The investment worth $30 million will fund the continued development of Twiga’s proprietary technology and logistics assets to support the roll-out of its distribution system and lay the foundations for expansion into other cities on the continent.
Goldman Sachs, a Top American investment bank is the latest to acquire a stake in Kenyan start-up Twiga Foods following an Sh2.44 billion ( $23.75 million) deal that will help the agro-based firm spread across the country and Africa.
This new investment marks Goldman Sachs’s first major deal in a Kenyan firm. Twiga, which buys produce from a network of farmers and delivers it to thousands of informal vendors, has recently become a magnet for foreign investors, making it one of the most funded start-ups in the region.
“Goldman Sachs is getting a stake and it will be the lead institutional investor in Twiga. It is providing the bulk of the $23.75 million,” said Peter Njonjo, who became the company’s chief executive in March.
“This funding enables us to invest in our technology and organization to tackle the inefficiencies in Africa’s domestic food production and distribution,” he added.
Twiga was established in 2014 and runs a cashless platform where it receives fruit and vegetables from 17, 000 farms for direct delivery to more than 8,500 vendors.
The new round of equity funding will scale up Twiga Foods’ use of technology and inject efficiency into its food distribution model, ultimately boosting the consumption of fresh, quality products while lowering their cost.
The earlier fundraising plans saw IFC invest Sh1 billion in Twiga Foods, which upped its food handling processes to global standards.
Twiga’s business model offers farmers a predictable rate for their produce, timely payments, escape the troubles of delivering to the market and avoiding the network of middlemen. Vendors, on the other end of the supply chain, are assured of a reliable supply of produce.
Besides fresh produce, Twiga has in recent months ventured into processed foods like rice, maize flour, cooking oil, milk, juice, and sugar following demand from manufacturers keen on tapping into the firm’s technology-based distribution network.
There are about 180,000 informal individual fresh food retailers in Kenya serving an estimated 6 million people, making the market very fragmented.
With the funding, Twiga will be eyeing other East African cities, such as Dar es Salaam in Tanzania and the Ethiopian capital, Addis Ababa, before exploring Africa’s most populous city, Lagos.
In a previously held After Office Hours by Grant Brooke, co-founder at Twiga Foods, Grant stated that it was essential that Kenya and the whole continent worked towards embracing similar models like Twiga if we do not want food to grow to a 50 – 60% of consumers spending. This just eats into the economies.
“Right now, we lose over 30% of stock between farms and the market. We have a problem where food is 45% of consumer spending but when you go to the farms the farmers still complain of not getting a reliable market. This is a huge problem that needs to be addressed It’s an issue that will not get better with the growing population unless we cultivate better agricultural practices and standards,” he said.