Nigerian agritech startup, Releaf has secured a $4.2 million funding. The total sum comes from a $2.7 million seed funding round and $1.5 million in grants.
The funding round was led by Samurai Incubate Africa, Future Africa and Consonance Investment Managers. They were supported by angel investors like the chairman of Bain Capital, Stephen Pagliuca, and Justin Kan of Twitch.
The grants were obtained from The Challenge Fund for Youth Employment (CFYE) and the United States Agency for International Development (USAID).
Founded in 2017 by Ikenna Nzewi and Uzoma Ayogu, Releaf is a startup that aims to adopt new technology to improve the sale of quality raw agricultural produce and boost the value chain between small farmers and food factories.
The company started out with vegetable oil. They buy the nuts from farmers, break them with a proprietary machine, the Kraken, and then press them into vegetable oil which they then sell to food factories.
Releaf says the Kraken processes 500 tonnes of palm nuts a year, per Techcrunch. Through its software, it has enabled 1,000 farmers with the means to provide 7.5 million KGs of quality crops as of 2020. Now it has onboarded over 2,000 farmers who have provided 10 million kg of quality palm kernel nuts.
The startup says it has been able to increase the income of smallholder farmers by three to five times.
With this seed funding, the startup plans to scale its offering by developing new technology which will be deployed to smallholder farmers. It also hopes to provide working capital to the farmers through the $1.5 million grant so as to help improve their production rate and by extension, their incomes.
“We think there’s a really great opportunity to bring both physical technology and financial services to these communities to make them more productive. And it’s kind of central to our thesis,” Releaf CEO, Ikenna Nzewi said.
“We believe that our smart factories can serve as an economic pillar in these rural communities and make it easier for us to supply these communities with other services that they can find valuable like access to working capital, payment for education, and access to insurance services. So we see the food processing as like the first step it cements us in the value chain.”Ikenna Nzewi
Vegetable oil is an important feature in cooking and also in making industrial products like paint, soap and lubricants. The method often deployed by oil palm farmers is breaking the nuts on rocks, a process that is manually intensive and makes the oil of impure quality.
“Nigeria has about 60% more demand for vegetable oil than it does supply. And it can not be met due to supply shortfall with imports because the government banned the importation of vegetable oil. So there is a need to take these smallholders who are driving 80% of production and make them more efficient so that we can have a better balance of supply and demand for vegetable oil,” the CEO said.
Releaf obtained a $180,000 grant after joining the 2017 Y-combinator cohort. It later raised $1.3m in funding from angel investors like Eudaimonia Capital. This brings its total funding to date to $5.68 million.
Agritech startups have experienced a lull in securing investments lately so this is a big win for the team. Now, they hope to expand into new areas because according to the CEO, the startup has more appetite for moving into new geographies instead of crop offerings. According to him, the style of cultivating and processing oil palm is straightforward due to its similarities across West Africa.
Speaking on the investment, General Partner at Future Africa, Iyin Aboyeji, said “the team at Releaf is building the agro-allied industry of the future from the ground up, starting with palm oil which 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.”