January 3, 2019

Nairobi-based Twiga Foods announced it has raised capital in the amount of $10 million through a round co-led by IFC, a member of the World Bank Group, and TLcom, a Pan-African venture capital firm.

Other participants include return investors Wamda Capital, DOB Equity, 1776, and AHL Venture Partners.

Co-founded in Nairobi in 2014 by Grant Brooke, who ventured to Kenya in 2008 to conduct graduate work for his master’s degree, Twiga Foods was born from Brooke recognizing that the disorganized nature of the agriculture and food value chain was benefiting the brokers and not the farmers, and was blocking any attempts at solving issues in the market.

The vast majority of food and FMCG products in Kenya are sold at small- and medium-sized stalls which are supplied by large open air markets that are beyond capacity, reports QuickNews Africa. This system breeds inefficiency and leads to Kenyans having to spend 43 percent of their household income on food alone.

“The main reason markets do not work here is because there lacks a proper market infrastructure to support the 5 million population in Nairobi,” said Brooke in 2017. “As a result, produce goes bad and there are massive delays at the markets. This means that the cost of the same gets passed to the customer.”

Twiga’s food tech platform employs mobile technology to align supply and demand, acting as a B2B facilitator, aggregating buyers and growers in African highly fragmented fruit and vegetable market. Twiga operates collection centers across Kenya, as well as cold storage facilities, a central pack house, and mobilized trucks and vans. Through Twiga, vendors can use the company’s m-commerce platform to order produce as and when needed, which is then delivered to their doorstep free of charge by the company. Farmers are then paid within 24 hours.

In essence, Twiga consolidates the supply chain, gathering the purchasing power of urban food retailers which enables higher quality, lower priced foods to be delivered directly to them, and eliminating the need for them to travel to the market.

“Access to markets is a key concern for smallholder farmers across Africa, many of whom live in remote areas. IFC’s investment in Twiga supports a disruptive startup that is helping create a more transparent, efficient supply chain, which connects farmers directly to markets, helping them earn more,” said Nikunj Jinsi, global head of venture capital with IFC.

The system is beneficial on multiple fronts, giving farmers access to a fairly priced, transparent, mobile market; giving vendors high-quality produce on a delivery basis; and through its highly efficient model and supply chain, is able to sell foods at lower prices while also reducing food waste.

In the years since its launch, Twiga has grown to engage with more than 13,000 farmers and 6,000 vendors across Kenya, and plans to use the fund from this round to expand operations and expand the services it can offer.

“The IFC and TLcom investment will enable us to reach more farmers, improve efficiency in service delivery and increase access to high quality produce and foodstuffs for vendors,” said Brooke. “We will continue in our mission to provide affordable, quality, and safe food to Kenya’s urban consumers, and reliable markets for farmers across the country.”

“Twiga is proving that smart use of technology and innovative business models can vastly improve large and inefficient African markets such as the agricultural supply chain,” said Maurizio Caio from TLcom. “With capital and business building support coming from this set of investors Twiga is positioning for massive value generation, demonstrating the increasing maturity of the Africa venture capital space.”

Lynda Kiernan