Niraj Varia spent the last eight years at Novastar Ventures, a global VC with hubs in Nairobi, Lagos and London, having joined it at inception and rising through the ranks to become partner. Under his watch, the firm invested in numerous tech-enabled startups in Africa’s sub-Saharan region, and, more recently, led efforts to help the firm manage multiple funds.
It is this business-development experience that he brings to Kenyan agtech scaleup iProcure, which is part of Novastar’s portfolio, and which he joins as CEO, taking over from co-founder Stefano Carcoforo. Carcoforo, who with Varia’s appointment becomes the chief data and growth officer, co-founded the agtech with Nicole Galletta (head of innovation), Patrick Wanjohi (chief technical officer) and Bernard Maingi (chief commercial officer) in 2014.
IProcure connects agricultural suppliers to local retailers (agro-dealers) through unique distribution infrastructure that interlink agricultural supply chains in East Africa. The agtech is designed to address the challenge of stock-outs and sub-standard supplies, bringing about new efficiencies that also lower and stabilize product prices.
TechCrunch spoke with Varia on his plans for steering iProcure’s growth across Africa, and his thoughts on the current startup investment space in Africa.
TC: You have just been appointed to head one of Africa’s fastest growing agtech enterprises, but you also have great experience in the tech startup world, both as a founder and investor. You must have had great experiences. How has the journey been for you, so far?
Varia: My career has been something of a random walk. After a brief stint as an actuary, I joined McKinsey & Co. for four years, where I was exposed to multiple industries and business problems. On leaving McKinsey, I spent several years trying to bring business ways of thinking to NGOs and charities in Africa, which led me to work in 12 African countries, where I greatly interacted with regulators, farmers and business people.
During that time, I saw firsthand the challenges of rural cooking energy, and the lack of solutions for deforestation, leading to my first business venture, which created the infrastructure that uses mobile money integration to distribute alternative energy solutions.
I later exited the business with valuable lessons that I brought to Novastar, where I spent eight years in investment strategy building, systems development and learning lessons about how VC works in Africa and, lately, leading the operations of the firm to build the systems and processes to develop a scalable platform that can manage multiple funds at the same time. During this time, my entrepreneurial itch resumed and I founded a food delivery service serving the Kenyan middle class, which took off well, but did not survive COVID.
Novastar Ventures becomes $200M African VC fund after $108M raise
What inspired your transition from the Venture Capital world to iProcure, which is a Novastar Ventures portfolio company?
I met the iProcure team while at Novastar, and I have been on their board for five years, but when Carcoforo asked me if I would consider taking the role, I at first thought it was a crazy idea. I was already a partner at one of the leading VCs in Africa and a move to the position of CEO was not at the top of mind.
But then, the more I thought it through, I realized that stepping back into business life gives me the chance to drive something from 10 to 100 rapidly — which is not something that a venture manager typically gets to do.
It also allows me to really make change happen, and not just whisper in the ears of the founders who truly make change happen. All this while stretching me in a way that another fund was not going to.
The mission of iProcure is one that has been close to my heart ever since I left McKinsey & Co. Wherever I have been, whatever agricultural value chain I have looked at, a failure to consistently access and apply the right inputs has always hampered yields, holding back Africa’s ability to feed itself.
The opportunity with iProcure fits the exact lessons I learned from my career. For one, the business rapidly made three pivots from its original business idea before it hit the product market fit it has today, which is supplementing rather than replacing the relationship between farmers and their local retailer. Using technology to power up the agricultural inputs supply chain, and not to try and replace the existing trusted relationship between the farmer and the agro-retailer led the company to grow 16 times in four years.
Secondly, the team is incredibly diverse. It includes a hyperactive idea generator, an obsessive tactician with extraordinary relationship and political skills, a pragmatic tech lead focused on building for what users need and not what sounds cool, an obsessive process builder and an operator who can hold enormous moving pieces in their head. Most importantly, we are all friends first and business partners second. This strong culture, deep respect and love for each other trumps making higher revenues or squeezing a higher valuation.
Joining iProcure was, in the end, an easy decision to make. It has become a great chance for me to learn and grow, and a great way for me to create an impact on a business that is, itself, having an enormous impact on over 1 million farmers already.
What are your immediate areas of focus at iProcure?
My first priority is to get the company working brilliantly to make the most of this season — we want to double our reach to 2 million farmers, a target that is hard, but feasible, given the investments we have made in technology and physical infrastructure.
I then plan to get the company ready to scale 10 times its current size, building the systems, processes, teams and capital base needed to enable it to transform the way agriculture works across East and West Africa.
We will expand across Uganda and Tanzania and, with time, into Nigeria. We will also expand our BNPL offering to enable agrovets to serve farmers without being constrained by their own cash flows. Lastly, we plan on making a big investment in our data: We collect unparalleled data on the use of farm inputs in Africa, data that can generate insights to improve our own performance, transform farmers’ decision-making and transform a very old-fashioned industry.
For budding startups, advisors play an important role as they raise funds or try to find a market-fit product. Will you be playing any role at Novastar Ventures, or will you have any involvement with its portfolio companies, especially those you were advising, moving forward?
I will not retain any operational or investment role at Novastar but I will continue to advise some of the portfolio companies that I led or supported. Leaving a daily role advising those companies was, in truth, the hardest part of my decision to leave Novastar. I have been so bound up in the successes and failures at, among others, Komaza, Turaco and Sanergy, that leaving those boards has left a large void in my day to day life. Fortunately, some have asked me to continue to support them, so the void is not completely empty yet.
How would you describe the startup scene in Africa at the moment — given that you have been a founder too — any notable changes you have witnessed, so far?
It is hyper-exciting. There has never been a better time to be an entrepreneur or investor in Africa. The quality of talent is outstanding.
The infrastructure that startups require is increasingly built up — gone are the days when I had to build an integration into the mobile money provider M-pesa myself — there are dozens of companies who will do that for me. Gone are the days when you had to make every delivery yourself — many companies use technology to do that for you.
Governments, too, are quickly realizing that startups are essential in solving the huge problems our countries face, partly because startups have the technology to help them, but mostly because entrepreneurs see opportunities rather than challenges. This is fundamentally different from when we got going at Novastar in 2014, when startups struggled to find talent, regulators strangled them, and teams had to build everything themselves.
What do you make of the VC slowdown, any notable effects of this in Africa. How do you project this will pan out for the continent?
2022 is a tough year to fundraise in. After two easy years for entrepreneurs, this is a year in which business models are being tested as capital becomes harder to find. While some of this is sensible, there are many good businesses being forced into mergers and unattractive exits because investors are not willing to take risks — even venture investors.
This is, I think, temporary. The performance of successful companies on the continent will attract investors back and, within a year or so, capital will flow again. I am confident that entrepreneurs who run out of time in 2022 will stay in entrepreneurship on the continent and come back better, stronger and wiser, and build great businesses in 2023 and 2024. The future is very bright.
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