Entrepreneurship Zone: 27 June 2021: Farming in the city: Ugandan start-up makes equipment for vertical agriculture

Sun Jun 27 10:08:49 CAT 2021

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Entrepreneurship Zone:  27 June 2021:  Farming in the city: Ugandan start-up makes equipment for vertical agriculture

Vertical and Micro Gardening is a Ugandan company that builds farm towers to make farming a viable micro-enterprise for low-income earners in urban centres. These towers are designed for horticultural crops such as spinach, onions and coriander. The company was started in 2014. Founder Paul Matovu answers our questions.

1. Give us your elevator pitch.

Our company is called Vertical and Micro Gardening (VMG). We are a homegrown Ugandan enterprise that designs, manufactures and distributes vertical farm growing kits. In addition, we have other products including packaged soil and we offer agricultural extension services, particularly to urban communities.

Our vertical farms can hold up to 200 plants and our impact reports indicate a farmer can earn up to $355 in one production cycle.

2. How did you come up with the idea for the company?

People live in tiny spaces in the city and we wanted to create a product that can enable someone to farm on their balcony, walkway, living room or office. Based on my background in forestry, I wanted to make something durable; a vertical farm that can accommodate more plants.

Over time, this has evolved into more than one model of the vertical farm. The original model is wooden and we call it the Basic Vertical Farm or Vertical Farm 1.0. We have a few other models set to launch this year. Overall, there are more than 20 other models in the pipeline that we hope to bring to market over the coming years.

3. Explain how you financed your start-up.

The first funding came from IDEAS For Us, the umbrella body of the IDEAS Movement based in Orlando, Florida, through a micro-grant called the Solution Fund. It gave us the first $1,000 to do the prototyping and the community extension. Later, we were given the second $1,000. We obtained more funding from the Tony Elumelu Foundation, McGinnity Family Foundation, Ruforum, The Africa Prize for Engineering Innovation and other awards. On top of that, we were making some sales of vertical farms, seedlings as well as charging people for extension services. These returns are what have kept us going. We have also received some loans, most significantly from Unconventional Capital.

4. If you were given $1 million to invest in your company now, where would it go?

We are currently looking for funding. Two of the areas we would invest in are production and product improvement. When we started in 2014, the cost of producing one vertical farm was about UGX 850,000 (about $250). To make a profit, I needed to sell it for over UGX 1,000,000 (about $280). The families we were targeting could not afford that. While some of the middle-class customers are able to pay that amount, they would still complain about the high cost of our product.

This is why, with the support of United Social Ventures in 2017, I launched a crowdfunding campaign to raise $5,000 to set up a small-scale production facility and it worked. By the end of 2019, we had a facility that enabled us to lower the cost of production by over 75%. Our farms currently retail for UGX 450,000 (about $127) when fully planted, and UGX 400,000 (about $113) unplanted.

We are renting our premises and we would like to reduce our overheads even further. We have already made improvements to the vertical farms but need finance to bring the new and improved models to market. These models will make it easy for us to scale up not only in Uganda but across the region, specifically targeting major cities.

The other important aspect of our business is sales and marketing. With the enhanced production capacity, we will need to invest in resources for customer acquisition and retention.

A VMG vertical farm within a residential area

5. Tell us about the risks your business faces.

I have seen other companies in Uganda and East Africa that are trying to replicate our product. Some have even plagiarised our audio-visual materials and written content. We understand there will always be competition but we have to find a way of constantly improving our product and be the market leader in terms of urban vertical farming in the region. There is a need for national and regional patenting and registering of trademarks.

The other risk is fluctuation in prices. The vertical farms are largely made out of timber and timber prices fluctuate quite extensively. The timber we use could be UGX 8,000 one day and then UGX 11,000 on another. However, we have set a standard market price for the product. To address this challenge, we are looking into other materials like toughened nylon, steel and concrete, as well as a wood-plastic composite.

Paul Matovu. Photo by James Oatway

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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