The latest fundraising, which was led by private equity firm Creadev, also included Africa-focused firms such as TLcom, IFC ventures, DOB Equity, and Goldman Sachs’ spinoff Juven as well as first-time investors OP Finnfund Global and Endeavor Catalyst Fund.
This comes after the company last year announced plans to expand to countries such as Rwanda, Tanzania, Nigeria and Ghana. This is yet to happen though amid disruption caused by the Covid-19.
“We’ve been fairly successful in Kenya. So, we want to consolidate our dominant position, clear out our proof of concept and expand to the neighboring countries,” the company’s chief executive office and co-founder Peter Njonjo told TechCrunch, a US-based tech and startups news platform.
Part of the cash will also be used to develop an in-house supply chain of commodities such as tomatoes, which have been hit by disruptions. It also seeks to invest in low-cost manufactured food and non-food products under its brand name by the end of this year.
“It is not just working with smallholder farmers; we will work with them but on some value chains. But we’re looking at having larger commercial farms integrated into our supply chain,” Mr. Njonjo said.
Since 2014, Twiga Foods has been using technology to build supply chains in food and retail distribution on the continent, starting with Kenya.
The seven-year-old company Series C round comes after the company’s $30 million Series B round — $23.75 million equity and $6.25 million debt — in 2019.
Per Crunchbase, Twiga has raised more than $100 million in both debt and equity financing rounds.
For most of Twiga’s operational history, it connected vendors and outlets with farmers via an app to access different agricultural produce.
But in 2019, the company began to connect FMCGs and manufacturers with retailers in Kenya in a bid to increase revenue, thereby dipping its hands into a space with regional players such as Sokowatch and MarketForce.
Working on a proof of concept
Smallholder farmers remain at the core of Twiga’s operations. Twiga can effectively track food and produce from processing to distribution. However, there’s bound to be some lapses in the production end of things where, for instance, farmers can apply a lot of pesticides to crops without Twiga’s knowledge, thereby creating food safety problems for the end consumer.
To avoid situations like this in the future, Twiga plans to personally handle the value chains of some products where traceability can be an issue.
“For us, it’s choosing value chains where you can manage the traceability issue while there are some value chains that will be harder to manage,” the CEO said, “The key thing is that we now have a more blended approach. It’s not just about working with small farmers; we still work with them but on some value chains. But we’re looking at having large commercial farms integrated into our supply chain.”
Njonjo says Twiga is investing in a proof of concept to develop an alternative way of producing food on the continent and cover both ends of traceability and mass scale.
According to the company, the proof of concept aims to reduce the price consumers pay for popular domestic plant-based food products by over 30%.
Once the company manages to set it up, Njonjo says the model might be spun off as a separate business to maintain a more asset-light approach to expansion.
The funding will be used to test the concept. Twiga also plans to use part of the funding to roll out low-cost manufactured food and non-food products under its brand before the end of the year.
Twiga who started off their operations at Nairobi Garage, uses technology to aggregate demand and streamline logistics in the distribution of farm produce such as bananas, onions, tomatoes, potatoes, mangoes, and cabbages, to small-scale vegetable vendors in city estates, thus helping make products more affordable and increasing sales for vendors.
It serves about 33,000 vendors every month with an average of seven orders per week per vendor, and also operates in Uasin Gishu, Embu, Meru, Kirinyaga, Machakos, Nakuru, and Kiambu counties.