Victory Farms, an aquaculture startup and farm for tilapia fish comprising hatcheries, nursery ponds and deep-water cages, has raised $5 million in new funding.
The investment was led by Ed Brakeman, a senior managing director at Bain Capital and Hans den Bieman, founder and ex-CEO of Mowi, one of the largest salmon businesses globally.
It is the startup’s first institutional investment following seven internal angel rounds from the same set of equity–and debt investors (it raised $4 million in debt last year). This funding will allow the Kenyan-based company to expand its business into Rwanda, DRC and Tanzania.
Joseph Rehmann founded Victory Farms in 2015. On a call with BlueHillco, Rehmann narrated his journey to starting the company. After completing his MBA program, he got to work on a three-month aquacultural project in Ghana, which ultimately led to a three-year role where he became CFO of an Accra-based farm.
“I learnt a lot about aquaculture scaling and all that. I believed the platform I was running could be a lot bigger and scale a lot faster if we could connect more dots — and basically creating an end to end protein plant,” said Rehmann, who has worked for an investment bank and Microsoft.
In 2015, Rehmann teamed up with his longtime business partner Steve Moran to explore Lake Victoria and perform some feasibility studies on how they could use technology to disrupt the country’s cold chain markets.
They concluded that a unique opportunity to rebuild the fish value chain from scratch existed. They raised an angel round to start Victory Farms before launching in mid-2016 to serve a market with about a $1.5 billion fish deficit.
The average Kenyan only consumes about 10-20% of animal protein intake, most of which is red meat. With a large fish deficit and retail prices reaching $5 per kilo, Victory Farm says it uses technology to produce more fish and drive down costs simultaneously for the thousands of market women who buy fish in small batches to cook and sell in local food markets.
“We run a tech-enabled platform and have scaled 2x faster than any other African fish company. And using data, we have built the most efficient operation globally at half the capex of current global leader,” Rehmann told BlueHillco via email. “We sell to mass market Africans via a high innovative RTM cold chain which uses predictive data to push fish to thousands of market ladies every day all across Kenya with less than 1% spoilage.”
The company has more than 54 retail locations where over 15,000 market women go to buy fish, and according to Rehmann, they use no electricity nor ice.
“We use vertical integration to drive a more robust data set from end to end,” 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 globally due to its technology. The company recorded a 130% CAGR between 2017 to 2021. Maintaining this growth rate can exude utmost confidence. In Victory Farms’ case, Rehmann believes there are no significant competitors to the company — which also has a processing plant and distribution network — in Kenya and the larger East African region.
“We’re 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 not being able to have 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” globally if its expansion into new geographies takes off as planned, the CEO argued.
As much as Victory Farms is profit and growth-oriented, Rehmann said it is worth highlighting that the company is working toward becoming the world’s most sustainable tilapia platform. “We’ve got several initiatives underway and planned to build the world’s first carbon negative fish platform. And I think it’s very exciting because we’ve got a lot of tangible and measurable dimensions built into the business to achieve that.”
Update: Correction was made with regards to Victory Farms’ debt funding last year. It was $4 million not $40 million.
