Terraa is a Moroccan startup which seeks to build a more efficient and sustainable food supply ecosystem first in Morocco and eventually across Africa. This week, the startup raised $1.5 million in pre-seed capital to pursue that mission.
TechCabal caught up with co-founder and CEO Youssef Benkirane to ask about the startup’s origins, its recent fundraising, expansion ambitions and much more!
TechCabal: Tell us a bit more about Terraa and the problem you are solving with your product offering
Youssef Benkirane: Our value proposition is that through our digital platform, we offer farmers, higher incomes, and access to stable markets at better prices. And we also offer it to the other side—the retailer’s side—very competitive prices, versus the current market price, and a consistent supply of high-quality goods.
So that proposition is what enabled us to showcase very strong traction from day one when we started our pilot in August last year. Our competitive prices help us to not only quickly convert our restaurants, but also our retailers.
TC: Has the global economic downturn, which has seen prices skyrocket, in any way affected Terra’s ability to payout farmers and retailers competitive prices?
YB: I would say no because this is a market where prices are dynamic. So every day, you have new prices for each of the products and depending on the quality, the prices can evolve even hourly. So it’s very hard to make any analysis; but what we can say is at any time, when the price of the market is set at, let’s say x, we will always be able to offer x plus y. And also, we will always be able to offer a higher margin to farmers because of the fact that we got the intermediaries and are able to make more margin out of this. So in short, even when the overall market price can go up, we will always be a better option to farmers versus what is currently in the market.
TC: What challenges have you faced in your operations in Morocco?
YB: There are many challenges of course. The first one is finding a way to aggregate the supply. Most farmers are buried in a lot of places that are very fragmented and what’s complicated is setting up the operations to make sure that we can supply from them directly and then aggregate and put everything together and then ship and ship everything to the end customer.
So it’s a pretty complex operational setup that we need to work with. And then you also have, of course, big issues on how we can deliver to the customer and do a lot of last-mile delivery, which can be quite complex in the African ecosystem.
To address these issues, we are building on existing networks that previous e-commerce providers have already built.
TC: Terraa just announced a $1.5 million raise this week. What will this funding be used for?
YB: Our key priorities are to build technology, hire talent and also seek to showcase that our model is viable. So the last element regarding the viability of the model, we will do it in Morocco, where we will scale in the key regions and cities of the country. And then once we build the playbook, right, the operational one and the commercial one, then we’ll be able to replicate the model elsewhere in Africa.
In the next 12 months, we’ll be dedicated to building this playbook and understanding the market, which is a very complex market. It’s a very challenging problem we’re trying to solve so we need to be sure that we figure it out properly. And once we are confident that we have a solution, we will start replicating in major markets in Africa.
TC: Do you feel like being able to raise capital in a VC downturn validates your model?
YB: Absolutely. We were able to raise this capital within 30 days and were also oversubscribed by twice the amount we had set out to raise. I think that showcases the fact that the problem we are trying to solve is a major issue that will become more and more of a priority in the next years and decades.
And we see that many other VCs are trying to help and support other entrepreneurs who are also trying to crack this problem. So in a way, it’s a problem that everyone sees. The question then becomes, what’s the right way to solve this problem?
We see other models similar to ours that have tried to do this in other regions that are still operating and scaled. But we need to find our own way and build our solution in an efficient way. So at the moment, it’s hard to say that we already have the right solution. I don’t think we have it. I think we will figure this out on the way. And it is just that we now have investors who believe that there is a real problem to solve. And they believe in and trust us as a founding team.
What would Terraa like to achieve the most in the next 12 months?
Building our operational playbook, building our supply from a very fragmented farmer community, and building a commercial playbook, and accessing our priority customers. We would also like to build our deck with the proper talent so we can start operating at a high scale. And then also, we aim to be in multiple cities in Morocco.
*Interview has been slightly edited and condensed for clarity.