The fresh produce supply chain in Africa and emerging markets faces a cascading list of challenges on a daily basis. They range from environmental and labor issues to logistical issues, food waste and poor synchronization between supply and demand. These different issues affect stakeholders differently: farmers struggle to sell, while retailers struggle to negotiate effectively.
Several agritech startups have attempted to solve these problems by taking control of the fresh produce supply chain, bypassing middlemen and directly connecting retailers and farmers; Frubana in Latin America, Meicai in China and Waycool in India are some 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-CEOs Youssef Mamou and Larbi Alaoui Belrhiti told TechCrunch that they took inspiration from these similar startups and sought advice from their founders to launch YoLa Fresh in early 2023. Now, the agritech startup is working with more than 1,000 retailers across the North. African country and records up to $1 million in gross merchandise volume (GMV). Such growth demonstrated less than a year after launch allowed the agritech to recoup $7 million in pre-Series A funding.
Investment is important for any African startup at this stage, and even more so for a Moroccan startup, which recorded $93 million in total value of venture capital deals last year, according to a report from Partech. The country, home to an emerging tech scene, has seen some significant fundraising 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 appeal to investors goes beyond solving a problem prevalent in emerging markets to include the impressive track records of its founders.
Founders with large-scale operational experience in the region
Belrhiti and Youssef, before launching YoLa Fresh, had already established impressive careers in the country’s tech scene. Alaoui founded and sold the online classifieds site Avito before becoming CEO of Jumia Maroc; Mamou was CEO of Uber’s Careem and led 212Founders, an early-stage incubator and venture capital firm in Morocco.
“I come from a family of farmers. So it made perfect sense for me to build something impactful that could be internationalized, exported and launched in different countries,” expressed Mamou, explaining why he joined Alaoui to build YoLa Fresh after the former executive of Jumia approached him with the idea in late 2022.
Alaoui had intended to start a small agricultural business on the side, but he soon recognized the significant challenges associated with the fragmentation of Morocco’s agricultural supply chain, a realization that led him to tackle to this problem rather than continuing with its original plan. Working with Mamou, the duo conducted extensive research on startups that have faced similar challenges in countries like India, Brazil and Malaysia. After studying their models and talking with other founders, it became clear that they could use technology to digitize Morocco’s fresh produce supply chain.
“When we looked at the Moroccan market, we found that it was similar in complexity to other emerging markets,” Alaoui said. “Smallholder farmers make up about 80% of agriculture, and traditional retail makes up about 90-95% of distribution. Very few people buy their fresh produce in supermarkets. The supply chain here is also very fragmented, with many middlemen, and that’s what we’re looking to solve.
Despite its relatively small size in the region, Morocco has a robust agricultural sector, contributing significantly to its GDP at 15%. Additionally, the country has a deeply rooted local consumption base, with estimates suggesting that between $5 billion and $6 billion is spent each year in the traditional business sector alone. This is a potential market that mirrors that of other African countries where smallholder farmers and traditional retailers face similar problems with multiple intermediaries involved in the supply chain, which typically extends from two to seven steps.
Resolving supply chain issues between farmers and retailers
Although YoLa Fresh plans to expand into these other markets, Morocco remains the priority. By connecting farmers with retailers and foodservice companies, 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 products and ensure farmers make more profit quickly, thereby synchronizing supply and demand in a way that minimizes waste. Additionally, YoLa Fresh uses data from both stakeholders to provide them with harvest visibility and access to financing.
“Our solution offers farmers the ability to place their orders before midnight for delivery the next day, typically between 7 a.m. and 9 a.m., or six to seven hours later,” said Mamou. “Not only do we guarantee higher quality products at the same price as the wholesale market, but our daily transactions open the door to potential financing opportunities once we partner with financial institutions. Although we have seen a reduction in wastage, ranging from 25-40% of agricultural production, our wastage rate is around 6-7% and we aim to reduce it further to 3% by 2026.”
YoLa Fresh currently transports more than 1,200 tonnes per month to customers ranging from fruit and vegetable sellers to mom-and-pop FMCG stores. The agritech claims to record a customer retention rate of 85% with an average of 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 company, established two years ago, plans to achieve this by doubling down on what already works: ensuring cash on delivery with traditional retailers, working closely with farmers to get more margins (it has a take rate of more than 20%) and focus intensely on unit economics. YoLa Fresh expects to reach annualized revenue of $40 million to $50 million by 2026, the same year it will prepare for expansion outside of Morocco. Competition in other sub-Saharan African markets includes Vendease and Complete Farmer.
Omar Laalej, Managing Director of Al Mada Ventures, who led YoLaFresh’s $7 million funding round, expressed confidence in the company’s ability to deliver tangible benefits to its clients in the Moroccan agricultural sector evolving. He highlighted the importance of YoLaFresh’s position to deliver value to its customers, not only in the North African country but potentially across Africa, as the continent’s agricultural industry undergoes a transformation of the digital supply chain.
“The agricultural sector is a major contributor to economic growth and employment in our region and stands to benefit significantly from technological solutions. YoLa Fresh is uniquely positioned to become a leader in 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 Entrepreneurial Development Bank.
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