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Morocco’s GrubMarket YoLa Fresh raises $7 million to bridge farmers and food sellers

Fresh produce supply chains in Africa and emerging markets face a range of challenges every day. These include environmental and labor issues, logistics problems, food waste, and a lack of synchronization between supply and demand. These different issues affect stakeholders differently: farmers struggle to sell, while retailers struggle to negotiate effectively.

Some agritech startups are trying to address these issues by taking control of the fresh produce supply chain, bypassing intermediaries and connecting retailers and farmers directly; Frubana in Latin America, Meicai in China and Waycool in India are a few examples. YoLa Fresh is one such startup that is starting in Morocco and connecting smallholder farmers directly with traditional fruit and vegetable retailers.

Co-founders and co-CEOs Youssef Mamou and Larbi Alaoui Belrhiti told TechCrunch that they drew inspiration from these similar startups and sought advice from their founders with plans to launch YoLa Fresh in early 2023. Currently, the agritech startup works with more than 1,000 retailers in the North African country and has a gross merchandise volume (GMV) of up to $1 million. With such growth in less than a year since its launch, the agritech company has raised $7 million in pre-Series A funding.

The investment is significant for any African startup at this stage, but especially for one from Morocco, which saw $93 million in venture capital deals last year, according to a Partech report. The birthplace of the nascent tech scene has seen several sizable funding rounds over the years: YC-backed B2B e-commerce platform Chari and shipping management software provider Freterium are two of them. Like these other companies, YoLaFresh’s appeal to investors lies not only in solving a problem common in emerging markets, but also in the impressive backgrounds of its founders.

Founders with experience operating at scale in the region

Prior to starting YoLa Fresh, Belrhiti and Youssef had already made impressive accomplishments in the country’s tech scene. Alaoui founded and sold online classifieds site Avito before becoming CEO of Jumia Morocco; Mamou was previously general manager of Uber-owned Careem and led 212Founders, an early-stage incubator and venture capital firm in Morocco.

“I come from a farming family. So it made perfect sense for me to create something impactful that could be internationalized, exported and launched in different countries,” said Mamou, explaining why he joined the effort to create YoLa Fresh after Jumia executives proposed the idea to Alaoui before the end of 2022.

Alaoui originally intended to start a small agricultural business on the side, but he soon realized that there were major challenges in Morocco’s fragmented agricultural supply chain, a realization that led him to tackle this problem rather than proceed with his original plan. Working with Mamou, the duo conducted extensive research on startups in countries such as India, Brazil, and Malaysia that had tackled similar challenges. After studying their models and speaking 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 had similar complexities to other emerging markets,” Alaoui said. “Smallholders account for about 80% of agriculture, and traditional retail accounts for about 90% to 95% of distribution. Very few people buy fresh produce from supermarkets. The supply chain is also very fragmented with many middlemen, which is exactly what we want to address.”

Despite its relatively small size in the region, Morocco has a strong agricultural sector that contributes 15% to its GDP. In addition, the country has a deep-rooted local consumer base, estimated at $5 billion to $6 billion per year in the traditional trade sector alone. This is a potential market that parallels other African countries, where smallholder farmers and traditional retailers face similar issues, with multiple intermediaries involved in the supply chain, which typically spans two to seven steps.

Solving supply chain issues between farmers and retailers

Although YoLa Fresh plans to expand into other markets, Morocco is its first target. YoLa Fresh tracks agricultural products from farm to retail, and by connecting farmers with retailers and food service companies, it hopes to eliminate middlemen in the food supply chain. This will enable retailers to purchase agricultural products at lower prices and ensure that farmers can quickly make more profits, thereby synchronizing supply and demand in a way that minimizes waste. In addition, YoLa Fresh also uses data from both stakeholders to allow them to understand the harvest and obtain financing.

“Our solution provides farmers with the convenience of placing orders before midnight and having them delivered the next day, usually between 7am and 9am, just six to seven hours later,” Mamou said. “Not only do we guarantee better quality produce at the same price as the wholesale market, but our daily transactions pave the way for potential financing opportunities after partnering with financial institutions. While we have seen a reduction in wastage, which is 25 to 40 percent of crop production, our wastage rate is around 6 to 7 percent and our goal is to reduce it further to 3 percent by 2026.”

YoLa Fresh currently delivers more than 1,200 tonnes of fresh produce per month to customers ranging from fruit and vegetable sellers to mom-and-pop FMCG stores. The agritech company claims a customer retention rate of 85% with an average of four transactions per retailer per week, indicating strong customer loyalty that will help the company achieve positive contribution margins by the end of 2024 or the first quarter of 2025.

Mamou said the two-year-old company hopes to achieve that by doubling down on its efforts: securing cash on delivery with traditional retailers, working closely with farmers to extract more profits (its margins are over 20%) and focusing heavily on unit economics. YoLa Fresh expects to reach annualized revenue of $40 million to $50 million by 2026, the same year it will prepare to expand outside Morocco. Competitors in other markets in sub-Saharan Africa include Vendease and Complete Farmer.

Omar Laalej, managing director of Al Mada Ventures, which led YoLaFresh’s $7 million funding round, expressed confidence in the company’s ability to bring tangible benefits to customers in Morocco’s growing agricultural sector. He stressed the importance of YoLaFresh in providing value to customers, not only in the North African country, but potentially across the continent 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 will benefit greatly from technological solutions. YoLa Fresh is uniquely positioned to be a leader in this transformation in Morocco and beyond,” added Tarek Assaad, managing partner at Algebra Ventures, one of the investors in this round. Other backers include E3 Capital, Janngo Capital and Dutch corporate development bank FMO.

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