Thrive Agric, a Nigerian agritech startup, has been in the news lately as a result of delayed payment to subscribers.
In its response to the aggrieved subscribers, Thrive Agric founders Uka Eje and Ayo Arikawe said the delay was the unfortunate outcome of the COVID-19 pandemic.
The statement reads: By now, you may be aware that payouts for some farm subscriptions are delayed. This is an unfortunate outcome of the COVID-19 pandemic and its consequent restrictions on physical access to farms and farming markets. Like many other businesses, we were not fully prepared for the impact, and despite the intent upon which this company has been run for the last 3 years, our subscribers now bear the brunt of these challenges with us.
We are issuing this statement to convey three things: First, to once again express our deepest apologies to our subscribers whose payouts are delayed.
Second, to share our plans to resolve this issue.
And third, to reassure you that Thrive Agric remains a viable business that Nigeria needs.
Catching up on the payouts:
Thrive Agric’s primary revenue source is based on a successful harvest (inclusive of crops and poultry).
Therefore, any revenue coming into the business is synchronized with the success of the operation as well as the timing of sales. When a planting season or harvest is lost, like we did this year, we can only hope to earn such lost revenues from subsequent harvests.
In our case, we have previously communicated to subscribers that we would meet our obligations based on overdue payments from off-takers. Some of those payments have come in, but not nearly enough to meet our obligations to subscribers. We hoped they would, but they did not.
Last week, we communicated timelines for repayment to our subscribers of up to 24 months depending on the specifics of their subscriptions.
We expect to payout before the committed due date, but in the past, we have been aggressive in our expectations and not met them. We do not want to continue to disappoint our customers so we have given a timeline that we can more confidently keep.
We are taking steps to beat this timeline, but experience has taught us to be more realistic.
We fully understand our customers’ frustration as the business is in the same position of linking obligations to expected payouts, only to have the schedule change.
We remain committed to our mission to enable agriculture, combat food scarcity, and build local wealth in Nigeria and beyond. We still believe that dream to remain valid, despite the current challenge.
We also remain committed to our subscribers and will pay ALL outstanding subscriptions as quickly as we can.
Leadway Disclaimer: Insurance only covers for the farm assets of its insured agric platforms
Leadway came into the mix because the insurance firm was touted to have insured the investment of subscribers. However, a press statement from Leadway clarified that “insurance only covers for the farm assets of its insured agric platforms.
“This, therefore, means that we only provide cover using our agric based insurance solutions for the risks to the insured farm assets against perils stated in the insurance policy document issued.
“As we have stated repeatedly, Leadway Assurance does not in any way guarantee the safety of investors funds if lost due to agri-business failure. Investors’ funds and the returns thereof are not covered as the subject of the insurance policy Leadway provides.”
Appointment of Adia Sowho
With subscribers giving the startup a 5-day ultimatum to pay them, Thrive Agric announced a temporary change of leadership.
According to a statement by Uka Eje, Adia Sowho, whose most recent role was as the vice president for growth at fintech startup Migo, will become the interim CEO. Sowho’s previous roles in the technology and business sector include leading digital business at Etisalat, and telecommunications consulting at Deloitte.
Sowho steps in for Uka Eje, the 29-year old who co-founded Thrive Agric in 2017 with Ayodeji Arikawe.
“She is here to guide Thrive Agric through a turnaround exercise so that we survive the effects the COVID-19 pandemic has had on the business,” Eje said in a statement.
“Adia has a lot of experience with building businesses from the ground up and shaping them to operate at scale. I asked her to support us, recognizing that she has the required expertise to move us past this period successfully.”
Ventures Platform Says it has been working behind the scenes
Ventures Platform, a pan – African early-stage fund focused on supporting post MVP teams to grow their startups, must have been really concerned about happenings at one of its portfolio companies. This means it has no choice than to painstakingly work to ensure that Thrive Agric pays its subscribers.
Ventures Platform in a statement said: Over the last few weeks, much has been reported about the challenges Thrive Agric has had throughout the COVID-19 crisis, and how these challenges have, unfortunately, adversely affected some of their crowdfund subscribers. However, what might not be so apparent is the work being done behind the scenes, to rectify and repair the situation, by ensuring subscribers are repaid in a timely manner.
Thrive Agric is one of Ventures Platforms’ portfolio companies; we invested in the agritech start-up in 2017. As early-stage investors, we take our role in how our portfolio companies operate and their overall corporate governance, very seriously.
Once alerted to the fact the company was facing some operational challenges, Ventures Platforms’ experienced senior management team and hired consultants intervened, working with the Thrive Agric founders to put in place deliberate and swift actions, to not only ensure repayment of investments to subscribers but also to realign the business for the long term.
Together, with Thrive Agric, we identified that one of the core issues was around sub-optimal communication between the company, its subscribers and additional stakeholders.
Working with the Thrive Agric Team, Ventures Platform has overseen the improvement of communication through the following:
- Communication to subscribers via email, with a more complete explanation of how COVID-19 impacted farming operations with an expectation of repayment horizon
- The commencement of active communications with concerned subscribers, via Zoom calls
- The release of a robust FAQ online via Twitter which addresses many of their subscribers’ and stakeholders’ key concerns
We are sufficiently happy with this important first step, and expect a more open and transparent line of communication between Thrive Agric and interested parties, in the coming weeks and months.
Additionally, Ventures Platform has also taken some important strategic steps with the Thrive Agric management team, including:
- Engaging actively with the founders to develop and implement a step-by-step plan to get the company back on track;
- The ordering of a thorough review of the company’s financial and non-financial operations to fully understand the scale of the problem;
- Supporting the company in strengthening their senior leadership such that they can frontally deal with these issues. The Thrive Agric team will communicate more on this very soon; and
- Providing bridge debt to help liquidate some of the outstanding to subscribers.
The actions we have taken alongside the Thrive Agric team, in this short period, are already yielding some small successes; but we know there is a lot more to do.
Whilst a lot of hard work has gone on behind the scenes to deliver these results, we are fully aware that the hard work starts here – and we will continue to push the entire Thrive Agric team, to return investments to subscribers, and rebuild the trust that has been lost in what has been an extremely challenging year.
The ultimate goal
With the subscribers saying that Thrive Agric owes them almost N50 million, the ultimate goal now is for the agritech startup to pay them.
Unfortunately, the subscribers are unwilling to wait for the 24 months timeline the startup hopes to settle all payments. In fact, they have given Thrive Agric a 5-day ultimatum to make payment.
Perhaps the intervention and face-saving measures of its investors like Ventures Platform will not only help settle the payment but also restore investor confidence in the startup (and other agritech startups as well).