YCombinator (YC) has today announced a set of 23 companies that made up the 2019 Winter batch of over 200 companies, Nigeria's Thrive Agric was one of them.
Thrive Agric provides microloans to Nigerian farmers and a channel to sell produce to large buyers like Flour mills. Thrive, as they are sometimes called, makes farmers more efficient by providing seamless access to financing, agricultural best practices and a premium market for their products.
For urban Nigerians, it offers an investment platform where they can fund agricultural operations symbolised as a farm, whether livestock or crops. On average, crowd-sourced individual investors fund a single farm for about ₦85,000 ($236) and can earn interests as high as 15% in 6 months. Longer durations of 9 months command higher interest rates of 20%. When compared to other investment vehicles like treasury bills, mutual funds and online savings fintechs with an average annual rate of 13%, Thrive Agric's returns are more lucrative.
Speaking on why he started Thrive Agric, the Benue-born Nigerian entrepreneur said "I grew up in a farming community, and I figured that the farmers lacked two major things. One, access to capital to scale up their production and two, easy access to a ready market to absorb their produce. We built Thrive Agric as a solution to these problems".
Uka's personal story is not unfounded as Nigeria has over 32 million small farmers, many of which are underserved by the financial system, therefore, constrained by capital. Thrive Agric Ltd. has gained decent traction in less than two years of incorporation (registered June 2017). In February alone, they funded farmers with over ₦180 million ($500,000) and has reportedly achieved a 50% month-on-month growth rate.
YCombinator is one of the world's most successful accelerators with an acceptance rate of 1.5%, lower than that of Stanford University, 5%. They have crossed ₦36 trillion ($100 billion) in market value across all the startups in their portfolio since 2005. YC's rooster of billion-dollar alums makes it easier to see why they are so sought-after. Some of the YC alums include Dropbox, Airbnb, and Reddit.
"We've applied for YC like three times", says CEO, Uka Eje to Benjamin Dada.
How does the YC programme work?
According to the company's official website, the startups move to Silicon Valley for 3 months, get coached by mentors and experienced entrepreneurs in refining their business model and pitch to investors. Every year, YC runs two cycles—summer and winter batch—each cycle culminates in a Demo Day where the startups present their companies to an invite-only audience including investors. By themselves, YC invests ₦54 million ($150,000) in the startups that pass through their programme for a 7% ownership of the company.
Due to the high-demand for YC content, they started an online 10-week startup school in 2017, Thrive Agric was one of the participating inaugural startups.
"We thought being part of the startup school was an automatic pass to the 3-month accelerator, but that was not the case. Each time we applied it looked like this was our chance; basically, there was hope", says Mr Eje.
Years of continuous improvement and persistence did pay off as the Nigerian agritech startup finally received an invitation to be part of YC's 2019 winter batch. The winter batch which started on January 3, has its Demo Day set for next week, March 19.
Beyond the seed capital, Uka is looking forward to partnerships that can help his farming business grow, even beyond Nigeria.
"I want to be able to build a healthy partnership with the right people, so we can scale what we are doing even beyond Nigeria. For instance, I am already having conversations around; access to technology partners for mechanised farming to enable us to scale, access to more lenders to provide capital to be deployed to the farms, and insurance tech to secure the farmers' future", says Uka.
With the corresponding raise, the company is also looking to invest in its online platform's engineering.
After Demo Day, Thrive Agric will now join the league of other Nigerian startups like fintechs—Paystack and Flutterwave—to have graduated from the global accelerator. Other things being equal, we can expect a Series A funding from them shortly.