Winich Farms raises $3m pre-series A to help smallholder farmers to produce and distribute profitably

Winich Farms, a Nigerian Agtech startup making the supply chain of farm produce seamless for all stakeholders, has secured $3 million in pre-series A funding to enhance its technology and optimize its operations. The round is a mix of equity and debt.

The equity funding of $2.5 million came from Acumen Resilient Agriculture Fund (an East and West Africa-focused impact venture capital fund ), Climate Resilient Africa Fund, Marula Square, Plug and Play, and Tekedia Capita. Lagos-based Sahel Capital supplied the $590,000 debt funding. 

According to Winich’s CEO and co-founder, Richies Attai, the funding will help the Agritech startup to improve its technology and scale its operations:

“This funding is strategic towards further enhancing our technology infrastructure making it more user-friendly, while advancing our data-driven approach in enhancing the farmers’ ability to access financially inclusive services like credit and insurance to increase productivity while scaling operations to accommodate our expansion plans”, he explained

When Richies started Winichfarms in 2020, his goal was to ease the burden small-sized Nigerian farmers face with access to the market for profitable sales and make quality farm produce available to buyers at the best prices. And, the genesis of his aspiration was the desire to solve the challenge of access to a stable commodity, beans, while he was at the University of Benin.

“Just like in every other university in Nigeria, beans are one of the most consumed food items. Yet, it was difficult to get it. And, when you do, you risk losing it to infestation by weevils. At that time, Nigeria was the largest producer of beans in the world. So it did not add up that beans will be cheaper in other places, than it was in Nigeria”, he told me.

This led him to study the value chain to understand why this problem existed. He, alongside his co-founders, identified three major problems: a long chain of middlemen that made farmers get little value for their outputs, the high cost of borrowing from microfinance and big banks and the high cost of distribution.

Back in the day, farmers had to wait for market days — sometimes every two weeks or even once a month — just to sell their produce. This left them in a tough spot, as they often had to rely on middlemen who took advantage of their desperation.

Now, thanks to his company, the farmers can sell whenever they want. All they have to do is drop their produce at the nearest collection point, and they get paid within 48 hours

The company provides off-takers with inventory management tools that help them order and manage raw materials from farmers across Nigeria. This is possible through the thousands of farm produce collection points that Winichfarm has across 30 out of the 36 states in Nigeria. 

From there, the produce is gathered and shipped to off-takers. With geo-zone technology, Winich Farms ensures orders are fulfilled from the closest collection points, making deliveries quicker. For instance, buyers in Lagos get their orders from farmers in nearby Ogun or Osun states, cutting down delivery time.

Speaking on the funding, Tamer El-Raghy, Managing Director of Acumen Resilient Agriculture Fund (ARAF), said: “We are excited to partner with Winich Farms as their solution addresses a critical need for rural farmers in Nigeria by facilitating efficient market access Smallholder farmers face. Investing in Winich aligns with our goal at ARAF of growing local businesses that support smallholder farmers towards increased productivity, sustainable agricultural development, better livelihoods, and increased food security.“

““With Riches’ deep-rooted personal connection to smallholder farmers, Chichebem’s technical expertise, and Winner’s operational experience, they offer a powerful combination. Their experience as second-time founders in this space further demonstrates their commitment to overcoming challenges and building a sustainable business.”
General Partner at Acasia Ventures Biola Alabi also said. 

Read also: Victory Farms’ $35M raise

Winich’s impact on the ecosystem

So far, Winich Farms has built an ecosystem of more than 150,000 users, including farmers, off-takers (small businesses and factories), logistics partners, and collection point agents. “For us, Winich Farms is more than just a profit-oriented business, but a cause at heart improving the lives of smallholder farmers, informal processors, and retailers who put food on our tables daily but have been largely marginalized”, Richies said.

The company is also helping smallholder farmers, who don’t have immediate access to the financial system, build their credit worthiness, by tracking and ranking their earnings over time and connecting them to its financial institution partners.

It recently launched a debit card in partnership with Sterling Bank, allowing farmers to save their funds in the bank with the certainty that they could get it whenever they want. “We currently have over 25,000 of these cards. Now, farmers who previously transacted using cash are now able to transact with these cards. And, they now have a traceable transaction history”, he explained.

To measure its impact on the ecosystem, Winich launched an independent survey to interact with users and document their experience. According to the survey report, 95% of the farmers confirm that their income has increased significantly. When asked about volume, they confirmed that it has been an average of 30% cycle-on-cycle.

“90% of them believe they will be worse off without Winich farms. Over 65% confirm that our updates have helped them achieve resilience and that the access to insurance that we facilitated indemnified them against many circumstances”, Richies told me.

The company’s GMV has grown 300% from $10 million in 2022 to $30 million at the end of the 2023 financial year. Last month, the company expanded into Tanzania to facilitate — not just local supply chains — but exportation into the Middle East and Europe.

Asked how the company makes revenue, Richies told me that they provide our services free of charge to farmers. They make a profit from the commissions that they charge the off-takers. “If a farmer drops off his produce at $90, Winich takes that produce and sells to the off-taker at $100. The $10 difference is what we earn as a commission. We typically charge a fair commission of 5 to 10%”, he explained.

Solving the problem of trust

A predominantly corrupt system in Nigeria makes the probability of getting legal resolutions a herculean task. Hence, business operators typically value trust as a currency of trade. Worse, local denizens like smallholder farmers are very sceptical of innovation because they cannot guarantee the safety of their funds.

I was curious about how the Winich team was able to get over 100,000 farmers to trust them to receive their produce, store them and return a fair cash exchange. Richies acknowledged that trust is an invisible barrier to entry to operating in the Agritech space. Yet, he admits that breaking the trust barrier is the secret to success.

“This is because farmers live in rural communities. They have a very communal lifestyle. And, this means that if one farmer is comfortable with your product or service, you will almost not need to do any marketing. The news of your offering will spread like wildfire. The same applies if one farmer does not like your service. It will spread like wildfire as well.”, he noted.

So, what his team did was to be intentional about earning the trust of farmers. During the COVID-19 lockdown in 2020, farmers who harvested their produce could either give their products to Winich (since they couldn’t go to the markets) or watch them perish.

“At that time, we were their only option. We helped them offtake their produce. We connected the produce to the market. As a matter of fact, at the time, we even had to deliver produce to people in their homes because of the lockdown… This served as the bedrock to earning the farmers’ trust post-covid”, he concluded.