In a surprising turn of events, former CEO Peter Njonjo’s sudden departure from Twiga Foods, a prominent African agritech startup, has left investors and industry observers questioning the viability of integrating corporate expertise into the fast-paced world of startups. Njonjo, celebrated for his extensive corporate experience at Coca Cola Company, was initially brought in with high expectations of steering Twiga towards unprecedented growth and institutionalization.
Twiga Foods, a major player in Kenya’s informal retail e-commerce sector, had successfully attracted significant investments, boasting a funding portfolio running into millions of dollars. Under founder Grant Brooke’s leadership, the company had ambitious plans to revolutionize traditional supply chains in the informal retail market, leveraging the red-hot venture capital-backed agritech ecosystem.
Njonjo’s appointment was viewed as a strategic move to infuse Twiga with corporate know-how, aiming to scale the company rapidly. Grant Brooke justified the decision by highlighting Njonjo’s successful track record at Coca Cola, where he led the multinational’s West and Central Africa business unit for over two decades. The goal was to leverage Njonjo’s proficiency in managing large institutions to streamline Twiga’s operations and solidify its market position.
However, the grand narrative took an unexpected turn when Njonjo, after a brief and intense tenure at Twiga, decided to step down. The question now looming over the startup ecosystem is whether the attempt to blend corporate prowess with the agility required for startup growth has backfired.
Adding complexity to the unfolding narrative, Njonjo’s recent public remarks about finding his “raison d’etre” and pursuing entrepreneurial ventures have raised eyebrows. His personal investment in the Galana Kulalu Food Security project, a deviation from Twiga’s core business, has fueled speculation about the real motivations behind his involvement with the startup.
Observers sampled by Afrikan Heroes are expressing a certain degree of disillusionment, questioning the effectiveness of bringing in a seasoned corporate executive to navigate the unpredictable waters of a startup. Njonjo’s tenure, intended to usher in a new chapter of growth and stability, now appears to have concluded in what some industry insiders are referring to as a “failed experiment.”
The abruptness of Njonjo’s exit has left Twiga at a crossroads, with industry stakeholders seeking reassurance and clarity about the company’s future trajectory. The inherent risks associated with merging corporate leadership with the dynamic nature of startup ecosystems now seem glaringly apparent, prompting a reevaluation of whether this approach is conducive to the fast-paced and unpredictable world of technology-driven ventures.
Njonjo’s departure comes at a critical juncture for Twiga, with the startup grappling with the need to reassure stakeholders and chart a clear path forward. As the startup ecosystem reflects on this development, the case of Twiga Foods serves as a cautionary tale about the potential challenges and pitfalls of incorporating corporate expertise into the unique dynamics of startups.
Twiga, the Kenyan startup renowned for its innovative approach connecting farmers with food vendors, has successfully raised $35 million in convertible bonds. The fundraising effort comes at a critical juncture for the company, following recent challenges, including a court dispute with a supplier and the announcement of a six-month sabbatical by CEO Peter Njonjo.
The convertible bonds, a form of debt that offers interest payments and the option for conversion into equity, were secured from private equity investors Creadev and Juven. Both firms, known for their previous investments in Twiga, played a crucial role in providing the undisclosed amount of funding. The financial infusion is earmarked to settle outstanding payments to suppliers and bolster Twiga’s operations.
Creadev, a subsidiary of the Mulliez Family Association, and Juven, a Goldman Sachs spinoff, have demonstrated their commitment to Twiga by participating in this latest funding round. However, both private equity firms did not provide comments regarding the investment at the time of this report.
The fundraising effort follows recent reports of a court dispute with Incentro, a cloud service vendor, seeking liquidation proceedings to recover outstanding debts. Private negotiations are ongoing between the concerned parties to resolve the dispute amicably.
Amidst the fundraising news, CEO Peter Njonjo’s decision to take a six-month sabbatical has sparked speculation within the tech community about potential internal dynamics. While some investors and industry observers suggest the timing could indicate a change in leadership, sources close to the matter maintain that Njonjo continues to enjoy a positive relationship with Creadev, emphasizing their ongoing support for Twiga.
Twiga, a B2B company co-founded by Peter Njonjo and Grant Brooke in 2014, has faced challenges in adapting to the evolving business landscape. The company recently underwent significant changes, including a 30% staff reduction and a shift in its commercial model, opting for independent sales contractors over an in-house sales department.
Despite Twiga’s impressive track record of raising over $150 million in equity and debt since 2017, the company has acknowledged the complexities of operating in an increasingly challenging business climate. Rising inflation and currency devaluation across Africa have added to the difficulties faced by B2B e-commerce startups.
Twiga, with its asset-light model, continues to navigate these challenges as it seeks to digitize the informal market for fast-moving consumer goods and packaged foods. The company remains backed by investors such as Genevieve Capital, Creadev, Juven AHL Venture Partners, and Omidyar Networks.
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
Twiga Foods Ltd, a prominent player in Africa’s B2B e-commerce technology sector, is making strategic adjustments to its workforce in response to changing economic conditions. The company, known for its provision of affordable high-quality goods and services to retailers, is navigating challenges by implementing what it terms “strategic operating adjustments”, which sees new set of 283 employees affected.
In light of ongoing economic shifts and a declining purchasing power, Twiga Foods is focusing on optimizing its operations for enhanced adaptability. The company’s “strategic operating adjustments” are designed to position it for resilience in the face of evolving market dynamics.
twiga foods
While Twiga Foods maintains its adherence to labor laws and workforce restructuring as part of these changes, the cumulative nature of these adjustments raises curiosity. With previous investments in expansion and business development, the company’s decision to implement workforce changes seems to be part of a broader strategy to ensure its operational fitness.
Twiga Foods’ approach to becoming a more streamlined and agile organization is in alignment with market trends favoring adaptability. However, it’s worth noting the potential implications of these measures on employee morale and the company’s overall workforce strategy.
The recent adjustments come on the heels of the company prior transition of trade development representatives into agents as a means of enhancing its operational model. This earlier move was seen as a prudent step to meet market demands and secure the company’s growth trajectory.
In addition to workforce adjustments, Twiga Foods is revising certain benefits and compensation structures. The reduction of staff per diems and travel reimbursements could be seen as a pragmatic response to financial considerations, although the company’s commitment to supporting its workforce remains apparent.
To mitigate the impact of these changes, Twiga’s management is offering employees the option to transition into agent roles, providing an alternative path amid evolving circumstances. The implications of such transitions, including potential changes in job security and benefits, will likely be weighed by affected employees.
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
Twiga Foods co-founders Grant Brooke and Peter Njonjo have acquired a majority shareholding of 55.8 percent in Maisha Microfinance Bank Limited (Maisha MFB) through their investment company, Cactus Cantina Investments Limited. The Central Bank of Kenya approved the acquisition under Section 19 (4) of the Microfinance Act on March 16, 2023, and the Cabinet Secretary for the National Treasury and Planning gave their approval on April 4, 2023, pursuant to Section 19(3)(b) of the same act.
twiga foods
Cactus Cantina, a Kenyan company wholly owned by Shara Inc., was founded by Brooke and Njonjo to provide affordable financing to Small and Medium Enterprises (SMEs) and their value chains. They are also co-founders of Twiga Foods, a B2B food and groceries distribution company that operates in Nigeria and Kenya.
Maisha MFB, which received its license on May 21, 2016, is a medium-sized microfinance bank that caters to insurance policyholders, insurance agents, micro, small and medium enterprises, and regular salaried people. The bank’s branch and head office are located at Chester House, Nairobi, and it holds a market share of 1.4 percent of the microfinance banking sector as at December 31, 2022.
Cactus Cantina’s investment is expected to transform Maisha MFB’s business model in line with the Central Bank of Kenya’s vision for the microfinance banking sector, providing the necessary resources to support business growth. The CBK welcomes the acquisition, seeing it as a transaction that will strengthen Maisha MFB and support the stability of Kenya’s microfinance banking sector.
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
After investing Sh1.6 billion to expand its business, the agri-tech company Twiga Foods is now reducing its personnel in ways that would cause those who remain to forfeit some of the perks they have been receiving.
The business, which previously stated it had 1,000 employees, now claims that all of its trade development representatives have been converted to agents as it transitions its sales team’s operations to an agency model. Out of the more than 1,000 employees, 21% have now been laid off.
twiga foods
The business had stopped working with foreign nationals who were providing various services across multiple departments in October.
In addition, Twiga has reduced the staff per diem for the remaining employees from a high of Sh4,000 to Sh1,000, with lodging being offered on a bed and breakfast basis.
“As a result of this transition to the agent model, your employment with Twiga will terminate on November 30, 2022,” reads a communication to the staff. “We invite you to transition into a new relationship with Twiga as an agent effective November 1, 2022”
In order to give them time to look for alternative engagements, the company stated people who decline appointment as agents won’t be obliged to work as trade development representatives during the one-month notice period.
The company has also restricted travel reimbursements to those employees whose jobs require them to travel for more than 75% of the month.
“The travel allowance will include all costs related to the movement of the employee in her/his personal vehicle to attend to the business of the company. Executives will identify employees in their team, whose jobs fit the criteria for a travel allowance,” said the firm.
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://insightsbyexperts.com/view_expert/charles-rapulu-udoh
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.
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.
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.
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.
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.
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
Twiga Foods, the Kenyan startup that delivers fruits and vegetable to customers is obviously trying to squeeze out every business opportunity occasioned by the coronavirus pandemic. It has partnered with African e-commerce giant Jumia Kenya to further expand their distribution capacities in the wake of movement restrictions as part of measures taken to contain the spread of the coronavirus.
Sam Chappatte, Jumia Kenya’s chief executive
“Our partnership with Twiga will allow customers to shop on Jumia for the fruits and vegetables they need. We are offering same-day free delivery on the platform in Nairobi. And will save customers money as Twiga cuts out the middlemen by buying directly from smallholder farmers across the country,” said Sam Chappatte, Jumia Kenya’s chief executive.
Here Is All You Need To Know
The distribution deal will allow online shoppers to order for fresh farm produce and processed foodstuffs from Twiga Foods on Jumia’s platform.
Pre-packed bundles will cost between Sh1,230 to Sh3,180 ($12 to $30) and consist of items such as watermelon, potatoes, tomatoes, onions, bananas, maize meal and processed milk.
The partnership will leverage on Twiga’s existing infrastructure and Jumia’s extensive e-commerce platform and logistics network to make home deliveries across Nairobi’s suburbs.
Twiga has depots in Dagoretti, Donholm, Embakasi, Thome, Ruaka, Kaloleni, Nairobi West, Syokimau, Waiyaki Way and Kilimani.
Twiga Foods sources farm produce from more than 15,000 producers and delivers to over 5,000 retailers a day.
The firms said that by bringing their capabilities together, they aim to offer an unrivalled delivery service for food, providing fresh, high quality products directly to people’s homes across Nairobi.
“Our vision as a company has been to lower the amount of money consumers are spending on food. Through this partnership, we will pass on to consumers the price benefit of sourcing directly from farmers and food manufacturers. Case in point is our Twiga Fresh bundle that offers a 50 percent discount to the prevailing market prices,” said Twiga Food Chief Executive Officer Mr Peter Njonjo.
Twiga Foods is going after the Kenyan food sector to break the jinx of inefficiencies presently in the sector, and to ensure that the limited resources available in Kenya’s agricultural sector are well-utilised.
Its simple business model is to aggregate all food retailers and dealers, from the banana vendors buying in bulk to the avocado retailers selling in stock, and then connecting them to Kenyan farmers producing quality farm produce. This is a classic example of a business-to-business (B2B) model, so that vendors looking to purchase agricultural produce don’t have to travel miles to meet local producers of the produce, thereby saving them the transportation and logistics cost, increasing the productivity and demand for the produce of the farmers, at the same time reducing food waste.
These metrics are what TLCom Capital looked out for when it invested in Twiga Foods.
“TLcom’s general investment thesis for Africa is that given the high penetration of mobile, there are very large markets where demand is already proven and technology can play a true role in offering a superior value proposition over existing solutions,” said Ido Sum, partner at TLCom Capital which syndicated Twiga Foods’ recent $30 million fund raising led by Goldman Sachs.
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.
Apparently affected by the growing VC interest in startups during this coronavirus pandemic, Kenya’s fruits and vegetable delivery platform Twiga Foods has secured a loan of $5 million from the US International Development Finance Corporation (DFC).
Peter Njonjo, co-founder of Twiga
Here Is All You Need To Know
Twiga will use the amount to buy additional transportation and cold storage equipment to improve market supply. The company sources from more than 17,000 producers and delivers agricultural products to over 8,000 retailers per week.
According to Peter Njonjo, co-founder of Twiga, the informal and fragmented market for food production and distribution in Africa was worth more than $300 billion in 2019.
This is not the first loan granted by the American DFC. In October 2019, the development agency had co-invested alongside other investors in the capital of Twiga Foods.
Twiga Foods is going after Kenya’s food sector to break the jinx of inefficiencies presently in the sector, and to ensure that the limited resources available in Kenya’s agricultural sector are well-utilised.
Its simple business model is to aggregate all food retailers and dealers, from the banana vendors buying in bulk to the avocado retailers selling in stock, and then connecting them to Kenyan farmers producing quality farm produce. This is a classic example of a business-to-business (B2B) model, so that vendors looking to purchase agricultural produce don’t have to travel miles to meet local producers of the produce, thereby saving them the transportation and logistics cost, increasing the productivity and demand for the produce of the farmers, at the same time reducing food waste.
These metrics are what TLCom Capital looked out for when it invested in Twiga Foods.
“TLcom’s general investment thesis for Africa is that given the high penetration of mobile, there are very large markets where demand is already proven and technology can play a true role in offering a superior value proposition over existing solutions,” said Ido Sum, partner at TLCom Capital which syndicated Twiga Foods’ recent $30 million fund raising led by Goldman Sachs.
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.
He could be contacted at udohrapulu@gmail.com
Twiga Foods, the Kenyan agri-tech startup trying to disrupt Kenya’s food demand and supply chains, understands that Kenyans need food, and need it badly. About 36.1%, representing nearly over 18 million of Kenya’s 48 million population are hungry. This figure is worsened by the facts that:
Peter Njonjo
Over 3.4 million people face acute food insecurity in the country; and
Agricultural productivity has been stagnating in recent years due to frequent droughts, floods, and climate change, leading to only about 20 percent of Kenyan land being suitable for farming.
Interestingly, Kenya’s agricultural sector contributes about 26% — more than one-quarter — to Kenya’s entire Gross Domestic Product. This is even as about 75% of Kenya’s entire workforce, mostly spread out in rural areas, is engaged in the agricultural sector.
Africa’s Food Security Index: Click To ExpandThese facts are the reasons Twiga Foods would be the startup of the future. The startup is going after Kenya’s food sector to break the jinx of inefficiencies presently in the sector, and to ensure that the limited resources available in Kenya’s agricultural sector are well-utilised.
Its simple business model is to aggregate all food retailers and dealers, from the banana vendors buying in bulk to the avocado retailers selling in stock, and then connecting them to Kenyan farmers producing quality farm produce. This is a classic example of a business-to-business (B2B) model, so that vendors looking to purchase agricultural produce don’t have to travel miles to meet local producers of the produce, thereby saving them the transportation and logistics cost, increasing the productivity and demand for the produce of the farmers, at the same time reducing food waste.
These metrics are what TLCom Capital looked out for when it invested in Twiga Foods.
“TLcom’s general investment thesis for Africa is that given the high penetration of mobile, there are very large markets where demand is already proven and technology can play a true role in offering a superior value proposition over existing solutions,” said Ido Sum, partner at TLCom Capital which syndicated Twiga Foods’ recent $30 million fund raising led by Goldman Sachs.
Quite noteworthy is the fact that TLCom Capital is often strategic with its investments, going mostly for early comers with the huge potentials. It went for Nigeria’s Kobo360, a startup pioneering digital trucking in Nigeria through the Goldman Sachs-led $20 million investment. It also went for Andela, one of Africa’s well-funded startups. Hence, that Venture Capitalist TLCom Capital preferred to invest in tech companies in their early to growth stages, such as Twiga Foods, shows that the startup is, to a large extent, home to disrupt.
The same is also said of Goldman Sachs, America’s leading investment banker which is recently interested in Africa and international institutional firms and VCs looking to invest on the continent at a time when other international investment banks such as Credit Suisse and Barclays have cut down or exited their African operations altogether. Goldman Sachs’ investment in Twiga Foods marks its first major deal in a Kenyan firm.
In view of all these, we therefore discuss a few strategies gleaned from Twiga Foods’ quest to disrupt the Kenyan food market.
Prove A Point First But Know That Scaling Is Important
First CEO Grant Brooke simply had to find a way to scale Twiga Foods, a startup in the often neglected African startup ecosystem — agritech. Of the whole investment made into Africa’s startup ecosystem in 2018, agritech got a meagre $20.2 million, out of which Twiga Foods got $10.2 million. Compared to fintech’s $284.6 million, this is discouraging for new comers to the agritech sector.
From all indications, these figures are a representation of the fact that even though Africa has a yawning food sufficiency gap, startups who take the path of agri-businesses often face low investment appetite from investors. Nigeria’s agritech startup Farmcrowdy, one of Africa’s top-funded agritech startups for instance, has been able to raise slightly above $2 million in funding from VCs since its founding in 2016.
Of course, investors are not to blame: entering early stage startups in Africa’s agritech startup ecosystem appears foolhardy, with all the risk associated with crop yields, partly brought about by changes in climate and diseases.
So Twiga’s strategies were to first avoid the crop production stage, in preference of the post production stage when crops are ready to be harvested; and to eliminate the final consumers from its model. Consumers in the African food markets are highly dispersed, making it grossly difficult to aggregate them. They are also highly unpredictable. Pursuing them would increase cost per acquisition for any startup, at the same breath, creating unnecessary competition from dispersed local markets where they are used to buying and selling from.
Therefore, by targeting the middleman between the farmer and consumers, Twiga found an easily large market to scale. The startup already has more than 17, 000 producers for direct delivery to more than 8,500 vendors.
Africa’s Agritech Startups Who Solve The Inefficiency Problem In The Agric Supply Chain May Win
Twiga’s other strategy is simple: find an efficient way to deliver to final consumers at lower costs. Inefficiencies in the supply chain have been blamed for high food prices in African cities, where close to 90 percent of the supply comes from informal retail outlets. Kenyans spend 45 percent of their disposable incomes on food, compared to 14 percent for South Africans and 10 percent for citizens of most European countries. To solve this problem, Twiga followed a simple pattern:
Get a farmer to sign up to join Twiga.
Twiga visits and assesses the farm, then adds farmer onto system.
Twiga issues a purchase order to book the produce and indicate date of harvest.
Twiga harvests and weighs farmers produce and issues you with a receipt.
Farmers receive payment within 24 hours.
All produce is gathered at over 30 Collection Centres across Kenya from the farms.
Produce goes to the Packhouse for processing, grading and dispatch to over 60 sales routes.
A vendor signs up to join Twiga.
Twiga sales representative visits vendor and registers them onto system.
Vendor places order with sales representative.
Twiga delivers produce directly to vendors shops.
Through this, the farmer benefits from: guaranteed market; transparent pricing as seen on price boards; farming advice;resources and access to credit from Twiga’s partners. On the part of vendors, the benefits include quality produce; free delivery; assured food safety through easy tracking; access to credit from Twiga’s partners; and fair prices for produce.
The end implication of this simple process is that Kenyans would spend less to purchase food produce. This would in turn encourage them to budget more on food.
Can Using Corporate Expertise Like Twiga Foods Assist Startups To Grow Faster?
To beat the glut in investment in Africa’s agritech startup ecosystem, Twiga quickly appointed Peter Njonjo to take over from founder Grant Brooke. Although the startup has previously raised $10.3m from investors and secured $2 million in grant funding from organizations such as USAID and the GSMA in 2017, followed by a 2018 $10m investment from the International Finance Corporation (IFC), TLcom, and the Global Agriculture and Food Security Programme, bringing Njonjo onboard the startup may seem more or less a strategic move to capture more market and scale quickly.
“Starting new ventures is really my skill-set and passion, while proficiently running institutions is Peter’s skill-set and passion. Twiga has an aggressive growth plan and this transition leverages on our respective expertise, ” Brooke said.
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.
Peter Njonjo’s appointment, noted Mr Brooke, presents a first; with a senior executive in a Fortune 500 Company joining an African startup, a “clear testament of the increasing capacity of venture capital in funding and solving significant problems and harnessing opportunities on the continent.”
“If my leadership was the period in which Twiga was proving a point that there’s a better way to build food safe and secure markets, Peter’s leadership will be about institutionalizing this way of doing business and scaling it. Peter’s experience in building efficient supply chains and last-mile distribution in over 33 African countries makes him uniquely suited to lead us,” said the outgone Twiga Foods CEO Grant Brooke.
Currently, the startup has reached more $50 million in total funding since 2014 when it was founded, over $35 million achieved under Njonjo’s leadership.
Critically speaking, Twiga’s success could largely be attributed to Grant Brooke, who has built a career researching Kenya’s informal retail market, an experience dating back to his home city, Texas, in the United States. Njonjo’s appointment could be analysed as finally giving Twiga Foods an African outlook. Therefore, it is safe to say that Twiga Foods still has a long way to go in qualifying as a contemporary agritech startup founded and run by an African. Mr. Njonjo’s Africa’s first ever corporate touch at Twiga and its eventual success may however still be a lesson in strategy for African startups.
Twiga Foods: Bottom Line
To put Africa’s food needs into perspective, Kenyans have more certainty of having food than Ugandans, Rwandans, Togolese or Nigerians. This is a dire situation for the population of these countries combined, and a huge opportunity for many more African agritech startups to come onboard.
Twiga Foods has obviously found a large market for its business model. Africa’s farmers are still obscure, and remotely isolated from the large market. Twiga has started a show of allowing them to play a significant part with some force. It does this by collecting them together with technology and helping them to deliver their products to final consumers, in a safe, cost-effective and efficient way.
These are the lessons Twiga Foods has taught us in Africa’s complicated food supply chain, and why Twiga Foods may be Africa’s next unicorn (and indeed the first agritech startup to achieve such feat) in ten years to come, if it gets its processes and team right.
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
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
