Khulisani Ventures, the venture capital arm of the Mineworkers Investment Company (MIO), has identified Livestock Wealth, a South African crowd-farming startup, as the “ideal illustration” of the type of company it hopes to back.
The MIO’s chief investment officer, Nchaupe Khaole, has verified that R10 million has been invested in Livestock Wealth by Khulisani Ventures. Livestock Wealth was established in Johannesburg by Ntuthuko Shezi, and it provides financing specifically for livestock. It facilitates the transfer of capital from investors to farmers in need of financing via the cattle investment medium.
Livestock Wealth was established in Johannesburg by Ntuthuko Shezi
“Inventions and innovations are the engines that power the growth of our economy,” remarks Khaole. “Livestock Wealth is one such entity, with innovation at its heart. It is the perfect example of the kind of companies we continue to seek out mutually beneficial partnerships with.”
A Look At What The Startup Does
Since its inception in 2015, the company has guided tens of thousands of investors toward real, growing assets such as livestock, free-range oxen, organic garden tunnels, and macadamia trees.
Thato Ntseare, the manager of MIC’s impact investments, cites Livestock Wealth’s ease of use as a major factor in the company’s appeal. Livestock Wealth makes it possible for anyone to purchase and own real profit-earning assets, while also assisting farmers in the cultivation and maintenance of such assets prior to their sale. To expand, “they have embraced innovation and recognised that developing inventive answers to challenges is the best approach,” he says.
Shezi, who is also Livestock Wealth’s CEO, believes that the collaboration with MIC will be essential in helping his firm achieve its expansion goals, including as increasing its exposure to new markets and capitalising on emerging possibilities.
“Farming is one of the oldest pillars of generational wealth. We understood this at Livestock Wealth and created a platform to make investment in farming accessible to anyone, anywhere. Which is why we, at Livestock Wealth, are so thrilled about this partnership with Khulisani Ventures. MIC’s investment in our company will allow us to scale our technology offering and prepare for growth beyond South Africa.:
Khulisani Ventures claims in a press release that it is dedicated to helping black-owned businesses of all sizes and stages realise their full growth potential.
Livestock Wealth South African Livestock Wealth South African
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexpert
With the latest investment coming from Rand Merchant Investment Holdings (RMI), South Africa’s ‘crowd farming’ startup, Livestock Wealth is now worth more than $7 million dollars ( R100 million), far surpassing the goal it set for itself at its launch far back in 2015.
Agri-tech entrepreneur and CEO of Livestock Wealth Ntuthuko Shezi is confident that this is just the beginning. His may have a point here. His startup has just further landed a business deal with retail giant Woolworths which it is supplying free-range beef.
A Look At The Funding
Although the terms of the funding were not disclosed, Ntuthuko Shezi hinted RMI’s investment is a big boost both in terms of capital to grow the business and from a profile perspective.
“Livestock Wealth now has more than 2 000 cattle on several farms in different parts of the country and about 1 000 investors currently. Now that we’re gaining traction, our target is to have about 10 000 investors by the end of our financial year in February.
“Late last year, we secured a lucrative agreement to supply Woolworths with free-range beef and we sent through our first supplies in April. In the last three months we have supplied Woolworths with around 64 tons of beef. Woolworths is a great brand to be working with and it naturally has strict supplier protocols, which we must adhere to.”
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.
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.
The new offerings give investors who lack the time and farming expertise the opportunity to own tangible, high-value, growing assets.
“For instance, macadamia trees, the most lucrative crop in SA, can cost around R20 000 per hectare for the investor, but after a few years of growth, one tree can reap rewards on a minimum investment of around R80 000.”
The South African macadamia industry is the largest producer of macadamia nuts worldwide. According to the 2018 World Nut and Dried Fruit Conference, an estimated yield of 53 500 tonnes of macadamia trees reaped a sales value of well over R3.2 billion in 2018.
The connected garden system, a pool-table-sized garden which grows any vegetable crop, including spinach, lettuce, cauliflower, and Brussel sprouts, is managed around the clock by an experienced partner farmer.
Investors can own several smart garden systems, which are connected to an Internet of things monitoring system, allowing the farmer to track the environmental condition of the plants, while the investor can view and track the plants at almost any time via the app.
Livestock Wealth has previously partnered with financial institution Fedgroup, through its Impact Farming mobile app, which allows investors to endow in blueberry bushes, beehives, and other plants, which are farmed and managed on their behalf from as little as R300.
It has also partnered with MTN Connected Livestock, which helps monitor the livestock online through a tracking device, providing investors with data about the condition of their animals, through the app.
The crowd farming company has also partnered with Woolworths and wholesaler Cavalier Foods, to provide them with free-range beef, which is free of antibiotics and growth hormones.
Shezi says the startup is also engaging potential partners such as restaurant chains, public hospitals, prisons and retailers to connect them to its farmer partners who will then supply them with fresh produce on a regular basis.
“Typically, we are looking at supplying institutions such as Johannesburg General Hospital with onions or lettuce on a daily basis and also supply some retailers and restaurants with a few kilograms of veggies on a daily or weekly basis. The farming systems are not limited to vegetables, but also include growing plants that will be used to make food spices, such as seeds, buds, fruits, flowers, bark and roots of plants.”
A Profitable Business?
Shezi says around half of South Africa’s 14 million cattle are still owned by black South Africans — largely in rural areas — who do communal farming without access to markets.
“Livestock Wealth bridges that gap. It gives communal farmers access to markets, while offering investors a chance to invest in cattle. They [investors] can chose to invest in cattle that will be grown on the farms we work with to supply either meat or cows that produce offspring,” he says.
Things have however progressed significantly since then; Shezi says the business is now an R100 million enterprise with its eye on further investments into SA’s agriculture sector.
This is good news for a business that started out with only 26 cows in 2015 and currently manages a herd of around 2 000 cattle at four farms across the country.
These have a total value of over R20 million and are managed on behalf of 800 investors who are not only South Africans but include Germans, Americans, Canadian, Irish, English, and Chinese.
The company says since inception, it has paid out almost R5 million in dividends. Its business model works like a bank fixed deposit, where the client would invest in a cow for a six- or 12-month period with an option to re-invest.
The 12-month option means investing in a pregnant cow (R18 730) and the six-month option is investing in a calf (R11 529), which will eventually be sold for free-range beef with an average return on investment of about 12%.
Another alternative is the shared-investment option (R576) where the investor buys a portion of a cow together with other investors.
For An Electromechanical Engineering Graduate, This Is A Major Achievement
Shezi graduated as an electromechanical engineer from the University of Cape Town and is no stranger to tech start-up innovation. After leaving professional services heavyweight Accenture in 2006, he launched Scratch Mobile. He was born in rural Ndwedwe on KwaZulu-Natal’s North Coast, which he says has influenced his rural-urban agri-tech innovation.
“Government can’t give us all a farm divided into small amounts. We need to move away from the old farm model of one person owning land, having all the skills and farming their own product,” says Shezi.
“With crowd farming, one entity owns the land, and the farmer who loves farming and has the skills continues to farm, and then others invest in the production. Whether it is cattle or blueberries or veggies, other people can be involved in production without the investors getting their hands dirty.”
“We are hoping that our business model will be a game-changer in lowering the barrier to entry for millions of aspirant farmers. The main definer is that the two parties each have what the other wants, and we are committed to managing the relationship between the investor and the farmer, by giving the farmer the option and the ability to unlock the hidden value in their crops and livestock,’’ he says.
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.
