NIGERIA – Nigeria-based agritech startup Releaf has secured US$2.7-million in a seed funding round to enable the development of industrial food processing technology in the country’s smallholder-driven oil palm sector.
Founded by Ikenna Nzewi and Uzoma Ayogu, Releaf is an agricultural technology company that develops proprietary hardware and software solutions that makes African farmers and food factories more efficient and profitable.
Starting with Nigeria’s US$3 billion vegetable oil market, Releaf ensures smaller factories are set up near smallholder farmers, enabling the former to get better processing yields and fewer logistics costs; and also provides a direct and accessible market for the farmers, increasing their income.
Pan-African focused venture capital firms Samurai Incubate Africa, Future Africa and Consonance Investment Managers led the round, with participation from private investors like Stephen Pagliuca, the chairman of Bain Capital and Justin Kan of Twitch.
Rena Yoneyama, Managing Partner at Samurai Incubate Africa who led the round commented, “Releaf’s novel approach to operating within the value chain with proprietary technology set it aside from many agtech startups we have spoken to. We believe the firm’s thesis on decentralizing food processing would have a strong match with Africa’s economic development landscape for the next few decades.
“Ikenna and Uzo are the perfect founders to disrupt this market in Nigeria and beyond. We are thrilled to back them as they innovate in providing both agro-processing and financial services to rural communities and farmers.”
In addition to the seed round, the agritech startup secured US$1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID.
The grant will enable Releaf to provide working capital and other value-added services for smallholders and small-scale processors.
It will also support the training, recruitment and retention of more women and youth in Nigeria Oil Palm sector through the creation of both digital and technical jobs.
Speaking about the new funding, Ikenna Nzewi, CEO and co-founder of Releaf, said, “Our mandate is to industrialize Africa’s food processing industry. This round of funding enables us to develop and prove our technology with smallholder farmers in the oil palm sector.
“We firmly believe that a robust real economy is the foundation for long-lasting and shared prosperity for Africans and are excited to deepen partnerships with like-minded organizations, governments, and firms.”
Nigeria’s oil palm industry is dominated by smallholder farmers, with 80 percent of local market share.
However, production rates are low because many still rely on ineffective processes for de-shelling, including the use of rocks and inappropriate hardware.
These ineffective processes also lead to low quality palm kernels which are largely unfit as input for high quality vegetable oil manufacturing.
As a result, food factories are unable to purchase these raw materials and operate significantly under capacity.
On average, food factories have 3X more installed capacity than utilization, which impacts the cost of food and hampers further investment into processing capacity.
To this end, Releaf acts as a bridge between smallholder farmers and food manufacturing companies with its proprietary patent-pending machinery, Kraken.
Kraken can process any quality of palm nut into premium quality (95 percent purity) inputs for food factories.
While palm kernel oil production is not foreign to Nigeria, Releaf’s technology and scale means it can process 500 tonnes of palm nuts per week.
Other than its proprietary hardware, Releaf’s software connects the start-up to more than 2,000 smallholder farmers, ensuring consistent, large-scale supply.
The software offerings also allow the start-up to receive inbound supply requests from farmers via USSD, provide working capital financing as well as collect proprietary data on supply availability.
This new funding will enable better productivity and accelerate the eradication of the menial and archaic processes that are prevalent across Nigeria’s oil palm sector and the agriculture sector as a whole.
It will also enable Releaf to drive more value and profitability across the oil palm value chain, as well as support direct and ancillary job creation in the farming communities of South and Eastern Nigeria.
Growth of the oil palm sector is paramount as nearly more than 50% of the goods in supermarkets globally contain glycerine – an extract made from palm oil – a cash crop that is passed down from generation to generation.
Presence of the ready market with a huge appetite ascertains Releaf’s move of building an agro-allied industry of the future from the ground up.
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