Why We Invested in Ghana-Based Farmio and Pakistan-Based Closet

In 2023, Village Capital partnered with Standard Chartered Bank to launch the Women in Tech Financing Facility, supporting alumni of the Futuremakers, through Standard Chartered’s Women in Tech (WiT) program. Globally, women-founded and led startups face a steep uphill climb in securing investment, with less than 3% of total capital going towards these enterprises. Recognizing this disparity, our initiative seeks to dismantle some persistent barriers these entrepreneurs encounter.

By providing vital catalytic capital, we are not just leveling the playing field; but setting the stage for women entrepreneurs to build resilient, scalable businesses. These startups do more than succeed commercially – they reinvest in their communities and stimulate economic growth. Village Capital has invested in two women-led startups: Bena Care (Kenya) and Mighty Finance (Zambia) through this financing facility. This blog post delves into our latest investments in Farmio, which champions climate-resilient farming in Ghana, and Closet, a second-hand fashion rental marketplace based in Pakistan, highlighting how these startups contribute to their respective countries’ environmental and economic improvements. 

Growing Green: How Farmio Champions Climate-Resilient Farming in Ghana

Born into a community steeped in farming, Anaporka Adazabra witnessed the struggles etched on the faces of her family and neighbors. Limited harvests, a single season’s yield choked by unforgiving weather and depleted soil, became a constant source of frustration for the farmers in her community.

“While studying for my major in Computer Science, I simply wanted to understand what kind of technology could be used to ensure year-round production, save on water use, and ensure affordability and profitability for people earning below US 5 a day on their open-field farms,” shares Anaporka Adazabra, co-founder of Farmio. This climate-smart agriculture startup provides tech-enabled solutions for agri-entrepreneurs, interested in building sustainable and profitable agribusinesses.  

Improving Food Quality and Yield Through Climate-Smart Practices

Ghana’s economy is heavily reliant on agriculture. The sector accounts for 54% of the country's GDP, contributes 40% of its earnings, and provides over 90% of its food needs. However, agriculture in the country is predominantly smallholder-based and rain-fed, with most farmers growing only enough to feed their families. 

Farmers face difficulties building profitable businesses without access to proper technical assistance, inputs, and markets. And, it’s even more challenging with the increasingly prevalent impacts of climate change, like prolonged drought and flooding. This is where Farmio comes in. The startup leverages climate-smart farming principles, providing farmers access to inexpensive greenhouses made from upcycled materials, reducing water consumption, and increasing yields by extending the growing season. Additionally, the startup offers farmers training in climate-smart agriculture. It includes how to operate greenhouses and optimize their outdoor fields with drip irrigation by connecting them with local agronomists in person or via their app. Not only are these practices good for the environment, they’re good for business. With the inclusion of drip irrigation, farmers reduce water use by up to 70%. Where previously, farmers needed over 1000 liters over two days, but now, they use the same quantity over a 7 to 10-day period. 

Farmio has not only improved farmers’ quality and quantity of produce but also increased their earnings from US 0.4 per kilo to as high as US 3 per kilo. 

“Through my research, I realized that we needed a good blend of software and hardware, education in climate-smart cultivation, and access to proper inputs to help improve production,” expressed Anaporka, who uses Farmio’s demonstration farm to test different growing techniques and train interested farmers. “Our solutions go a long way in helping solve the problems of vegetable farmers and broader community challenges around food security, access to adequate nutrition, and high unemployment rates.” 

Increased Revenue for Small Scale Farmers Through Market Linkage and Upskilling

Beyond the training and access to greenhouse infrastructure, Farmio addresses one of the key obstacles small-scale farmers face in building profitable businesses: access to markets. Farmers often sell produce through a series of middlemen, reducing the percentage of the food dollar they get to take home. By managing some of the logistics and aggregating produce from many farms, Farmio can cut out the middlemen and work with the larger-scale aggregators, grocers, and food manufacturers that wouldn’t be willing or able to work with a single farm. They also have a growing direct-to-consumer sales channel to meet the demand for easily accessible fresh, local produce. Since launching in 2019, the company has developed a network of 220 farmers throughout Ghana and sold their produce to 25 grocery aggregators and 430 retail consumers.

Up to 74% of the farmers supported are women who are either directly farming or engaged in different agricultural jobs around production, supply, harvesting, and aggregation.

Why We Invested in Farmio 

Village Capital was excited to support Farmio because they’ve embedded sustainability into their operations – from training farmers in climate-smart agricultural practices to incorporating circular economy principles in their daily business operations by using recycled materials to construct greenhouses. “Our circular economy journey begins from the construction process where recycled metal pipes and sheets are fabricated into different parts of our greenhouse structure,” explains Anaporka. “Bamboo and wood are also incorporated into the construction where necessary. Following this, we process coconut shells into cocopeat, which is treated and enriched with manure for use as a soilless growing medium that improves water retention, drainage, and nutrient supply to the roots of our plants as well as sequester carbon.”

What’s next for Farmio? This investment from the Women in Tech facility opens new horizons for the startup’s growth and impact. They’ll use the funds to expand their demonstration farm and scale their technology to reach more farmers. Anaporka and her team’s goals involve growing Farmio’s farmer network from over 200 farmers to 5,000 farmers in the next few years as they continue to leverage technology to expand reach through their app. We’re excited to see how Farmio creates change in the agricultural system in Ghana and sows hope for future generations.

Fashion Forward: Closet’s Innovative Second-Hand Fashion Rental Marketplace in Pakistan

During her college years, Laiba Amir and her friends discussed the exorbitant costs associated with hosting weddings in Pakistan – a cultural necessity that often becomes an economic burden for families. In Pakistan, where the average monthly family income is USD 500, wedding costs average around USD 10K, with a significant portion, up to 45%, allocated to clothing for the bride and groom.

Driven by this insight, Laiba founded Closet, a Pakistani fashion rental marketplace, in 2019. The platform allows customers to rent wedding and other outfits at a fraction of the cost, creating income-generating opportunities for outfit owners.

At the time of Closet's launch, the concept of second-hand wedding fashion was not widely embraced in Pakistan. Laiba notes a notable shift in user attitudes since then. "Our data shows a steady increase in users opting for second-hand wedding fashion. Testimonials from our community highlight not only the cost-effectiveness of purchasing pre-loved items but also the environmental and ethical benefits. Users have expressed delight in finding unique pieces that align with their style while contributing to sustainable fashion practices.” 

To date, Closet has served over 20,000 users. “Brides and grooms have shared their experiences saving up to 90% on outfit expenses, allowing them to redirect those funds towards other significant expenses and enhancing their overall wedding experience.” 

As a socially responsible marketplace, Closet earns a 50-55% commission (gross margin) from each outfit rental, ensuring the platform's sustainability and growth.

Why We Invested in Closet

Closet stood out to us due to its multifaceted impact, encompassing social, environmental, and economic aspects.

The environmental footprint of the fashion industry is staggering, contributing approximately 20% of global wastewater and generating vast amounts of textile waste that end up in landfills or incinerators. Research indicates that the fashion industry could contribute 26% of carbon emissions by 2050 without significant changes. Closet’s societal impact is equally significant, leveraging social norms not only to influence positive consumer behavior but also to create income-generating opportunities for over 5,000 women lenders. “This marketplace has been instrumental in supporting women in covering basic expenses such as purchasing diapers for their children and achieving significant earnings of up to  USD 7K, as one lender did over six months with their used dress, shares Laiba.”

How We Structured Closet’s Investment

Village Capital is committed to unlocking capital for underserved entrepreneurs and those operating in overlooked markets. In line with Laiba’s faith, Islamic finance principles, which prohibit interest, were factored in, thereby facilitating a Shariah-compliant investment. Like many socially conscious investments, a Shariah-compliant investment emphasizes both financial returns and the social impact generated for beneficiaries.

“We started with a basic convertible note, a common early-stage financing tool. Standard convertible notes are structured with an interest rate during the debt phase that accrues until the conversion to equity when the note gives the investor a discount on the per-share conversion price,” shares Meredith Storton, Senior Manager of Investments at Village Capital. “We then replaced the interest with a tiered discount on the conversion price that increases the longer the conversion takes, which allowed us to follow the founder's Islamic finance requirements and structure with some upside potential. If the company decides not to pursue future venture investment, they can pay off the note as debt, and Village Capital will have offered a 0% interest loan. The financing facility’s focus on impact over returns allowed us to offer that concession.”

Elevating Closet to New Heights

“As a woman entrepreneur, I’ve encountered various challenges, especially in fundraising conversations. There’s often a subtle bias or skepticism directed toward women in leadership roles, especially regarding financial backing. However, I’ve found that perseverance and a strong belief in the value of our venture have been crucial in overcoming these obstacles,” shares Laiba, reflecting on her journey. Laiba credits programs like WiT, designed for women founders, for contributing significantly to her startup’s success. “The WiT program wasn't just a program; it was a catalyst. Its impact is felt everywhere at Closet, shaping our journey and inspiring us to reach new heights.” 

This investment has been transformative. Beyond supporting their growth objectives, it’s strengthened investor confidence and garnered interest from other investors and capital providers. Currently, the startup is in the final stages of securing a USAID grant.

What’s next for Closet? The startup is exploring innovative sourcing methods and adjacent revenue streams. This includes partnerships with emerging designers, opportunities for individual investors in pre-loved garments, and exploring avenues like jewelry and footwear rentals.