When Joseph Rehmann started his aquaculture company, the biggest hurdle was finding employees.
Together with his partner, the Victory Farms co-founder decided to create a pipeline of qualified workers for their fish business in Homa Bay County.
“The aquaculture industry was small and couldn’t provide a big talent pool of trained professionals. We had to focus on training first,” he talks of the business when it started eight years ago.
Because their business involves fish feed production, breeding, hatchery, processing, cold chain distribution, and retail, they needed more workers.“Pioneering was the hardest part,” he says.
They started a college hire programme called Graduate Aquaculture for Learning and Training (GALT) which has seen 40 trainees graduate.
Half of them now work at Victory Farms and the training investment has paid off.
“They are the future of aquaculture in East Africa,” Mr Rehmann says, adding that Victory Farms has one of the most efficient hatchery systems operated by Kenyans.
They faced another hurdle. There was the preexisting notion that Lake Victoria is not suitable for aquaculture [rearing of fish in controlled spots] because it is too cold, shallow, and hyacinth-infested.
“We knew there were challenges associated with the geography but we did our own technical work and concluded that Lake Victoria would be suitable for commercial aquaculture. So we took the risk,” he says.
Unlike many start-ups built by entrepreneurs with little know-how about the industry they are venturing into, which is the biggest cause of failure, the Victory Farms co-founder had over 15 years of aquaculture experience in Africa.
“Some basis of experience can mitigate risks,” Mr Rehmann says, adding “I brought business skills and he brought the aquaculture technical skills and I strongly believe in a two or three-punch team. Solo teams can work but it’s hard to have everything in one person.”
Art of fundraising
Just like most entrepreneurs, raising the first round of capital was not easy. But today, the firm has mastered the art of fundraising, receiving billions of shillings from venture capitalists to grow its presence.
This week, Victory Farms received Sh4.7 billion ($35 million) for expansion.
Mr Rehmann says they were lucky to have an aquaculture industry champion, Hans Den Bieman, founder of Sealand Aquaculture, the world’s largest salmon farm who was instrumental in their fundraising efforts.
His credibility attracted other investors.
He advises that when you have a vertically integrated business [where the company controls all stages along the supply chain instead of relying on external suppliers] it is less risky because you control the whole value chain, guaranteeing quality products, scale-up, and proper asset utilisation.
“Many investors prefer to invest in one piece, either cold chains or processing or retail, and when you put the whole package together, you end up excluding other investors,” he says.
Over the years, the business has grown from the 100 tonnes of fish it was producing. In 2022, they did 7,000 tonnes and this year 10,000 tonnes are expected.
“With our recent round of fundraising of $35 million, the plan is to scale Kenya's production capacity to 20,000 tonnes annually,” he says.
In Rwanda, they are looking at building a fully vertically integrated unit too. “We are also exploring investment opportunities in Uganda, Tanzania and Ethiopia for the next few years."
On its quest for sustainable business practises, he says Victory Farms is focused on becoming the first regenerative aquaculture platform.
“Kenya has the opportunity to be the world leader in tilapia production and this fundraising round enables us to deploy capital into research and development to understand how to substitute foreign feed ingredients with local ingredients which has a massive multiplier effect on job creation,” says the CEO of the company feted among the top 100 SMEs in Kenya by the Business Daily and KPMG in 2022.
Their upcoming feed mill which will go live soon will also be the world’s first geothermal-powered aqua mill. It will ease the burden of importing feed from Egypt.
“During the pandemic, we were heavily impacted by the global supply chain disruptions because we were importing the majority of our feeds from Egypt. Dependency on other regions was brought to the fore and that’s why we need to have our local food systems to supply local demands,” says Mr Rehmann.
On markets, the fish investor says the Homa Bay-based firm focuses on underserved Kenyan consumers, who buy fish from local markets.
“Their suppliers have challenges sourcing fish – fresh and readily available. We’ve partnered with thousands of fish traders,” he says, adding that they have 79 branch locations across Kenya.