The fresh produce supply chain in Africa and emerging markets faces a series of cascading challenges every day. These include environmental and labor issues, logistics, food waste, and poor supply and demand synchronization. These different issues affect stakeholders otherwise: farmers struggle to sell and retailers struggle to negotiate effectively.
Several ag startups have tried to solve these problems by taking control of the fresh produce supply chain, bypassing middlemen and connecting retailers and farmers directly; Frubana in Latin America, Meicai in China and Waycool in India are just a few examples. YoLa Fresh is one such startup that directly connects small farmers with traditional fruit and vegetable retailers, starting in Morocco.
Co-founders and co-founders Youssef Mamou AND Larbi Alaoui Belrhiti told TechCrunch that they drew inspiration from similar startups and sought advice from their founders to launch YoLa Fresh in early 2023. Currently, the agritech startup works with over 1,000 retailers across the North African country and sees a gross merchandise volume of up to 1 million dollars (GMV). This type of growth, demonstrated in lower than a 12 months since launch, earned agritech $7 million in pre-Series A funding.
The investment is significant for any African startup at this stage, and much more so for a Moroccan startup that, according to Partech, recorded a total VC deal value of $93 million last 12 months. report. The country’s emerging tech scene has seen several significant rounds of funding over the years: YC-backed B2B e-commerce platform Chari and transportation management software provider Freterium come to mind. Like other firms, YoLaFresh’s appeal to investors goes beyond addressing a common problem in emerging markets and includes the impressive backgrounds of its founders.
Founders with experience operating on a large scale in the region
Before founding YoLa Fresh, Belrhiti and Youssef already had impressive careers on the national tech scene. Alaoui founded and sold online classifieds site Avito before becoming CEO of Jumia Morocco; Mamou was CEO of Uber’s Careem and headed 212Founders, an early-stage incubator and enterprise capital fund in Morocco.
“I come from a farming family. So it made perfect sense to me to build something impactful that could be internationalized, exported and marketed in different countries,” Mamou stated, sharing why he joined Alaoui to build YoLa Fresh after being approached by a former Jumia executive with the idea at the end of 2022
Alaoui had intended to start a small farming enterprise on the side, but he soon saw significant challenges in Morocco’s fragmented agricultural supply chain and realized this, which led him to tackle the problem as an alternative of pursuing his original plan. Working with Mamou, the duo conducted extensive research on startups that faced similar challenges in countries corresponding to India, Brazil and Malaysia. After studying their models and talking to other founders, it became obvious that they may use technology to digitize the fresh produce supply chain in Morocco.
“When we looked at the Moroccan market, we found it to be similar in complexity to other emerging markets,” Alaoui said. “Small farmers represent about 80% of agriculture, and traditional retail accounts for about 90-95% of distribution. Very few people buy fresh produce in supermarkets. The supply chain in this case is also very fragmented and has a lot of intermediaries, and that’s what we’re trying to address.”
Despite its relatively small size in the region, Morocco boasts a strong agricultural sector that contributes significantly to its GDP at 15%. Additionally, the country has a deeply entrenched local consumption base, with estimates suggesting that between $5 and $6 billion is spent annually in the traditional trade sector alone. This is a go-to market harking back to other African countries, where small farmers and traditional retailers face similar problems with multiple intermediaries involved in the supply chain, which generally involves two to seven steps.
Fixing problems in the supply chain between farmers and retailers
Although YoLa Fresh plans to expand to other markets, its priority is Morocco. By connecting farmers with retailers and food service firms, YoLa Fresh, which tracks produce from farm to retail, hopes to eliminate middlemen in the food supply chain. This would allow retailers to pay less for produce and ensure farmers realize higher profits more quickly, thereby synchronizing supply and demand in a way that minimizes losses. Additionally, YoLa Fresh leverages data from each stakeholders to provide them with visibility into harvests and access to financing.
“Our solution gives farmers the convenience of ordering before midnight for next-day delivery, typically between 7 and 9 a.m., just six to seven hours later,” Mamou said. “Not only do we guarantee better quality products at the same price as the wholesale market, but our daily transactions pave the way for potential financing opportunities when we partner with financial institutions. While we have seen a reduction in losses ranging from 25 to 40% of crop production, our wastage rate is around 6 to 7% and our goal is to further reduce this to three percent by 2026.”
Currently, YoLa Fresh transports over 1,200 tons monthly to customers, from fruit and vegetable sellers to FMCG stores. agritech says it has recorded a customer retention rate of 85%, with an average of 4 transactions per week per seller, indicating strong customer loyalty that can help the company achieve a positive contribution margin by the end of 2024 or the first quarter of 2025.
Mamou said the two-year-old company goals to achieve this by doubling down on what it already does: providing money on delivery to traditional retailers, working closely with farmers to achieve higher margins (collection rate in excess of 20%) and focusing intensively on individual economics. YoLa Fresh is projected to achieve annualized revenues of $40 million to $50 million by 2026, the same 12 months it’s going to prepare to expand outside Morocco. Competition in other sub-Saharan African markets includes Sell and a complete farmer.
Omar Laalej, managing director at Al Mada Ventures, which led YoLaFresh’s $7 million financing round, expressed confidence in the company’s ability to deliver tangible advantages to its clients in Morocco’s growing agricultural sector. He stressed the importance of YoLaFresh’s positioning in offering value to its customers, not only in the North African country, but potentially across Africa as the continent’s agricultural industry undergoes a digital supply chain transformation.
“The agricultural sector is a major contributor to economic growth and employment in our region and can greatly benefit from technological solutions. YoLa Fresh is uniquely positioned to lead this transformation in Morocco and beyond,” added Tarek Assaad, managing partner at Algebra Ventures, one of the investors participating in this round. Other sponsors include E3 Capital, Janngo Capital and FMO, the Dutch Enterprise Development Bank.