Nigeria’s agritech startup, Releaf, which develops proprietary hardware and software solutions to industrialise food processing, has raised $2.7 million seed funding and grants.
The round was led by Samurai Incubate Africa, Future Africa and Consonance Investment Managers with participation from Stephen Pagliuca, Chairman of Bain Capital and Justin Kan (Twitch). Releaf also secured $1.5 million in grants from The Challenge Fund for Youth Employment (CFYE) and USAID.
The seed funding will enable the startup to develop industrial food processing technology in Nigeria’s smallholder-driven oil palm sector, while the grant will enable Releaf to provide working capital and other value-added services for smallholders and small-scale processors.
Grant funding will support the training, recruitment and retention of more women and youth in Nigeria oil palm sector through the creation of both digital and technical jobs.
Nigeria’s oil palm industry is dominated by smallholder farmers, with 80 per cent of local market share. However, production rates are low because many still rely on ineffective processes for de-shelling, including the use of rocks and inappropriate hardware.
These ineffective processes also lead to low quality palm kernels, which are largely unfit as input for high quality vegetable oil manufacturing.
As a result, food factories are unable to purchase these raw materials and operate significantly under capacity. On average, food factories have three tines more installed capacity than utilisation, which impacts the cost of food and hampers further investment into processing capacity.
Releaf acts as a bridge between smallholder farmers and food manufacturing companies with its proprietary patent-pending machinery, Kraken. Kraken can process any quality of palm nut into premium quality (95 per cent purity) inputs for food factories.
Releaf’s software connects the start-up to over 2,000 smallholder farmers, ensuring consistent, large-scale supply. While palm kernel oil production is not foreign to Nigeria, Releaf’s technology and scale means it can process 500 tonnes of palm nuts per week.
The software offerings also allow the start-up to receive inbound supply requests from farmers via USSD, provide working capital financing as well as collect proprietary data on supply availability.
Speaking about the new funding, Ikenna Nzewi, CEO and co-founder of Releaf, said: “Our mandate is to industrialise Africa’s food processing industry. This round of funding enables us to develop and prove our technology with smallholder farmers in the oil palm sector. Given Nigerians spend ~60 per cent of their income on food and Africa’s population is set to increase by 100,000 people per day over the next three decades, we’re presented with an incredible opportunity to feed more people, reduce consumer costs, and supply the fastest-growing food market in the world.
Releaf is committed to harnessing technology to accelerate the economic wealth of rural, agrarian societies throughout the continent. We firmly believe that a robust real economy is the foundation for long-lasting and shared prosperity for Africans and are excited to deepen partnerships with like-minded organizations, governments, and firms.”
This new funding will enable better productivity and accelerate the eradication of the menial and archaic processes that are prevalent across Nigeria’s oil palm sector and the agriculture sector as a whole. It will also enable Releaf to drive more value and profitability across the oil palm value chain, as well as support direct and ancillary job creation in the farming communities of South and Eastern Nigeria.
Rena Yoneyama, Managing Partner at Samurai Incubate Africa who led the round said: “Releaf’s novel approach to operating within the value chain with proprietary technology set it aside from many agtech startups we have spoken to.
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.”