Agrifood Tech | May 8, 2024

Kenya’s iProcure, used by a million farmers, is the latest African funding crunch casualty

Lucy Ngige
Guest Author

Lucy Ngige

The Agtech startup iProcure launched a decade ago to untangle supply-chain logistics for Africa’s hundreds of millions of smallholder farmers.

Now the company is bankrupt.

iProcure provided seeds, feed and fertilizer, streamlined distribution and last-mile deliveries, and offered market data. Investors including I&P, British International Investment, Novastar Ventures and family office Ceniarth poured a collective $17.1 million into the Nairobi-based startup, including $10.2 million in debt and equity in August 2022.

“We are deeply sorry to see this pioneer in African agritech fail after successfully disrupting the agricultural inputs distribution sector in Kenya and Uganda,” Novastar said in a statement.

iProcure had digitized and served more than a million farmers.

Market headwinds

iProcure’s board placed it under administration in late April after the startup failed to close a new funding round. Accounting firm KPMG will wind down the startup’s operations.

Financial and market headwinds are buffeting young companies across the continent. At least 10 Kenya-based ventures, including online retail merchant Sendy, online farmer forum WeFarm, and Notify Logistics, which rented retail shelf space to small enterprises, have shut down since 2021.

Funding for African agtech startups fell 36% last year, to $84.6 million.

“iProcure’s failure is a painful reminder that even the most promising companies operating in our region are vulnerable to macroeconomic headwinds and extremely challenging funding and operating environments,” Novastar said.

Africa’s GDP growth slowed last year to an estimated 3.2% from 3.8% in 2022, African Development Bank data shows, but is expected to rise to 3.8% this year and 4.2% in 2025.

Meanwhile, higher global interest rates have increased debt service payments. Local news reports cited iProcure’s “undisclosed debts” that had not been repaid. Family office Ceniarth’s loan to iProcure was repaid last year, Ceniarth’s Greg Neichin confirmed.

“We know that the company faced various headwinds in its growth including the introduction of significant Kenyan government subsidies on fertilizer,” Neichin told ImpactAlpha.

Neichin lamented the news of iProcure’s bankruptcy. “We felt that the business was taking an innovative approach to aggregating farmer demand for inputs and, if successful, would have helped to increase access to higher quality and lower cost seed and fertilizer.” 

iProcure didn’t respond to a request for comment. BII declined to comment “on matters that are commercially confidential.”

Food insecurity

iProcure focused on a sector of critical importance to Africa’s 1.4 billion population: food. Africa is home to 60% of the world’s uncultivated arable land, and 80% of its food is produced by small-scale farmers, many using subsistence methods.

Climate change is intensifying food insecurity across Africa “with lasting adverse macroeconomic effects, especially on economic growth and poverty,” the International Monetary Fund said in a 2022 paper. Russia’s war in Ukraine and the pandemic had increased food prices and depressed incomes “raising the number of people suffering from high malnutrition and unable to meet basic food consumption needs.”

Meanwhile, Africa’s population will nearly double by 2050, to 2.1 billion people.

Despite iProcure’s failure, “there remains a vibrant sector of private, nonprofit, and hybrid agri-enterprises all continuing to find ways to support farmers in Africa,” Neichin said.