Africa’s agtech wave gets $10 million richer as Twiga Foods raises more capital

Jake Bright Contributor Jake Bright is a writer and author in New York City. He is co-author of The Next Africa. More posts by this contributor Nigerian data analytics company Terragon acquires Asian mobile ad firm Bizense Africa Roundup: Local VC funds surge, Naspers ramps up and fintech diversifies Kenya’s Twiga Foods has raised $10 million from […]

Kenya’s Twiga Foods has raised $10 million from investors led by the International Finance Corporation to add processed food and fast moving consumer goods to its product line-up.

The startup has built a B2B platform to improve the supply chain from farmers to markets. Twiga Foods now aims to scale additional merchandise on its digital network that coordinates pricing, payment, quality control, and logistics across sellers and vendors.

CEO and co-founder Grant Brooke sees “a growth horizon…to build a B2B Amazon,” with produce as the base.

“If we can build a business around fresh fruit and vegetables, everything else after that is much simpler to add on,” he told TechCrunch.

“Fresh food and vegetables gives you clients that are ordering every two days, and now that’s paying for access to vendors and a proper way to be on every street,” said Brooke.

“It’s now much easier to lay things over that that would have been very expensive to get to end retailers.” In addition to the processed food FMCG it will add now, CEO Grant Brooke named household goods, such as light-bulbs that stock and sell in lower volumes than produce, as something the startup could include in the future.     

The $10 million IFC led investment—co-led by TLcom Capital—comes in the form of convertible notes, available later as equity, according to Wale Ayeni, regional head of IFC’s Africa VC practice. As part of the deal, Ayeni will join Twiga Foods’ board.

Of the decision to fund the startup, Ayeni indicated IFC likes what the company’s already done in “figuring out a way to service a mass market with a digital platform focused on food in a sector that’s not really been touched,” he said. Another factor was Twiga’s prospects to create additional revenue by improving B2B supply chain for FMCG and other consumer products.

Co-founded in Nairobi in 2014 by Brooke and Kenyan Peter Njonjo, Twiga Foods serves around 2000 outlets a day with produce through a network of 13,000 farmers and 6000 vendors. Parties can coordinate goods exchanges via mobile app using M-Pesa mobile money for payment.

The company has reduced typical post-harvest losses in Kenya from 30 percent to 4 percent for produce brought to market on the Twiga network, according to Brooke.

“That’s savings we can offer the outlets and better pricing we can offer the farmers,” he said.

Twiga Foods generates revenues from margins on the products it buys and sells. As an example, the company could buy bananas at around 19 Schillings ($.19) a kilo and sell at 34 ($.34) Schillings a kilo.

“Our margin is how efficient we are at moving products between those two elements” and the company purchases from farmers at roughly 10 percent higher than Kenya’s traditional produce middle-men, according to Brooke.

Agtech has become a prominent startup sector in Africa. A number of companies, such as Ghana’s Agrocenta and Nigeria’s Farmcrowdy, have raised VC for apps that coordinate payments, logistics, and working capital across the continent’s farmers and food markets.

In 2017 Twiga Foods raised a $10.3 million Series A round lead by Wamda Capital. Earlier this year the startup partnered with IBM Africa to introduce a blockchain enabled finance working capital platform to its network of vendors.

With the new investment and product expansion, Twiga Foods will explore offering additional financial services to its client network. The startup doesn’t divulge revenue information but “profitability is on the horizon for us,” said Brooke.

Twiga Foods will maintain its focus primarily on Kenya, but “we’re starting to research and dabble in Tanzania,” according to Brooke.

The startup doesn’t plan to move beyond B2B to direct online retail. “I don’t think B2C e-commerce is viable on the continent once you factor in job size and cost of acquisition versus lifetime value,” said Brooke. He also named the high cost of marketing: “In B2C e-commerce space you really have to be in the advertising space. Our clients are ordering every two days with no marketing budget,” said Brooke.

So for the time being, Twiga Foods aims to stick with improving the supply chain for products between Kenya’s buyers and sellers.

Peak Theory lines up media partners and funding as Cubcoats becomes a phenomenon

With a planned cartoon series coming up, partnerships in place with Major League Baseball, NBCUniversal and other media companies of heroic proportions, the founders creating the kids clothing phenomenon, Cubcoats, are on a roll. Peak Theory, launched by longtime friends Zac Park (who’s 29) and 35-year-old Spencer Markel, is the company behind Cubcoats, a hoodie […]

With a planned cartoon series coming up, partnerships in place with Major League Baseball, NBCUniversal and other media companies of heroic proportions, the founders creating the kids clothing phenomenon, Cubcoats, are on a roll.

Peak Theory, launched by longtime friends Zac Park (who’s 29) and 35-year-old Spencer Markel, is the company behind Cubcoats, a hoodie that transforms into a puppet (or a puppet that transforms into a hoodie?). With their first product, the two founders have achieved the kind of viral success in its first year that most companies only dream of.

Markel, a former mergers and acquisitions lawyer with DLA Piper, and Park, a product director at the design agency AKQA, first met in San Francisco through a mutual friend, and almost immediately began planning their escape from the corporate world.

Peak Theory founders Zac Park and Spencer Markel

“We thought to ourselves, what can we create that would bring over a novel and sticky concept that could sell well to parents and create a lasting brand relationship with kids,” Park said, in a statement. “We wanted a product that a child would get attached too, grow up with, and want to gift to their future kids.”

The two self-described kids at heart hit upon the idea of Cubcoats through a mutual love of Transformers and Mighty Morphin Power Rangers as children (and maybe as adults as well).

“We don’t have any kids, we were just big kids,” said Markel. 

They started the process of creating hundreds of prototypes in September 2016, and by November of 2017 had hit upon the final designs for eight different puppets that turned into zippered hoodies for children. Each animal-inspired puppet had different characteristics and personalities and each came with a story tied to it.

The two-in-one clothes went viral. In its first full year, Cubcoats expects to pull in somewhere between $2 million and $5 million in revenue, according to the two founders. By July, 2018, the company had sewn up $5 million in financing from a who’s who of entrepreneurs and celebrity investors.

Institutional investors, including strategic partner Major League Baseball and celebrity investor Will Smith’s Dreamers Fund, came on board. So did individual angel investors like FabFitFun co-founders Daniel and Michael Broukhim, the actress Hilary Duff, Schwarzenegger scion, Patrick Schwarzenegger and Jen Rubio, the co-founder of Away.

The Harmon Brothers video production company, which is behind a number of direct-to-consumer marketing hits like the mattress company Purple and others is collaborating on a series of videos with the Peak Theory team and investing in the company, as well.

The idea of the company is to create a brand that’s not just the two-in-one Cubcoat,” said Markel.  “We’re trailblazing a new area of consumer products that we think will be pretty hot. There’s a burgeoning space in two-in-one products. We’re uniquely situated to design these two-in-one products and build our own IP in terms of content.”

Big media and entertainment companies are already clamoring to work with Peak Theory, the company said. Professional sports teams and leagues like Major League Baseball are only the first companies to publicly disclose their interest in the company.

“We’re two big kids at heart with very whimsical dreams,” said Markel. “We’ve tried very hard to be two people who are not necessarily from the industry to come in and create a novel industry and rethink some of the way we do consumer products… it’s been really fun.”

The company plans to expand the Cubcoats line to Canada, Australia and across Asia in 2019 — meaning popular favorites like Kali the kitty and Tim the puppy will be popping up in cities from Sydney to Seoul in addition to Seattle.

Peak Theory has partnered with Nordstrom for the holiday season to sell its Cubcoats in roughly 100 of its locations and will have pop-up shops of its own at The Grove mall in Los Angeles and the Americana mall in Glendale, Calif.