Neeraj Varia spent the past eight years at Novastar Ventures, a global VC with centers in Nairobi, Lagos and London, after joining at the start and rising through the ranks to become a partner. Under his leadership, the firm invested in numerous technology startups in the sub-Saharan African region and most recently led efforts to help the firm manage multiple funds.
It is this business development experience that he brings to the growth of Kenyan agtech, iProcure, which is part of the Novastar portfolio and which he joins as CEO, taking over from co-founder Stefano Carcoforo. Carcoforo, who with Varia’s appointment becomes chief data and growth officer, co-founded agtech with Nicole Galetta (head of innovation), Patrick Wanjohi (chief technical officer) and Bernard Maingi (chief commercial officer) in 2014.
iProcure connects agricultural suppliers with local retailers (agro-merchants) through a unique distribution infrastructure that connects agricultural supply chains in East Africa. Agtech is designed to address the challenge of stockouts and substandard deliveries by achieving new efficiencies that also reduce and stabilize product prices.
TechCrunch spoke with Varia about his plans for managing iProcure’s growth in Africa and his thoughts on the current startup investment space in Africa.
TC: You’ve just been appointed to head one of Africa’s fastest-growing agritech businesses, but you also have a lot of experience in the tech startup world, both as a founder and as an investor. You must have had some great experiences. How has the journey been for you so far?
Varya: My career was kind of a random walk. After a short stint as an actuary, I joined McKinsey & Co for four years where I was exposed to multiple industries and business issues. After leaving McKinsey, I spent several years trying to implement business mindsets in NGOs and charities in Africa, which led me to work in 12 African countries where I interacted extensively with regulators, farmers and business people.
During this time, I saw first-hand the challenges of rural cooking energy and the lack of solutions to deforestation, which led to my first business venture, which created an 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 building investment strategy, developing systems and learning lessons about how VC works in Africa, and most recently leading the firm’s operations to build systems and processes to develop a scalable platform that can manage multiple funds simultaneously. During this time my entrepreneurial itch reignited and I founded a food delivery service catering to the Kenyan middle class which took off well but did not survive Covid.
What inspired your transition from the venture capital world to iProcure, which is one of Novastar Ventures’ portfolio companies?
I met the iProcure team while at Novastar and have been on their board for five years, but when Carcoforo asked me if I would consider taking on the role, at first I thought it was a crazy idea. I was already a partner in one of Africa’s leading venture firms and moving to the CEO position was not the most important thing.
But then, the more I thought about it, I realized that going back to business life gives me the chance to quickly get to something from 10 to 100 – which is not something a venture manager can usually do.
It also allows me to really make the change happen, not just whisper in the ears of the founders who are really making the change happen. All while stretching me in a way no other fund would.
iProcure’s mission is one that has been close to my heart since I left McKinsey & Co. Wherever I’ve been, whatever agricultural value chain I’ve looked at, the lack of consistent access and application of the right inputs has always hampered yields, hampered Africa’s ability to feed itself.
The opportunity with iProcure fits the exact lessons I learned from my career. First, the business quickly took three turns from its initial business idea before reaching the produce market it has today, which complements, rather than replaces, the relationship between farmers and their local retailer. Using technology to strengthen the agricultural supply chain, rather than trying to replace the existing trusted relationship between the farmer and the agri-retailer, has grown the company 16 times in four years.
Second, the team is incredibly diverse. It includes a hyperactive idea generator, an obsessive tactician with exceptional relationship and political skills, a pragmatic technology leader focused on building for what users need rather than what sounds cool, an obsessive process creator, and an operator who can holds huge moving parts in its head. Most importantly, we are all friends first and business partners second. This strong culture, deep respect and love for each other trumps achieving higher revenue or pushing for a higher valuation.
Joining iProcure ended up being an easy decision to make. This has become a great chance for me to learn and grow and a great way for me to make an impact on a business that in itself has a huge impact on over 1 million farmers already.
What are your immediate areas of focus at iProcure?
My first priority is to make the company run brilliantly to make the most of this season – we want to double our reach to 2 million farmers, a target that is difficult but achievable given the investments we have made in technology and physical infrastructure .
I then plan to prepare the company to scale 10 times its current size by building the systems, processes, teams and capital base needed to transform the way agriculture works in East and West Africa.
We will expand into Uganda and Tanzania and in time into Nigeria. We will also expand our BNPL offering to enable agrovets to serve farmers without being constrained by their own cash flows. Finally, we plan to make a major investment in our data: we are collecting unparalleled data on input use on farms in Africa, data that can generate insights to improve our own performance, transform farmer decision-making and transform very old fashion industry.
For budding startups, advisors play an important role as they raise funds or try to find product-to-market. Will you play any role in Novastar Ventures or have any involvement in its portfolio companies, particularly those that you’ve been advising, moving forward?
I will not retain any operational or investment role at Novastar, but will continue to advise some of the portfolio companies I have led or supported. Leaving the day-to-day role of consulting for these companies was actually the hardest part of my decision to leave Novastar. I was so attached to the successes and failures of, among others, Komaza, Turaco and Sanergy that leaving these boards left a big void in my day-to-day life. Fortunately, some have asked me to continue supporting them, so the void isn’t completely empty yet.
How would you describe the startup scene in Africa right now – given that you were also a founder – any notable changes you’ve witnessed so far?
This is super exciting. There has never been a better time to be an entrepreneur or investor in Africa. The quality of talent is exceptional.
The infrastructure that startups need is increasingly being built — gone are the days when I had to build integrations into mobile money provider M-pesa myself — there are dozens of companies that will do it for me. Gone are the days when you had to do every delivery yourself – many companies are using technology to do it for you.
Governments are also quickly realizing that startups are essential to solving the huge problems facing our countries, partly because startups have the technology to help them, but mostly because entrepreneurs see opportunities, not challenges.
This is fundamentally different from when we launched Novastar in 2014, when startups were struggling to find talent, regulators were strangling them, and teams had to build everything themselves.
What do you think about the VC slowdown, any noticeable effects of that in Africa. How do you predict this will affect the continent?
2022 is a tough year to raise funds. After two easy years for entrepreneurs, this is a year where business models are being tested as capital becomes increasingly difficult to find. While some of this is reasonable, there are many good companies that are forced to merge and exit in unattractive ways because investors are unwilling to take risks – even venture investors.
I think this is temporary. The presentation of the successful companies on the continent will attract investors back and in a year or so the capital will flow again. I am confident that the entrepreneurs whose time is up 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.