Kenyan agritech startup, FarmWorks has closed a $4 million Pre-Series A funding round to enhance its business operations. Aside from connecting farmers with farm inputs like pesticides, the startup also buys their crops. It leverages the out-grower model which is common in Africa.
Acumen Resilient Agriculture Fund championed the round while Livelihood Impact Fund, Vested World, some family offices, and angel investors joined too. So far, FarmWorks has raised $5.6 million since its establishment in 2020.
When asked for insights into the purpose of the funding, FarmWorks CEO, Yi Li explained that the startup would channel the resources to three areas. Firstly, it would solidify its data analytics prowess, then it would leverage AI to boost production. Finally, the funding will help the business make lending and planning decisions.
FarmWork’s out-grower network of 2,000 small-scale farmers has greatly benefited from a supply chain that ensures their crops get shipped promptly. It sells 400 tons of produce monthly. Aside from giving farmers a steady market for their produce, the startup also loans them drip irrigation kits and other farm tools.
Commenting on FarmWork’s efforts to enhance farmers’ capabilities, Yi said:
“We are transforming what they are farming, and their income by introducing higher value crops like sugar snaps and snow peas, and finding the market. So, we become vertically-integrated from day-one in both the production and the distribution side of the business.”
Farmworks is keen on expanding its operations to other regions inside Kenya. It is also eager to widen operations to 2 regions. This makes sense given then it already has 16 collection centers in that region.
Farmworks is tackling problems in Kenya’s agricultural sector
Like Rwanda, Kenya is heavily fixated on agriculture. According to an agriculture sector survey commissioned by the Central Bank of Kenya, the gro sector accounts for 27% of the country’s Gross Domestic Product (GDP).
The agrarian sector is also a significant employer of labour. The survey found that it employs 40% of the country’s population. Interestingly, 70% of the rural demographic relies on the sector for income.
Despite its economic importance to Kenya, it’s not yet reaching its full potential. This is due to several factors including a lack of farm inputs, poor road networks to the farms, and little knowledge of how to operate inputs like herbicides and pesticides.
“We have a strong belief that the huge issue facing farmers in Kenya is production — the low yield is mainly due to poor farming practices, and soil degradation that has happened over the years,” Yi said regarding the issues plaguing the country’s agriculture sector.
That’s where FarmWorks comes in. By equipping farmers with farm inputs and providing them with a market for their harvest, it gives them a chance to get the most out of the trade. Aside from the above, the startup also enlightens farmers on best agricultural practices. It does this using a collection of training centres that originally served as the ground for its crop production.
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