants. She inspired me and passed along the fundamentals of business, but I didn’t know what kind of enterprise I wanted to run.”

“While I was an undergraduate, I had the opportunity to work with the Ministry of Agriculture. Through this, I participated in a program that allowed me to meet with farmers to understand their challenges and what the government could be doing to address their agricultural needs,” he further added. 

Elia said the idea of East Africa Fruits started when his program team visited over 3,000 farmers across Tanzania, and together observed the patterns around food waste and transactional middlemen, all of which resulted in reduced incomes for smallholders. 

“This was the “ah-ha” moment that put me on a mission to develop a business solution to eliminating post-harvest losses and increasing incomes for small-scale farmers,” he said.

Looking back, he said: 

“When I first got into the business, I began as a middleman, or broker, to understand the ecosystem. For a farmer to sell produce, he or she must sell to a broker in the local village. For that produce to reach a commercial center, like Dar es Salaam — which may be hundreds of miles away — the village broker must then sell to a transporter who will take the produce to market. There may be only one truck to choose from, so the transporter has the upper hand in price negotiations. Once in-market, the produce passes through another broker who negotiates selling to consumers…All of this creates inefficiency and waste, and this is happening to most farming businesses in Tanzania. At East Africa Fruits, we reduce this complexity in several ways.”

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 writer