By Sodeinde Temidayo David
A Nigerian agricultural technology startup, Releaf, has secured a total of $4.2 million to scale its food processing technology in a bid to solve the distance and logistics challenges of farmers.
The company said it raised $2.7 million in seed and grants towards the effort to build proprietary hardware and software solutions to make these farmers and food factories more efficient and profitable.
The round was led by Pan-African focused venture capital firms like Samurai Incubate Africa, Future Africa and Consonance Investment Managers and individual investors like the chairman of Bain Capital, Mr Stephen Pagliuca and Mr Justin Kan of Twitch.
In addition to the seed round, the agritech startup secured $1.5 million in grants from the Challenge Fund for Youth Employment (CFYE) and USAID.
Founded by Mr Ikenna Nzewi and Mr Uzoma Ayogu, Releaf focuses on value chains where smaller factories are set up near smallholder farmers, allowing them to get better processing yields and fewer logistics costs, where the farmer has more money to work with.
Releaf is set to use the seed investment to develop technology and deploy it to smallholder farmers, and then the $1.5 million in grants will focus on providing working capital financing to these farmers.
The firm has run financing trials already this year where it has increased smallholder incomes by three to five times.
After graduating from Y Combinator’s summer, Releaf has been noted with ideas around trade finance and a marketplace for buyers and sellers of agricultural products, with the aim to increase productivity in Nigeria’s agricultural sector.
The firm is reputed to have a slice of the global market for palm oil which stands at $61 billion, as the company is into the production of palm oil.
According to the co-founder, Mr Nzewi, the team saw an opportunity and set out to build a technology to help farmers crack oil palm nuts, as farmers typically go through the process by using rocks or inappropriate hardware.
With the help of a machine created by the Releaf group called Kraken, they produce about 500 tonnes of palm kernel oil per week for smallholder farmers.
The organization is working to increase the production capacities of the 3,000 farmers in their network and hopes to decentralize food processing from major cities in Africa.