Releaf, a Nigerian agritech startup, has raised a $4.2 million funding to develop its technology and provide funding to smallholder farmers.
The funding came from pan-African focused venture capital firms Samurai Incubate Africa, Future Africa and Consonance Investment Managers led the round. Individual investors like Stephen Pagliuca, the chairman of Bain Capital and Justin Kan of Twitch also participated.
In addition to the seed round, the agritech startup secured $1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID.
Founded in 2017 by Ikenna Nzewi and Uzoma Ayogu, Releaf uses pre-processing technology to increase the quality of inputs supplied to African food factories running at <30% capacity due to procurement challenges. Its proprietary oil palm de-sheller is 25X faster, improves quality to double factory margins, and pays itself back in <3 months.
Releaf also focuses on value chains where smaller factories are set up near smallholder farmers. This allows them to get better processing yields and fewer logistics costs; in the end, the farmer has more money to work with.
The agritech startup will use the seed investment to develop technology and deploy it to smallholder farmers while the $1.5 million in grants will focus on providing working capital financing to these farmers.
“We think there’s a really great opportunity to bring both physical technology and financial services to these communities to make them more productive. And it’s kind of central to our thesis,” Nzewi said.
“We believe that our smart factories can serve as an economic pillar in these rural communities and make it easier for us to supply these communities with other services that they can find valuable like access to working capital, payment for education, and access to insurance services. So we see the food processing as like the first step it cements us in the value chain.”
Rena Yoneyama, the managing partner at Samurai Incubate Africa, said Releaf’s novel approach sets it aside from other agritech startups the venture capital firm has engaged with.
“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,” she added.
Speaking on the investment as well, Iyin Aboyeji, general partner at co-lead investor Future Africa said, “The team at Releaf is building the agro-allied industry of the future from the ground up, starting with palm oil which they have developed a novel technology to aggregate, deshell and process into critical ingredients like vegetable oil and glycerine. Future Africa is delighted to back Releaf to build the future of modern agriculture.”
