FarmWorks, a Kenyan agtech that provides farmers with access to farm inputs, and market for their produce, has raised $4.1 million in a pre-Series A round led by Acumen Resilient Agriculture Fund, an existing investor. Livelihood Impact Fund, Vested World, a number of family offices, and angel investors also participated in the round that brought the total equity funding raised by FarmWorks to $5.6 million.
FarmWorks CEO, Yi Li, who co-founded the startup with Peter Muthee in 2020, told TechCrunch that they will use the funding to strengthen their data analytics capabilities, and use AI to enhance production, and influence planting and lending decisions.
FarmWorks runs an out-grower scheme that brings together over 2,000 smallholder farmers, which has helped it to build a supply chain network that ensures timely delivery of quality produce. It plans to grow its network of contract farmers in other regions within Kenya, in addition to the two counties in the central region of the country, where it is currently operational and has 16 collection centers.
The startup provides farmers with farm inputs, and pest control services, and buys their produce for export, or local sales. It also provides them with farming equipment like drip irrigation kits, on loan.
“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,” said Li.
The startup is tapping gaps in Kenya’s agriculture sector, which accounts for 20% of the Gross Domestic Product (GDP) and employs 70% of people in the rural areas, according to this report. However, while agriculture remains a critical sector for the Kenyan economy, small scale farmers, who are the majority, are faced with a myriad of challenges, including lack of quality farm inputs, information on good agricultural practices, inadequate advisory support, and unpredictable or unreliable markets.
The startup also teaches the farmers on good agricultural practices, which it demonstrates on its own trial farms.
“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,” said Li, who added that the startup is unlocking production and by boosting farmers’ capacity. The startup sells about 400 tons of farm produce a month.
FarmWorks previously engaged in crop production on its own farms, which it has now turned into training centers.
“There’s a lot of operational expenditure in running a big farm, and we realized that for the same efforts, we can cover a lot more farmers. That is why this year, we made a strategic decision to scale our out-grower scheme because that seemed to pick up much faster. We will be using our farms as training centers,” said Li. Li previously worked in Kenya as a management consultant for McKinsey, prior to launching FarmWorks with Muthee, who has been in the agriculture space for nearly three decades.