NAIROBI (Reuters) - Kenyan food distribution start-up Twiga Foods has raised $30 million in debt and equity through a fundraising round led by Goldman Sachs, it said on Monday.
Twiga, which estimates Africa’s informal food production and distribution system at $300 billion a year and growing, uses an online platform to link food producers with retailers, aiming to harness technology to boost demand for farmers’ products.
The funds, raised partly from existing investors such as the International Finance Corporation, TLcom Capital and Creadev, will be invested in upgrading the technology behind the Twiga platform and to establish a new distribution center.
“This allows us to ... get the company to the next level of growth,” co-founder and CEO Peter Njonjo told Reuters.
Twiga is among a host of African start-ups looking to use information technology to solve the continent’s problems, such as highly fragmented and informal retail food markets that discourage investments in farming.
The company’s fleet of vehicles delivers fruit and vegetables to retailers within 18 hours of receiving an order on the platform and pays the farmers within 48 hours using mobile platforms such as M-Pesa.
“We are aggregating the demand of those informal retailers, allowing the farming ecosystem to start having an addressable market,” Njonjo said.
The new distribution center will feature cold rooms, conveyors and other sorting infrastructure as the company seeks to perfect its business model and take it into new markets.
“By having this set-up in Nairobi, it provides us with a blueprint for when we start looking at other cities across the continent,” Njonjo said.
The company plans to expand into other Kenyan cities by the middle of next year before moving into other African cities.
“We are doing our due diligence in terms of the next cities that we need to launch. French West Africa is really looking attractive,” he said, adding that areas for expansion have yet to be finalised.
Twiga, which was started in 2014, has now raised a total of $55 million in debt and equity.
The latest round netted $23.75 million in equity and $6 million in debt from OPIC and Alpha Mundi, Twiga said.
Njonjo declined to give a valuation for the company or say whether it has started making profit, citing Goldman Sachs’ policies on non-disclosure of such information.
Editing by David Goodman