Kenyan aquaculture company Victory FarmsEast Africa’s largest commercial fish farmer, has raised $5 million in equity to expand operations in Rwanda, Tanzania and the Democratic Republic of Congo (DRC).
The round was led by two angels, Bain Capital managing director Ed Brakeman and Sealand Aquaculture director Hans den Bieman. He is the former CEO of Mowi (formerly Marine Harvest), the world’s largest producer of farmed salmon.
Another angel who contributes to the Forbes Technology Council and existing investor DOB Equity also participated in the round. The funding comes after the commercial fish farm secured a mezzanine debt investment from agriculture-focused social impact investor AgDevCo in 2021, and an investment from private equity firm DOB Equity in 2020.
The startup has experienced significant growth since its inception in 2014; it now has 600 employees, more than 55 branches in Kenya and generated $17 million in revenue in 2021. It aims for 15 times growth over the next five to six years.
why is it important
Fish feeds more than 200 million Africans, according to the Food and Agriculture Organization of the United Nations (FAO). In most parts of the continent such as East Africa, the supply of fish is less than the demand each year. This is mainly because fishing rates are not sustainable. A study published in the Marine Ecology Progress Series Journal reveals that fish stocks along the East African coast are being depleted to alarming levels, with 70% of reefs below sustainable levels.
The Kenyan fish market, valued at around $500 million according to Victory Farms, still has to contend with unsustainable fishing practices. According to the company, there has been a 90% decline in tilapia, which is the most popular freshwater fish, as the human population increases.
“The problem is that the wild catch can’t keep up and it’s not going to bounce back, at least not for a long time. The traditional way of doing aquaculture is also very inefficient and this is how it is practiced almost everywhere in Kenya and East Africa,” Joseph Rehmann, CEO and co-founder told AFN. from Victory Farms.
How it works
Victory Farms was founded in 2014 by Rehmann and Steve Moran. Rehmann had a background in investment banking and worked on an aquaculture project in West Africa.
They identified the high but unmet demand for fish in the East African market. While the shortfall was made up with fish of Chinese origin, the quality was questionable. They set out to produce quality tilapia to supply all of Kenya and then expand to other East African countries.
“We saw an opportunity to build an end-to-end protein platform. It really is a science and technology-driven platform, which is significantly disrupting traditional businesses through the use of technology,” says Rehmann.
To provide a constant supply of fish, the startup combines indoor fish farming, base farming and lake farming using deep-sea cages. The company also invented its own hatchery recirculating aquaculture system (RAS). The system provides a controlled environment to enable optimum fish production.
According to Victory Farms, this system makes its farms 99.9% more land-efficient compared to traditional tilapia aquaculture. The company is on track to produce around 8,000 tonnes of fish this year, working with 15,000 female market traders who source from its 55 branches across the country to supply their consumers. The women who receive 80% of Victory Farm’s produce are assured of a steady supply of high quality fish, which cannot be guaranteed from wild catches. The remaining 20% is split between restaurant suppliers and walk-in individuals at company branches.
Victory Farms is now moving into precision fish farming with an automated drone system that can predict future fish performance. The company is currently looking to partner with an aquaculture research company to help it deploy drones that will monitor fish ponds. According to Rehmann, this decision would help them infer the health of fish based on the color of the water. They could then adjust feed or oxygen levels in the water and ultimately predict future production volumes.
Fish farming is endemic to Kenya. While Victory Farms has the largest number of fish farms in the country, other players in the market include Mwea Aquafish Farm, Africa Fish Farming, Safi Fish Farm, Nyanam Fisheries and Lake Naivasha Fish Farm to name a few. .