Due to distance and logistics problems, farmers’ crops may go bad, which will in turn impacts factories’ processing yields and prices. Due to post-harvest losses, farmers also get paid less and miss out on investing in their crops.
This is a problem that Nigeria’s agritech startup, Releaf, is addressing by building software and hardware solutions to help farmers and food factories work more efficiently and profitably.
The company announced today that it had raised $2.7 million in seed funding.
A round of funding was led by pan-African focused venture capital firms Samurai Incubate Africa, Future Africa, and Consonance Investment Managers. Investors like Stephen Pagliuca of Bain Capital and Justin Kan of Twitch also participated.
Additionally to the seed round, the agritech startup secured $1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID.
Releaf, founded by Ikenna Nzewi and Uzoma Ayogu, focuses on value chains where smaller factories are set up near smallholder farmers. By doing this, they can produce higher yields and save on logistics costs resulting in more money for the farmer.
The concept behind Releaf was not concrete yet when the company started in 2017, as the team based in the U.S. had not figured out product-market fit.
It planned first to use software to increase productivity in Nigeria’s agricultural sector. Even after graduating from Y Combinator’s summer batch that year, Releaf played around with ideas around trade finance and a marketplace for farm products.
By the time the founders returned to Nigeria, the team would have a clearer idea of what it wanted to build.
In their tour across 20 states, the Americans of Nigerian descent identified inefficiencies that technology could solve in the value chains of various crops.
Using the seed investment, Releaf will develop technology and market it to smallholder farmers, Nzewi says. The $1.5 million in grants will be used to finance the working capital needs of these farmers.
As a result of Releaf’s financing trials already this year, the incomes of smallholders have increased by three to five times.
Rena Yoneyama, the managing partner at Samurai Incubate Africa, said Releaf’s novel approach sets it aside from other agritech startups the venture capital firm has engaged with.
“We believe the firm’s thesis on decentralizing food processing would have a strong match with Africa’s economic development landscape for the next few decades. Ikenna and Uzo are the perfect founders to disrupt this market in Nigeria and beyond.
We are thrilled to back them as they innovate in providing both agro-processing and financial services to rural communities and farmers,” she added.
Speaking on the investment as well, Iyin Aboyeji, general partner at co-lead investor Future Africa said, “…The team at Releaf is building the agro-allied industry of the future from the ground up, starting with palm oil.
They have developed a novel technology to aggregate, deshell, and process into critical ingredients like vegetable oil and glycerine. Future Africa is delighted to back Releaf to build the future of modern agriculture.”
