Scaling a Food&Agri venture internationally: Farmforte
The food & agriculture industry is inherently a difficult one to succeed in. Sales cycles are long and dependent on seasons, and regulations can pose a serious obstacle to new entrants. It is also highly affected by climate change, economic downturns, and now the covid-19 crisis.
It’s more important than ever to support ventures that address the safety, security and health in the overall supply chain. One such company is ScaleUpFood graduate Farmforte, whose goal is to guarantee food security across the value chain by means of technology. The company offers a broad range of services and products, which include sweet potatoes, sesame seeds, beans, and cocoa.
Recently we had the chance to talk to Director Charles Ojei about Farmforte’s scaling journey. Here are some of the highlights:
#Scaling focus 1: Fostering a Tribe
In 2017 Farmforte started their operations with 5 people. The team now consists of over 300 people working in international locations. In this scaling phase, the company develops from a family to a tribe. It needs to create a dynamic structure, where it needs more organization than a start-up but must remain flexible and adaptable to rapid change. The Farmforte team is now in the process of defining a common culture that all employees embrace and feel included in, which Charles points out as a key takeaway of the ScaleUpFood program.
All of the founders of Farmforte have a highly entrepreneurial background, so they strived for passing this onto their employees. By allowing for entrepreneurial freedom within the team, everyone feels empowered to act. Charles actually points this out as recent learning: ‘The biggest takeaway from the ScaleUpFood Program was to learn how to build the right organizational capacity to enable and execute your business strategy.”
#Scaling focus 2: Going International
A strategy is all about discovering new products and services the business may want to offer, as well as entering new markets and customers it may want to serve in the future. Farmforte excels on both ends, by continuing to launch new products that meet local demand, and by strategically having selected the Netherlands to expand its operations.
The Netherlands is a focal point for innovation in food&agri technology in the world. Adding to its infrastructure and quality of human talent, it was the best choice to expand Farmforte’s operations internationally. This is a differentiating factor between scale-ups in stall-ups. Whereas stall-ups may take up opportunities to internationalize as they come, scale-ups select new international markets strategically. As a result, most scale-ups (64%) generate at least 20% of their revenues internationally, vs. only 39% of scale-ups.
#Scaling focus 3: Positive Working Capital
When it comes to finances, Farmforte’s management team has experienced challenges accessing working capital in the past. They wanted to access funding without getting lost within the bureaucracy of bank loans and VC investment processes, so they set up their own crowdfunding campaign. This allowed them to connect with local investors around Nigeria and to scale up their production facilities and international sales teams.
This is a key success factor for scaling, as firms with negative working capital can grow themselves into bankruptcy. According to our research, 50% of scale-ups, versus 25% of stall-ups, have positive working capital.