Meet Farmcrowdy From Nigeria – A Unique Business That Sells Investment Options In Agribusiness

At The Economist Innovation Summit event last week I heard Onyeka Akumah talking about Farmcrowdy and I was fascinated by this business model. Farmcrowdy is Nigeria’s technology-driven agricultural platform. I had to find out more about this business platform that empowers farmers and also gives returns to investors. Onyeka Akumah is the founder and CEO of Farmcrowdy.


Tell me about your business. How did it start?

Farmcrowdy is a company, it is a business – it is not a charity. It was set up in September 2016 but we launched it on 14th November 2016. 9 months before I had started on some research around agriculture generally. And what led me there was, first I had a background in software engineering then later started doing e-commerce businesses.  I was one of the founding members of Rocket Internet Junior when it started in Nigeria. I have been involved in Konga and Wakanow which are big companies in Nigeria. At that time when Buhari’s administration which is the current administration of Nigeria was coming into this, I was pursuing a platform called Track Better and doing that, I wanted to get into agriculture.

The government of Nigeria was trying to insert itself into agriculture. But they did not have the know-how on where to put their money (nobody wants to lose their money). There were also no farmers they knew that they could trust with money that would give them returns. I was doing my research to advice the farmers to work and I realized the farmers had 3 problems. One – They were considered unbankable and couldn’t access loans or money from banks to expand their farms. Two, they did not have the necessary know how to improve the quality of what they produce, and quantity to meet the market demand and even if they solve that issue, they had the issue of, where is the market that will buy what they have harvested. I came to understand that farmers had this problem and then individuals who wanted to invest had their own problems.

So the guys who were working on me with this, now the co-founders in Farmcrowdy came together to connect the sponsor (the investors) with the farmers. On the website, we put up what the farmers need. The units of the farm are published so a sponsor knows what the farmer needs to go full circle- inputs, fertilizer, labels warehousing et. That sponsor is making the money available to the farmer to complete that cycle. What we then do in Farmcrowdy is we take the money, buy the inputs and take it to the farmers based on a precise protocol. So as a farmer I get fertilizer on week 1, then get a tractor in week two, so the farmer goes through that process with our own technical food specialist organizing all of this with the farmers throughout the process. At the end of the process, when the farm cycle is ending, we shall also have an arranged market that will sell the farm produce at a particular price. When the harvest is sold, then we split the profit on the farm harvest on a 40: 40: 20 ratio where the farmer gets 40% for his farm, the sponsor gets his money back plus 40% returns and Farmcrowdy get 20% of the profit.

So when you go to the Farmcrowdy website you see the farm unit for maybe poultry. If you sponsor maybe 250$, you will get 6% in return. What that means is that the 6% is the actual 40%. There is another 6% that will have gone to the farmer and another 3% going to Farmcrowdy. So that is how we split the 40-40-20 share.  After launching in November 2016, in the last 15 months, we have worked with about 2000 farmers and grown their income an average of 20%. These 2000 farmers were able to join and get 2.2 million dollars in sponsorships from Nigerians that have sponsored these Nigerian farmers to grow the food they grow. We have gone full cycle on poultry because it is a shorter cycle – 5 times, we have gone one cycle on the crops, and we have not completed one cycle for another of the crops because it is a 12-month cycle crop-cassava. On maize and rice, we have gone full cycle. We are currently in a couple of states in Nigeria with the intention to optimize the model this year and look at having the same in other African countries. Farmcrowdy now is a team of 26 sitting out in an office in Lagos. So that’s the business.

Are you making a profit yet? You said you have made 2.2 million dollars from Nigerian sponsors. Have you made money from outside?

Yes, we are making money. In our 20% it comes to about 7% of the total sponsorship becoming the profit for us at Farmcrowdy so that is some money coming to us. Yes, we made money last year, it is not money we can boast about yet because it was our first year and scanning our operations, we intend to expand the model to make more money.  This also speaks to why we have raised some investments. Last year we raised 1 million dollars just before our first year anniversary from our investors. A million dollars as an equity investment, not sponsorship or funds. From 6 investors in the US, one in the UK and one in Nigeria. Last week we got a grant from a GSME of $325,000 to continue to grow our business.  So all these investors are seeing how the business works, what could come out of it and that speaks to the model.

Talking about the 2.2 million dollars we have generated already, Farmcrowdy is a community model – we want Nigerian Famers to grow food for Nigerians.  We have a significant number of Nigerians from outside especially the UK  sponsoring but around 705 of them are based in Nigeria. To make sure everybody investing is Nigerian, you must have Nigerian bank accounts to use our card to sponsor farms on our website or mobile.

So as a Kenyan I cant invest?

At this time there are two entry points you can get into Farmcrowdy, you can sponsor a farm so you invest and get pictures of the chicken or the farm but you can also come in as a farm follower. A farm follower gets pictures and videos of the farm but they cannot invest yet. In the process of growing the business as we move from country to country, followers can eventually convert to become sponsors so you can still get in to get the information and get educated about agriculture process. So you can still be able to to make an informed decision about investing in the future.

You guys have scaled kind of fast. Is everybody part time or full time?

Everyone is full time. 5 co-founders manage the operations on the farms, including an agronomist. There is a lot we have to do with technology with building the platforms we have. So we try to do that in-house. We have finance, management, and customer engagement. When a sponsor sponsors a farm, there is a person who deals with customer engagement to help him understand the process. To ensure that the relationship between him and the farmer is safe and he is getting all the objects he requires to farm. In all of that, managing sponsors, managing farmers, managing finance, managing technology that speaks to why we have quite a lot of people on the table.

I think the model that I have seen is similar to something in Kenya but it is not a profit model. There is an orphanage for elephants called David Sheldrick where you can sponsor an elephant and see them grow and get updates. Where did you get the idea? Is it an original idea or it is something you had seen before?

I tell people that there is nothing original about any idea. An idea you call original is only picking up different elements and coining it into what you want. What I’ve always thought is that you find opportunity from your own people. So for me in Farmcrowdy, the idea came from the fact that I was pulling a group of people to work with me and invest in the farms. This is something that happens in Nigeria already where ten people come together and put money together to do a farm project.  Then they go to a rural farmer that is like 1000 km away from them, invest in this farm to grow tomatoes, they harvest and bring it back to Lagos, where they sell it in the market and split the profit. Offline, people are already doing that.

One of our co-founders the lady that leads operations, she was actively doing that before Farmcrowdy and I had seen that 3 years ago. In deciding what the model was going to be initially we wanted to start a pure crowdfunding platform but later we had to tweak it.  It now looks like an e-commerce site. That provided the level of interaction we wanted and it did all of the crowd bit in the background with the farmers. The idea has been evolving over time because from time to time we keep adding a few things to tweak it. That’s where the idea came from. Taking something that happens offline and take it online.


How has that been for you since in Nigeria you already do that so it was just tweaking an idea? How has the idea been embraced by the business community and farmers as well because I am assuming before the farmers were getting a raw deal and struggling to do everything by themselves and this model makes them partners? So how has it been taken up by the farmer and the business community? Also, I’m assuming there are brokers who are not happy. So what is the environment around that?

There are 28 million small-scale farmers in Nigeria working so working with 2000 is a drop in the bucket and so far so good. We have seen that over 70% of these farmers have come back to us. There is a reason it is 70%, there are farms that have not been completed so we cannot say they have not come back to us for another cycle. So some have come back to us and they want to do more. They have recommended more farmers to work with us.

Speaking about the model and the farmers, there is huge acceptance of the model because beyond the fact that the farmer makes money, he gets the education he wouldn’t have had, and he gets the exposure that will help him sell which the farmers do not usually get. Now the farmer is brought to the table to be part of the deal-making on how much he makes. That in itself makes a lot of transparency for the farmers, who now make more or whatever it is they are making they trust that their interests are well protected and they got the maximum they could get in terms of making money as a business.

To the business community, just as I mentioned there are two entries on Farmcrowdy. We have had over 100 farm sponsors and 8000 farm followers. Our mobile app was launched on our anniversary on 14th November last year and has been downloaded 50,000 times and 18,000 people are using it every day. The business community is looking at this not just as an investment platform but one you get returns as you are making an impact. Second, the level of education they get from around what happens in core agricultural processes is something they are happy about. It is the opportunity of having a farm without owning a farm, where they do not get their hands dirty while getting involved in food production. So we see a lot of recognition coming from the business community and a lot of press too. We are happy about that. We just want to scale a bit more and do double the figures we did last year and get more farmer to enjoy Farmcrowdy.

With the middlemen, agriculture is a 100 billion dollar business in Nigeria. These guys still make money. A farmer that moves from them to us today does not mean the middlemen have lost out in the market. They still have others they can work with.

But it is a threat?

It is but we deal with core partners. They are happy to partner with Farmcrowdy because small-scale investments which are able to grow their quantity that will allow them to meet demand. Even with the middleman, investors and major industrial players still have a shortfall of quality input for them.  So where Farmcrowdy is now playing is working with that small-scale farmer to make him a major farmer. So because the middlemen were taking advantage of this small-scale farmer, they were happy to leave them. And now, they are meeting the demand of these industrial players. They too are happy to work with Farmcrowdy because we are now turning these small players to farmers who produce the right quantity and quality that they desire. So as long as we are doing that, then eventually the middlemen will see a future where we can become partners.

So far what are the gains since you have been operational for 15 months, for you as a business and the farmers? Because that will also determine whether new farmers outside Nigeria will join you 

The gains for us as a business is the opportunity to drive the mortar that stirs the impact, where there is emotional satisfaction while making money. So it is not just for charity. We are building a social enterprise that makes good business sales.


Do you classify yourself as a social enterprise?

I just classify us as a business; a profit-making business. Today we put on the cap of a social enterprise tomorrow we put on a cap of profit-making business but I never call as a charity. What we do here is about farmers. In Nigeria the way these people perceive these farmers spoils the business for people. If they perceive you as charity, they will treat you as one. You will never get your money back. They consider that as the national cake. We do not ever perceive ourselves as one and even if we work with such industries we try and put that completely off the radar. This is a business venture where we are taking money to work with you. We have to pay these people back their money. You have to do business how business is done.

Gains for us is the fact that we are getting a lot of the right attention which is helping us to put our strategies in place that will help us scale better. We are getting the right relationships, the right noise, getting the right information, the right stakeholders who pay more attention to what we are doing which is good for us.

On the flipside for the farmers, the gains for every farmer we have worked with is beyond the money. It is the mentoring, and the knowledge, It is the exposure they are are getting from us. The access to inputs that single farmer wouldn’t have been able to get his hands on. Now we are able to negotiate deals that give them access and that grows the capacity for that farmer. It makes it interesting for them. The opportunity for them to take advantage of as much space as they have because originally these farmers especially the ones we select will have 2.5 acres of farmland that they work on every season. Though they have access to 7.5 acres of farmland which is wasted. That opportunity to give that extra 5 acres to Farmcrowdy so you can get sponsors to sponsor those 5 acres, you can go full capacity on what you do with it.

Another thing is access to the markets. The farmer now goes through the process of getting an education on producing the right yield, quality, and quantity. That market can now buy at the right price and the farmer makes money. Eventually, the gain will be bigger if we go bigger. Then we can commercialize that market and more farmers can sell through us.

How do you ensure that the farmers you work with and they do not they do not misuse the inputs?

We have a technical office specialist that works with these farmers. The farmers work with a protocol office and it speaks to how we source our farmers. The farmers we work with, have to be recommended by the community. So the community knows that if something goes wrong we will blacklist that community and cooperatives know it too. In addition to this, the farmers around this farmer know that if something goes wrong it is going to affect me. So the farmers hold themselves responsible but even after we do all this, we still have our technical specialist that works with the farmer 24/7 throughout the farm cycle.

So do they sign contracts?

Yes, they do. We get their full data. We have the historical data of the farmers and pictures. We do not have biometrics yet but we have historical data and guarantor data because if something happens to the farmer there needs to have the second candidate to take over.

Has the government supported this initiative because one of the reasons people were encouraged to farm was when Nigeria had become over-dependent on the oil market that kind of went under?

Support from them has been through the endorsement of the work we are doing. We have had the Minister of Agriculture talk about Farmcrowdy, speaking about it in a positive light and telling Nigerians innovators to start platforms like Farmcrowdy. I have been invited to a table where we drew out strategies from how the venture capitalists can embrace technology to grow agriculture and this space. I have been to several events to talk about what we do in Farmcrowdy.

The government has made the environment more suitable for us by doing the media work for us which makes us spend less time on our marketing to convince people on what agriculture opportunities are available. They are also laying down funds for infrastructure that will continue to make the ease of doing business in the agri-space grow so that is something that is encouraging. They draw a lot of investments into the agri-space; irrigational facilities and the like. Logistics channels are being set up because they are reaching out to countries like China and Europe to lay the foundation for what we do.

The Central Bank of Nigeria set up an insurance that provides up to 75% cover for anyone who involved in core agricultural production. We recently signed a contract with them so that in itself is a involvement for us.

Considering that agriculture is a risky endeavour because stuff happens like pests, diseases etc how do you make sure that even if things go wrong the sponsor is getting his money back?

4% of the money that you invest goes into insurance. In addition to that is that cover by Central Bank of Nigeria. The insurance cover comes in two forms; the input cover and the yield cover. The input cover is that all the investment that goes into the farm is protected and that production is secured so if anything goes wrong you the insurance company can kick in. The yield cover is that if something goes wrong and you do not get the desired output the insurance takes care of that. This is where is where we are able to tell sponsors that we do not guarantee a return on investment but we will guarantee your sponsorship back.

Do you guarantee the profit?

You will get all the updates so if something goes wrong we can explain that this and this happened. So the investors know that their capital is protected.

How much have you raised from Nigerians who have invested in the business?

2.2 million US dollars

You said about 4% goes into the cover but when I get back my money, I get back my capital. That 40% includes the capital or what happens?

On the platform maybe you invested in the maize farm we said you will get 10% on the maize. For example, this means is that at the end of the cycle you will get 100$ back plus 10$. This 10$ is 40% of the profit, so the farmer is also getting 10$ then 5$ goes to Farmcrowdy.

The reason I am asking this is that you have said if I invest 100$ and get 10$ back, 4% goes into the cover, you do not recoup that money?

A lot of balancing happens around the profit. Because if all that happens, 10$ profit is the worst case scenario of what will happen on the farm. We will eventually make more.

So you have also calculated the insurance figure in?


What are the challenges of running such a business?

Who will buy the harvest? You need the right kind the right kind of partner to buy the harvest. Because in 8 months I have to give you your 100$ back with 10% profit. This means I would have grown what I am growing, harvested, sold, collected my money from the where I have sold and pay you back. A challenge you may face through getting the wrong kind of buyers who hold on the money for far too long and that goes beyond the cycle we have to pay investors.  In dealing with that we had to do more due diligence, turning down some buyers and focusing on the right kind of buyers who meet our criteria. So getting the right kind of buyers to meet the demand is hard.

Two is getting the right people on the team. There was a time when we had issues on who was going to be working for us, what truly is the person’s motive and technology partners who are we going to partner with. That in itself was a challenge but we use certain criteria to decide who we should talk to in the first place.

The others are not so much as challenges right now maybe in future when we scale. Making sure the farmers are ready to do business with us in the next cycle without jeopardizing the process. That’s why I’m saying it is not a challenge just something we see in the future. Scaling of the value chain to give them the opportunity to sell their harvest to the market but is there market access? Before we got the grant, the challenge was if we wanted 100 farmers we could handle them. However what happens when we get 1000 farmers. Are you going to get 1000 specialists? But now we are using technology to grow the reach of our technical specialists so they can engage more farmers without being physically there.

So what are you doing? Are you incorporating video or a community visit?

We are doing everything you just mentioned. We have town hall meetings but beyond that, we are building technological around USSD codes because farmers do not necessarily have smartphones but they have other phones. They can exchange information via text.  We are also getting hands-on technical field partners so we do not have to employ technical field specialists but we can get partners who work with us which extends our reach.

Any plans to expand the business beyond Nigeria?

We want to spend this year at the border and by the end of this year, we will try to find out about Ghana. Eventually, we will get there next year but because it is a community model we have to understand the mindset of the people you are going to. So in going to Ghana, we will borrow a lot from the experience of people we work with in Ghana to help us get into the market. But we just want to spend 2018 by fine-tuning things. And then move to other countries starting with Ghana then Kenya and Uganda come into play. Basically, where there are structured systems to manage small-scale farmers, it is an opportunity for us. But that in itself, Nigeria has large farms, 38 million of them, bigger than any country in Africa so core operations will still be in Nigeria and it will just be the opportunity replicate the process in other African Countries.

So are you looking to run it yourself or get partners you can work with from those countries?

When I mention the scaling bit, we need to know the country as much as its people. Farmcrowdy being a community-based business we have to have people from that community. So yes we will work with partners – co-partners. But we will still have people on the ground to ensure that the quality of the product is maintained. Our launch team will be in Nigeria but eventually, we will bring in other people. We are going to understand the policies the people from that country work with. that is how we want to drive the growth of the model as we bring it to other countries.

I like this lesson from Jumia because I remember when Jumia started, they wanted to bring the South African way of running business and e-commerce trade. It was almost failing. I am not going to make that mistake.

Looking back, are there things you wish you would have done better or mistakes you made in the process?

I do not regret anything that we have gone through with Farmcrowdy. All the challenges we have faced have presented us with opportunities to learn how to do things better. If we did not face that problem then, we will have faced it today. So I embrace all the mistakes we have made because it has made us a better company today. One of the biggest things that I have learned is how we learn fast from the mistakes we make and improve ourselves never to make such mistakes again. It is better having mistakes at a small level than at scaling. So everything that has happened has built us to where we are today so I embrace it.


Your team is pretty young. How did that come about?

The team is young true. I am 33, the oldest person is 40 and the average age is 26-33. People are between there. What happened originally was I tried to identify people I could relate to at things I was interested in. So the CFO who was also a co-founder was actually a contact from a previous startup that I sold. That was where the relationship started. My CTO taught me Java Programming in 2003. That was where our relationship started. As much as they are young they are experts in their own area. Our CFO is a chartered accountant with his own firm. He worked at KPMG and in his own right, he is a leader. Before the CTO joined us fully, he was actually working as an IT consultant for a State Corporate.

Same goes for the lady who leads operations. She has her own agro-business company where she was making money in Lagos, getting farmers to do what they do, then bringing the harvest to Lagos and selling it then splitting the profit. So she was running the Farmcrowdy model in itself on her own which she later collapsed to join Farmcrowdy.

In deciding who joins us on the team, there is no focus on age but the person has to be young at heart. The person has to understand that we are trying to get the youth to invest in agriculture. Trying to get the middle class that is around 25-40 to invest. That is our target audience and that is why you will find a lot of young people have worked in one or two startups before joining us. Some of them have actually worked in the logistics chain of Jumia but have first and second degrees in agriculture. So when they decided to join us, we needed people in the logistics chain. You find one has a first degree in agriculture and another one in logistics. He brings the entrepreneurship mentality to run the logistics channel to drive that business. That’s the mix of people who are on our team.

Where do you see your platform in the next 10 years?

Right now we do beans rice, cassava, and poultry. We want to be the biggest producer of food in Africa. We want to have an impact of a minimum of 50,000 small-scale farmers and grow their income on an average of 80% – we have already started. Being the biggest producers of food does not necessarily mean we own the farms. Sort of like Uber for Agriculture.

Are you planning on doing horticulture, cattle, and milk?

It will change from country to country. If the structure supports the other types of farms available if the farmers are there and willing to invest then even better. We cannot force people to produce maize when they are interested in tea. The reason we picked these crops in Nigeria was that we found ways to cut across things like logistics and warehousing. Some of these things we can store for 2-3 months and we deal with the market prices and forces within that period. And some of them are the type we sell out even before we start harvesting which is poultry and cassava. That is peculiar to Nigeria. We wouldn’t touch tomatoes in Nigeria. From country to country depending on the appetite of the people, we will do what makes sense. Like in Nigeria, we want it faster even if it is smaller.

Is your investment model every crop cycle or every once a year investors are getting this dividend? Or are you planning on changing the model?

Right now you start with maize, then beans and so on. Then your cycle closes. Eventually, we will start with portfolio packages. Since we have different cycles for different plants. We can bring two farms together where we have beans in one and maize in the other. It also protects us from a business standpoint we will consider that for future. So, for now, it is crop-based and cycle based.

How many months after do you pay out because I am assuming that different varieties have different cycles?

We normally say 8-9 months because for something like maize will be 9 months because we want to hedge with 4 months because we want to sell at good prices. So all this comes into consideration. But the first time we did 6 months of maize and shot ourselves in the leg because we had just harvested. This year we are now back to lengthening the cycle and explaining to sponsors why that is happening.

Any advice to young entrepreneurs who are beginning and want to get into agri-business?

I would give the same advice I gave myself when I started Farmcrowdy – start small, learn fast then grow. We started Farmcrowdy with 5-day old chicks and the lessons we learned with those chicks was worth 3 years in business school. Embrace your mistakes and grow.

Agriculture is not a quick win business so anyone going into it should know that you have to seek a lot of money to put in infrastructures to help you make money in the future. People should look at it as a long-term investment if you are looking to get into agriculture.

For those without the starting capital and have land, they need to find ways to access loans that allow them to utilize what their land can produce. They need to look at agriculture and see a business. Do not eat your capital which is what a lot of farmers do. They eat up all their money without thinking about all the time they spent going to the farm and the time it takes to move things into the warehouses and how much it will be to store it. They put 100 Naira then make 200 Naira then think that their profit is 200 Naira. That is wrong.

As a business, you should put all your costs into play. Get involved in the value chain of selling. Get to learn about the middlemen and then grow your capital base. Connect with small-scale buyers in the market and then move on to other things very quickly. We should stop looking at agriculture as an island. There is a lot to learn.

Are you teaching your farmers financial management?

Yes. We just don’t show them how it is done. We teach them how to check their records so they may understand what profit truly is.

If you would like more information on Farmcrowdy, you can find them on Twitter, Instagram, and Facebook. Also, you should definitely check out their website.

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