NewsWeekend Features

GFA Weekend Feature – Funding Opportunities in Agritech: Spotlight on Twiga Foods ($30million)

Image result for twiga foods


As technology and digital platforms continue their strong growth across African businesses, GetFundedAfrica reflects on how potential and existing business owners should bring a larger focus on the enabling requirements to attract funding, and position themselves for 2020 and beyond.

The statistics of Africa’s bludgeoning population are all over information media and staring at people during everyday life on the continent.

“The Food and Agriculture Organisation (FAO) predicts the size of the agriculture market in Sub-Saharan Africa will grow from US$200 billion in 2015 to US$1 trillion by 2030. This expected five-fold market growth presents very attractive investment return opportunities, especially for investors willing to take on risk earlier in the development process,”  This quote is attributable to Erick Yong’s company of GreenTec Capital Partners – an investor in Farmcrowdy.

Fortunately, national regulators are increasingly involved in the enhancement of opportunities, especially via financial inclusion. Key to bridging the gap in the potential of agriculture and achieving financial inclusion regulatory targets is the utilization of mobile applications as a strategy to improving digitization in agriculture, these would cascade into benefits such as improved yields, wider margins, and resilience to climate change.

BusinessDailyAfrica reports that top American investment bank Goldman Sachs is the latest to acquire a stake in Kenyan start-up Twiga Foods following a $23.75 million deal that will help the agro-based firm spread across the country and Africa.

The US bank will provide funding to the start-up together with three other Twiga Foods existing investors – International Finance Corporation (IFC), venture capital firm, TLCom Capital, and French private equity fund Creadev.

Twiga, which purchases 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.

Into the Company

The company is a mobile-based supply platform for small and medium-sized fruit and vegetable vendors and was established in 2014. It runs a cashless platform where it receives fruit and vegetables from 17, 000 farms for direct delivery to more than 8,500 vendors.

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.

The new round of equity funding will scale up Twiga Foods’ use of technology and inject efficiency into its food distribution model, ultimately boosting the consumption of fresh, quality products while lowering their costs.

Business Model

Returning to GetFundedAfrica’s introductory paragraph on financial inclusion, technology, and digital platforms, we can briefly describe part of Twiga’s business model. The company manages a digital platform that serves the purpose of distribution infrastructure, enabling end-to-end data collection and processing. Integrated with mobile money (M-Pesa), the platform facilitates cashless payments throughout its value chain.

Twiga Foods’ distribution infrastructure is managed through a digital platform that enables real-time, end-to-end data collection. The platform is also integrated with mobile money (M-Pesa) to provide cashless payments throughout the value chain.

Twiga’s business model offers farmers predictable rates 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.

 “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 2019 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.

What Attracted Investors/Funders?

Strategically, the investment underlines 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.

Co-investor, 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 higher quality and lower priced food on the continent,” said Jules Frebault, the Africa head at Goldman Sachs in a statement.

Since succeeding co-founder Grant Brooke as CEO, 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 told the Business Daily.

Profile of Funder

According to Bloomberg, Goldman Sachs Group Inc. is a U.S. investment bank seeking to tap into the fast economic growth on the continent.

The lender is partnering with Investec on equity trading, which will allow both firms to extend their trading operations from Johannesburg to the rest of Africa, New York-based Goldman Sachs said in a statement on Wednesday.

Goldman Sach seeks to leverage the economic growth potential from Africa’s population profile; working-age population is larger than the non-working-age share of the population. Africa’s working-age population will rise from 705 million in 2018 to nearly 1 billion by 2030, according to the African Development Bank. Increased commerce, service expansion and quality on the back of a rapidly growing African fintech sector serve as further justification for Goldman Sachs renewed interest in South Africa and Africa at large.

Opportunities for African Business People

GetFundedAfrica highlights that the deliberate and strategic focus on Africa by one of the largest investment banking shops, Goldman Sachs  – is enough evidence that opportunities for eco-system business models in the agriculture and tech space can be exploited and could attract the required funding. Agritech, aggregation of produce, technology improved supply chain logistics are among the various factors bringing remotely and rurally located small to medium sized farmers in greater connection to final consumers via vendors.

By building scalable tech-based business models that increase speed & reliability along the value-chain; reduce costs & waste, while maximising margins, Africans seeking funding can look in the direction of Twiga on their journey to raising the required financial resources for their projects and businesses.

GetFundedAfrica recommends companies focus on set-ups that leverage mobile applications, strengthen digital inclusion and improves agricultural digitization. Raising crop yield and reduction of costs through Artificial Intelligence and data-driven agric initiatives are becoming the norm within the industry outside Africa. The continent progressively needs to look in this direction.

Agritech in Africa attracts a varied mix in funding terms, though our research sees a more significant level of debt and grants. We also suggest business people to consider arranging their agritech projects as social enterprises to extend opportunities for accessing grant funds.

Referenced articles:

Check out the African Farming’s Agroinvestment Summit as it returns for its second year on our website:

Our previous weekend articles are here: 1) and here: 2)

GetFundedAfrica curates funding news across Africa and emerging markets. Subscribe & check out our March 2020 preview and events here:

Nichole Manhire

Is the media and brand manager at GFA News. She works very closely with editors and podcasters that contribute to telling the African business success story. For marketing and advertising send Nichole an email:

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button