releasea Nigerian agtech startup supplying consumer goods makers and their food factories with ingredients, starting with oil palm, raised $3.3 million in an oversubscribed pre-Series A funding round.
Startups supported by the Jack Ma Foundation, $4.2 million announced (including a $1.5 million grant) in September 2021, which it says will support the launch of two new technologies: Kraken II and Place.
Releaf focuses on the value chain of setting up small factories near small farmers, enabling them to obtain higher processing yields and lower logistics costs. Oil palm was the first and currently the only crop Releaf is researching; the oil palm market is a $3 billion market made up of more than 4 million small farmers.these farmers drive 80% crop yield Using rocks or inefficient hardware is responsible for producing low quality vegetable oil. That’s why agritech has launched the Kraken, a static palm nut sheller designed to process the crop and efficiently extract ‘premium’ vegetable oil for farmers.
“Our seed round was primarily focused on getting the first evolution of Kraken and proving that we could be the first company to take a variety of very poor quality smallholder palm nuts and convert them into premium palm kernel oil,” uzoma ayoguco-founder and CTO, told TechCrunch in an interview.
“After proving this, we needed to figure out how best to dynamically place this technology, and over the past few months, progress has been made in Kraken’s evolution from static to portable and significantly lower cost [Kraken II] While adding new products [SITE] to complement our existing technology suite. “
The Kraken II is a mobile and cheaper version of a palm nut sheller that costs half as much and eliminates more than 80% of profit-eroding costs. SITE, on the other hand, is a geospatial mapping application that exposes food processing assets. SITE was developed in collaboration with Professor David Lobel, a MacArthur Fellow and director of the Center for Food Security and the Environment at Stanford University, whose team has improved the age identification process for oil palm trees in Nigeria.
According to Ayogu, YC-backed Releaf found that building technology alone was not enough to achieve optimal profits for farmers and manufacturers, but technology needed to be used in the right place and in the right season in different parts of Nigeria. That’s why Kraken’s portability and SITE’s placement and routing capabilities come into play. The combination of the two enables Uyo-based Releaf to target the best opportunities in Nigeria’s oil palm belt, rather than being limited to sourcing crops within 100km of fixed processing sites as incumbent food processors are.
“The greatest benefit to them [farmers] With this new development of Kraken and SITE, many offer low prices to farmers because they have to pay a lot for logistics.But now that we can eliminate 80% of the logistics costs and process closer to the farmers, we can return a lot of the profits to them while keeping more for ourselves while improving the quality of the final product,” shared with the CEO Ayogu who founded Releaf says Ikenna Nzevi Why this new technology matters to farmers.
In Nigeria’s food processing industry, there is more downstream competition, mainly dominated by middlemen and traders, usually a single or a small number of organizations, which are often closer to consumers and have better pricing power. The situation is different for Releaf, which operates upstream and has less competition, at least when considering technology applications. Ayogu pointed to better prices for farmers and providing working capital as two ways Releaf can gain market share in the space.
Since launching Kraken in 2021, the startup has processed more than 10 million kilograms of palm fruit using its supply chain technology. As a result, Releaf’s monthly revenue has grown sevenfold year-on-year and will grow this year after securing more than $100 million in supply contracts from Nigerian consumer goods manufacturers. With the funding, the agtech company, which has tripled in valuation since its seed round, will seek to expand the areas where it processes palm and expand the types of crops it works with.
“Our insights suggest that downstream is constrained by supply, and supply is upstream,” the CTO said. “So our focus is on having a first-mover advantage in a differentiated technology where we can get a lot of supply in a fragmented market and then verticalize over time to grow margins and market position.”
The pre-Series A round was led by Samurai Incubate Africa, which reinvested after leading Releaf’s seed round, with participation from Consonance Investment Managers. Stephen Pagliuca (Chairman, Bain Capital) and Jeff Ubben (WWF Board Member and Founder, Inclusive Capital Partners) also invested. Rena Yoneyama, Managing Partner of Samurai Incubate Africa, said of the investment: “The success of Releaf’s pilot Kraken validates its thesis and we are delighted to continue to support their ambitious vision of an efficient supply chain in the African agricultural market .”