Africa's farmers face many challenges, including inadequate financing, education, and distribution of inputs. This has a significant impact on Africa's agricultural output. Startups are finding innovative solutions to these problems. South Africa's Khula is one example. This startup was launched in 2018 and is now thriving in this ever-growing market.It announced today a seed round of $1.3 million to scale up operations across the country.It would appear that agritech has not grown as rapidly in Africa as other tech-operated sectors. It has. According to Farmers Review Africa, the agritech industry grew by 44% between 2016 and 2019. The continent also has the highest level of agritech services, reaching more 33 million smallholder farmers.Khula was founded by Jackson Dyora, Matthew Piper, Karidas Tshintsholo and Matthew Piper three years ago. Khula offers software and a marketplace for small-scale and large-scale farmers. This description does not do justice to the difficult problem Khula solves.Tshintsholo, Piper and Khula were business and school partners before Khula. After dropping out of college, they worked as consultants for a year. It was exciting to be able to meet clients from different disciplines but not enough.Tshintsholo explained to TechCrunch that they always wanted to do something that was more powerful, meaningful, and could make a real difference in the world. Agritech became the obvious choice due to the experiences of both founders.60% of the arable land in Africa is located in Africa. Agritech in Africa is expected to grow to $1 trillion by 2030, according research. Piper was intrigued to see why Israel, despite having half its land being deserted, produced more agricultural produce than African nations.Tshintsholo stated that it didn't make sense that there was more land on the continent than any other continent. Most people on the continent are farmers, so we were purchasing more food than we were selling. Given the competitive advantage that agriculture has, we wondered how this was possible.Further research revealed another problem. Intermediaries ripped off farmers throughout the country.South Africa's agricultural industry is known for favoring industrial agriculture. Smallholder farmers in South Africa are, like many other parts of Africa, faced with a multitude of challenges. These include selling and marketing, as well as transportation and storage of their produce.Farmers typically take their produce to large warehouses where they are picked up by big aggregators and sold. Consignment sales are a common way for farmers to make a sale. These perishable goods are bound to see a drop in their prices. There is also a lack of transparency that allows middlemen to fleece farmers.We started to play detective when the penny fell for us. These farmers were followed by the big companies that were listed on the stock market. They would go to these markets to pick up produce, then sell it to the formal market. They would pick it up at R3.50 and then sell it at R11.00. They did not add anything to the value chain, other than picking it up and dropping off.Farmers could sell their produce to processors who then sell it to supermarkets at a higher price. A supermarket can also make a profit selling individual consumers their produce. What a farmer might sell for R3.50 ($0.24) could end up as R30 ($2.07) in the hands of individual consumers. This is not all: Farmers must also pay commissions for these middlemen and the municipalities in which they operate.Tshintsholo stated that this was when we realized this was a problem and the problem we wanted. We didn't go live until we had solved that problem. Agriculture can be complex. We now have the Khula ecosystem. This is because agriculture is interconnected.Khula hopes to address all of these issues simultaneously and provide liquidity, access, and a market for farmers. The platform includes three products.The Inputs App permits farmers to have access to approved agricultural inputs from both local and international suppliers.The Fresh Produce Marketplace is the second, which targets farmers who have faced the same challenges as those cited. It allows farmers to directly sell their produce to formal bulk buyers both locally and internationally. The platform allows farmers to negotiate prices directly with suppliers. This will reduce the middlemen that have led to farmers being exploited.The Funder Dashboard then connects institutional investors and farmers who fulfill their funding mandates.Tshintsholo explained that the reason we chose to use an ecosystem approach is because it's more of a sticky model. We want farmers to be able to use our ecosystem to purchase the products and services they require.Since its launch, Khula has gained some traction. Khula has already signed up over 3,000 farmers and more than 100 suppliers. The startup was accepted into the Google for Startups Accelerator Class 6 along with 14 other African businesses.The company announced the investment today, but it already closed the round last January. It was led by AECI (one of the largest agrochemical companies on Africa). South African impact investor E Squared Investments was also present.Khula will not only receive financial support from its investor but also access to AECI's extensive distribution network in order to scale up its inputs app. Khula claims it has 132 depots in the country and can deliver products to every province in every major agricultural region.Tshintsholo said that AECI is Khula's ideal investor: a partner who is interested in execution, not quarterly updates.We didn't want an investor who would only ask how we did in a particular quarter. We needed a partner who would work with us long-term. Partner with an excellent reputation in the industry, an amazing distribution network, and a long-term partnership that was tied to our business model. AECI is that partner.Khula is a very attractive company with strong fundamentals, a large addressable market, app design capabilities, key agribusiness networks, and a management team who wants to work with AECI. Quintin Cross, managing director of AECI Health, stated in a statement that Khula has a lot of potential, said Quintin Cross.
