“After proving that, we needed to figure out how to best place this technology dynamically and, over the last couple of months, made progress on Kraken’s evolution from being static to being portable and reducing the cost significantly [Kraken II] while adding new products [SITE] to complement the suite of tech that we have already.”
Kraken II is a mobile and less expensive version of the palm nut de-sheller, costing half as much and eliminating over 80% of margin-eroding costs. On the other hand, SITE is a geospatial mapping application that discloses food processing assets. SITE was developed in collaboration with Stanford University’s Professor David Lobell, a MacArthur Fellow, and Director of the Center on Food Security and the Environment, whose team refined the age identification process for oil palm trees in Nigeria.
According to Ayogu, the YC-backed Releaf figured out that just building tech wasn’t enough to get the best margins for farmers and manufacturers but that the tech needed to be in the right places and at the proper season across different regions in Nigeria. Hence the reason for Kraken’s portability and SITE’s placement and route planning capabilities. The combination of both enables the Uyo-based Releaf to target the best opportunities across Nigeria’s oil palm belt rather than being limited to sourcing crops within 100 kilometers of a fixed processing site like existing food processors.
In Nigeria’s food processing industry, there’s more competition downstream, dominated mainly by middlemen and traders, usually single-person or few-person outfits that tend to be closer to consumers and have better pricing power. It’s different for Releaf, which operates upstream and has less competition, at least when the application of tech is considered. Offering farmers better prices and providing working capital are two ways Releaf uses to gain market share in this segment, Ayogu noted.
The startup has used its supply chain technology to process more than 10 million kilograms of palm nuts since the launch of Kraken in 2021. As a result, Releaf has grown its monthly revenue 7x year-on-year, which is set to increase this year following the securement of over $100 million in supply contracts from consumer goods manufacturers in Nigeria. With this funding, the agritech, whose valuation has tripled since its seed round, will be looking to expand the regions where it processes palm and extend the crop types it works with.
“Our insights have shown that downstream is capped by supply, which is upstream,” the CTO mentioned. “And so our focus is via the first mover advantage with differentiated technology, we can capture a significant amount of supply in a fragmented market and then over time verticalized to increase margins and market position.”
The pre-Series A funding was led by Samurai Incubate Africa, who re-invested after leading Releaf’s seed round, with participation from Consonance Investment Managers. Stephen Pagliuca (Chairman of Bain Capital) and Jeff Ubben (Board member at World Wildlife Fund and Founder of Inclusive Capital Partners) also invested. Rena Yoneyama, managing partner at Samurai Incubate Africa, speaking on the investment, said: “Releaf’s success with its pilot Kraken validates its thesis, and we are excited to continue supporting their ambitious vision to create efficient supply chains within Africa’s agricultural market.”
Nigerian agritech Releaf gets more capital as it launches new tech for food processing by Tage Kene-Okafor originally published on TechCrunch