Nigerian agritech Releaf raises capital as it launches new food processing technology • TechCrunch

Nigerian agritech Releaf raises capital as it launches new food processing technology • TechCrunch

Releaf, a Nigerian agritech startup that supplies ingredients (starting with the oil palm) to consumer goods manufacturers and their food factories, has raised $3.3 million in an oversubscribed pre-Series A round.

The Jack Ma Foundation-backed startup, which announced a $4.2 million seed capital increase (including a $1.5 million grant) in September 2021, said the funding will see the launch of two new ones Technologies support: Kraken II and SITE.

Releaf focuses on value chains where smaller factories are built close to small farmers, allowing them to achieve better processing yields and lower logistics costs. The oil palm is the first and for the time being only crop that Releaf is working on; The oil palm market is a $3 billion market made up of over 4 million small farmers. These farmers drive about 80% of crop production with rocks or inefficient hardware responsible for the production of low-quality vegetable oil. That’s why Agritech has launched Kraken, its static palm nut shelling machine built to process this crop and efficiently extract “high quality” vegetable oil for farmers.

“Our seed round was essentially focused on getting the first evolution of Kraken and proving that we can be the first company to take multiple species of very poor quality smallholder palm nuts and turn them into high quality palm kernel oil,” Uzoma Ayogu, co-founder and CTO, told TechCrunch in an interview.

“Once we proved this, we needed to figure out how best to dynamically place this technology, and over the last few months we’ve made strides in evolving Kraken from a static to a wearable device, significantly reducing costs [Kraken II] when adding new products [SITE] to complement the technology suite we already have.”

Kraken II is a portable and lower-cost version of the palm nut sheller that costs half as much and eliminates over 80% of margin-sapping costs. On the other hand, SITE is a geospatial mapping application that reveals food processing facilities. SITE was developed in collaboration with Stanford University Professor David Lobell, a MacArthur Fellow and director of the Center on Food Security and the Environment, whose team refined the oil palm dating process in Nigeria.

According to Ayogu, YC-backed Releaf has found that building technology is not enough to generate the best margins for farmers and manufacturers, but the technology needs to be available in different regions of Nigeria, in the right places and at the right times of the year. Hence the reason for Kraken’s portability and SITE’s placement and routing capabilities. The combination of the two allows Uyo-based Releaf to capture the best opportunities in Nigeria’s oil palm belt, rather than being limited to sourcing crops within 100km of a fixed processing site like existing food processing plants.

“The biggest advantage for them [farmers] With this new development from Kraken and SITE, many farmers are offering bad prices because they have to pay a lot for logistics. But now that we can eliminate 80% of the logistics costs and process it much closer to the farmers, we can give much of that profit back to them while keeping more of it for ourselves while even improving the quality of the end product,” said Ayogu, who Releaf co-founded with CEO Ikenna Nzewi on why these new technologies are important to farmers.

There is more competition downstream in Nigeria’s food processing industry, which is mainly dominated by intermediaries and traders, typically one-person or few-person businesses, who tend to be closer to the consumer and have better pricing power. Unlike Releaf, which operates upstream and has less competition, at least when you consider the application of technology. Offering farmers better prices and providing working capital are two ways Releaf can gain market share in this segment, Ayogu noted.

SITE developed by Release

The startup has used its supply chain technology to process more than 10 million kilograms of palm nuts since launching Kraken in 2021. As a result, Releaf has increased its monthly sales seven-fold year-on-year, which is expected to grow this year after securing over $100 million in supply deals from consumer goods manufacturers in Nigeria. With this funding, the agritech, whose valuation has tripled since its seed round, will seek to expand the regions in which it processes palms and expand the plant species it works with.

“Our findings have shown that downstream is limited by upstream supply,” said the CTO. “So our focus is on the first mover advantage with differentiated technology, we can capture a significant amount of offerings in a fragmented market and then verticalize over time to increase margins and market position.”

The pre-Series A funding was led by Samurai Incubate Africa, which reinvested after leading Releaf’s seed round with participation from Consonance Investment Managers. Stephen Pagliuca (Chairman of Bain Capital) and Jeff Ubben (Chairman of the World Wildlife Fund and Founder of Inclusive Capital Partners) also invested. Rena Yoneyama, Managing Partner at Samurai Incubate Africa, said of the investment, “Releaf’s success with its Kraken pilot project validates their thesis and we look forward to continuing to support their ambitious vision to create efficient supply chains in the African agricultural market.”

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