The fresh produce supply chain in Africa and emerging markets faces a laundry list of challenges every day. They range from environmental and labor issues, to logistical food waste to insufficient demand-supply synchronization. These various issues affect stakeholders differently: farmers struggle with sales, while retailers struggle to negotiate effectively.
Several agricultural startups have attempted to solve these issues 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 some examples. YoLa Fresh is one such startup directly connecting small farmers with traditional fruit and vegetable retailers, starting in Morocco.
Co-founders and co-managing directors Youssef Mamou and Larbi Alaoui Belrhiti told TechCrunch that they drew inspiration from these similar startups and sought advice from their founders to launch YoLa Fresh in early 2023. Now, the Casablanca-based agritech startup works with more than 1,000 retailers across its country of North Africa and records up to $1 million per month in gross merchandise volume (GMV). This growth in less than a year of launch has brought the agritech $7 million in pre-Series A funding.
Investment is important for any African startup at this stage, even more so for one from Morocco, which recorded $93 million in total VC deal value last year, according to a Partech report. The country, home to an emerging tech scene, has had some notable funding rounds over the years: YC-backed B2B e-commerce platform Chari and transportation management software provider Freterium come to mind. Like these other companies, YoLaFresh’s lure to investors extends beyond addressing a widespread issue in emerging markets and includes the impressive backgrounds of its founders.
Founders with experience operating at scale in the region
Alaoui and Mamou, before starting YoLa Fresh, had already established impressive careers in the country’s tech scene. Alaoui founded and sold online classifieds site Avito before serving as CEO of Jumia Morocco. Mamou was the general manager of Uber’s Careem and led 212Founders, an incubator and early stage VC in Morocco.
“I come from a farming family. So it made perfect sense for me to build something spectacular that could be internationalized, exported and released in different countries,” expressed Mamou, explaining why he teamed up with Alaoui to build YoLa Fresh after being approached by her former executive. Jumia with the idea to late 2022.
Alaoui intended to start a small farming business on the side, but soon recognized the significant challenges in Morocco’s fragmented agricultural supply chain, a realization that led him to address this issue instead of pursuing his original plan. Working with Mamou, the duo conducted extensive research on startups that had faced similar challenges in countries such as India, Brazil and Malaysia. After studying their models and talking to other founders, it became apparent that they could use technology to digitize Morocco’s fresh produce supply chain.
“When we looked at the Moroccan market, we found that it is similar in complexity to other emerging markets,” Alaoui said. “Smallholder farmers account for about 80% of agriculture and traditional retail accounts for about 90 to 95% of distribution. Very few people buy their fresh produce in supermarkets. The supply chain here is also very fragmented, with many middlemen, which we aim to solve.”
Despite its relatively small size in the region, Morocco boasts a robust agricultural sector, contributing a significant 15% to its GDP. Additionally, the nation exhibits a deep-rooted base of local consumption, with estimates suggesting that between $5 billion and $6 billion is spent annually in the traditional trade sector alone. This is an addressable market that mirrors other African countries where smallholder farmers and traditional retailers face similar problems with many middlemen involved in the supply chain, typically spanning two to seven steps.
Fix supply chain issues between farmers and retailers
Although YoLa Fresh plans to expand into these other markets, Morocco is the priority. By connecting farmers with retailers and food companies, YoLa Fresh, which tracks produce from farm to retail, hopes to cut out middlemen in the food supply chain. This would allow retailers to pay less for produce and provide farmers with more profits quickly, thereby synchronizing supply and demand in a way that minimizes waste. In addition, YoLa Fresh uses data from both stakeholders to provide them with visibility into harvests and access to financing.
“Our solution offers farmers the convenience of placing their orders by midnight for next-day delivery, typically between 7 and 9 a.m., just six to seven hours later,” noted Mamou. “Not only do we guarantee better quality production 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 reduced wastage ranging from 25 to 40% of crop production, the wastage rate is around 6 to 7% and we aim to reduce it further to 3% by 2026.”
YoLa Fresh currently transports over 1,200 tonnes per month to customers ranging from fruit and vegetable vendors to FMCG mom and pop stores. The agritech claims to record a customer retention rate of 85% while averaging four transactions per week per retailer, indicating strong customer loyalty that will help the company achieve a positive contribution margin by the end of 2024 or the first quarter of 2025.
Mamou said the legacy company expects to do this by doubling down on what already works: securing cash on delivery with traditional retailers, working closely with farmers to earn more margins (it has a take rate of more than 20%) and focusing heavily on unit finance . YoLa Fresh predicts it will reach $40 million to $50 million annually by 2026, the same year it will prepare to expand outside of Morocco. Competition in other sub-Saharan African markets includes; Vendée and Complete Farmer.
Omar Laalej, the CEO of Al Mada Ventures, which led the funding round, expressed his belief in the company’s ability to deliver tangible benefits to its clients in Morocco’s growing agricultural sector. He highlighted the importance of YoLaFresh’s position in delivering 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 contributes significantly to economic growth and employment in our region and stands to gain significantly from technological solutions. YoLa Fresh is uniquely positioned to lead this transformation in Morocco and beyond,” added Tarek Assaad, managing partner of Algebra Ventures, one of the investors in the round. Other backers include E3 Capital, Janngo Capital and FMO, the Dutch Business Development Bank.
