Victory Farmsan aquaculture startup and tilapia fish farm, comprising hatcheries, breeding ponds and deepwater cages, has raised $5 million in new funding.
The investment was led by Ed Brakeman, senior managing director at Bain Capital and Hans den Bieman, founder and ex-CEO of Mowi, one of the largest salmon companies in the world.
It is the startup’s first institutional investment after seven rounds of internal angels from the same set of equity and debt investors (it brought $40 million in debt last year). This funding will allow the Kenya-based company to expand its operations to Rwanda, DRC and Tanzania.
Joseph Rehmann founded Victory Farms in 2015. During a conversation with businesstraverse.com, Rehmann recounted his journey towards starting the company. After completing his MBA program, he started working on a three-month aquaculture project in Ghana, which eventually led to a three-year position where he became CFO of a farm in Accra.
“I learned a lot about scaling up in aquaculture and all that. I believed that the platform I was using could be much larger and scale much faster if we could connect more dots — essentially creating an end-to-end protein factory,” said Rehmann, who for a investment bank and Microsoft has worked.
In 2015 Rehmann worked with his longtime business partner Steve Moran to explore Lake Victoria and conduct some feasibility studies on how they could use technology to disrupt the country’s cold chain markets.
They concluded that there was a unique opportunity to rebuild the fish value chain from scratch. They called for a sting round to start Victory Farms before launching in mid-2016 to serve a market with a fish shortage of about $1.5 billion.
Just the average Kenyan consumes about 10-20% of animal protein intake, most of which is red meat. With a major fish shortage and retail prices as high as $5 a kilo, Victory Farm says it is using technology to produce more fish while cutting costs for the thousands of market women who buy fish in small quantities to cook and sell at local food markets. .
“We have a technically backed platform and have scaled up 2x faster than any other African fishing company. And using data, we’ve built the most efficient operation globally with half the capex of the current global leader,” Rehmann told businesstraverse.com via email. “We sell to mass market Africans through a highly innovative RTM cold chain that uses predictive data to push fish every day to thousands of market ladies across Kenya with less than 1% spoilage.”
The company has more than 54 retail locations where more than 15,000 market women go to buy fish, and according to Rehmann, they don’t use electricity or ice.
“We’re using vertical integration to drive a more robust dataset from start to finish,” he said. “This allows us to innovate and create more cost-effective solutions through our systems and the power of data to deliver a better, fresher product to more consumers.”
Victory Farms claims to have one of the highest margin structures in the fishing industry worldwide due to its technology. The company recorded a CAGR of 130% between 2017 and 2021. Maintaining this growth rate can exude the utmost confidence. In the case of Victory Farms, Rehmann believes there are no significant competitors for the company – which also has a processing plant and distribution network – in Kenya and the greater East African region.
“We are growing so much faster than them (the competition) that we don’t see this as a competitive playing field. The real competitor for us is hunger and consumers who can’t get an affordable protein option,” he said.
But from a global perspective, Rehmaan touts Zurich-based Regal Springs as a bigger player. However, Victory Farms could surpass Regal Springs in the next five years to become “the largest end-to-end tilapia platform” worldwide if expansion into new regions goes according to plan, the CEO argued.
While Victory Farms is profit and growth oriented, Rehmann said it’s worth highlighting that the company is working to become the world’s most sustainable tilapia platform. “We have several initiatives underway and plan to build the world’s first carbon negative fishing platform. And I’m really excited because we’ve built a lot of tangible and measurable dimensions into the business to achieve that.”