Barely twelve months after its launch, agro-Startup in Nigeria, Farmcrowdy has raised $1 million from investors including Techstars, Cox Ventures and Social Capital.
Farmcrowdy’s digital platform connects investors to farmers through sponsorship packages to fund higher yields for a share of the returns.
The app allows the sponsors to “Farm Shop” screened agricultural opportunities by produce type, funding amount, contract duration, and expected returns on an investment. The profiles include details on what the sponsorship funds―farm inputs, technical advice, or logistical support―to achieve yields. Common crops are cassava, soya beans, and rice. Investors can also use Farmcrowdy’s platform to track the performance of their sponsorships.
“What makes Farmcrowdy different from other platforms is it turns a complex problem into a digital marketplace,” Farmcrowdy CEO Onyeka Akumah said in a press release. “We’re taking care of funding for farmers, training for farmers, providing the market for the farmers to sell. We’re taking care of the logistics to move farm harvests to the market and making sure farmers earn a decent return at the end of their cycle,” he said.
Farmcrowdy screens small scale farms throughout Nigeria and works with partners such as Syngenta and Africa’s International Institute of Tropical Agriculture to shape sponsorship packages to provide them expertise. A big problem, according to Akumah, is many of the farms do not have the inputs to reach the full harvest potential of their land plots.
Farmcrowdy’s revenue model operates on a split system for sponshorships: principal plus 40 percent for sponsors, 40 percent for farmers, and 20 percent for Farmcrowdy. For example, if an investor sponsored a maize farm for 6 months at $1000 and at harvest the produce sold for $1500, the sponsor would regain their investment ($1000) plus 40 percent of profits ($600), the farmer $600 (40 percent), and Farmcrowdy $300 (20 percent).
Farmcrowdy will use its fresh funding to scale operations, expand into 20 Nigerian states, and bring more small-scale farmers and sponsors into its program.
The startup participated in the accelerator class of one its investors, Techstars, in summer 2017. Techstars vetted Farmcrowdy’s model during a trip to Nigeria earlier in early 2017, Techstars mentor Cody Simms confirmed in an email.
Agriculture is yet another African sector in which tech companies are attempting to scale startups, apps, and solutions. MasterCard launched its 2KUZE agtech platform for smallplot farmers in Kenya, Uganda, and Tanzania in January. AgroCenta has developed digital logistics solutions for smallholder farmers in Ghana.
Farmcrowdy CEO Onyeka Akumah sees the revenue potential for agriculture in Nigeria “as massive”, noting the country’s size and growth. “Nigeria has 186 million people and is projected to become the world’s third largest country in the next 30 years. All of these people are going to need food to eat,” he said.