Today, our investment in Regen Organics (formerly trading as Sanergy) has been announced cementing our ambition to invest in entrepreneurs that foster an inclusive, circular future in Sub-Saharan Africa.

Regen Organics is closing the circular loop for food systems by manufacturing sustainable agricultural inputs from safe management of residual organics, which pose an environmental and public health threat in emerging economies.

Food systems are essential given the prominent role of agriculture in the region as well as the growing challenge of feeding a growing population with increasingly scarce resources. The investment in Regen Organics showcases that existing inefficiencies and losses across the food systems value-chain – such as decline in land productivity, limited competitive domestic production, and unsustainable management of food waste – can provide amble opportunity for innovative solutions that build prosperous, inclusive, and climate resilient communities by closing local loops.

Our investment underscores our belief that regenerative growth provides for a better long-term investment strategy than the traditional singular focus on economic growth.

Especially in an African context, where resource efficiency has always been the norm. When it comes to food systems, the existing linear economic model of “take, make, dispose” depletes natural resources, is harmful to the environment and contributes to rising food insecurity.

Current agricultural practices, like excessive use of chemical fertilizer, have severe impacts on soil health resulting in contaminated water, loss of soil carbon, and loss of biodiversity, to name a few.

Hence, there is a burning platform to reverse such effects through the deployment of regenerative practices that decouple growth from the use and misuse of scarce resources. On the African continent, BESTSELLER Foundation has witnessed many emerging circular business models in the food systems value chain that are currently being piloted, for example, aquaponic farms, cold-chain logistics services, and production of organic fertilizer from food waste.

These business models are leading the way for how to grow organically both in sync with nature and often in an inclusive manner that can help formalize and generate income for the informal economy. Thus, when emphasizing that regenerative growth is a better strategy than purely economic growth, it is about accounting for the long-term value of achieving that perfect equilibrium between human and nature, between financial and impact return.

Given the nature of regenerative growth, it is becoming clear that the traditional venture capital (VC) model does not immediately cater for the circular opportunities emerging on the continent. Many VCs are now redirecting their focus from the saturated ecosystems in developed markets to the emerging ecosystems on the continent – on the hunt for the next unicorn – but they may find themselves at an impasse.

Upon entry many soon realize that successful digital ‘point solutions’ from developed markets are not directly transferable to all African markets. Given the fragmented nature of many value chains – as described with food systems – there is a need to deploy ‘platform solutions’ that tackle inefficiencies across the value chain (if unaddressed it would impede scale).

That requires not only marrying digital with physical solutions, but also taking off the ‘digital technology’ glasses inclined to search for the next blockchain, IoT, or big data solution and start exploring other technologies – like physical technologies (e.g., engineering, energy storage, and nanotechnology) or biological technologies (e.g., bio-based materials, bioenergy, and hydroponics). Individually and collectively these technologies can help overcome fractures across the value chains.

It is about building locally embedded infrastructure, and now is the momentum to make sure such infrastructure is regenerative and circular. This will not only make business cases and value chains viable in the long run, but also help overcome supply-chain disruptions in the short term, as we have seen with Covid-19 and with the war in Ukraine. By closing local loops, circular businesses like Sanergy are ensuring self-sufficiency in the region, which must be the long-term strategy for economic growth.

There is momentum behind circular economy models on the African continent. As an investor in the circular economy, we see a proliferation of circular entrepreneurs and initiatives. But the road towards circularity is not always straight-forward. December this year, the World Circular Economy Forum (WCEF) will for the first time be hosted on the continent in Kigali, Rwanda, which will be a perfect opportunity to spotlight the many homegrown circular solutions.

We are, however, aware that (local) entrepreneurs are facing challenges to attract financing, not only because they may have higher capital expenditure requirements and require scale to attain attractive margins, but also because the playing field for the circular economy is not levelled with that of the linear economy. 

Traditional linear economy business models typically do not pay the price of the negative externalities that occur from the production and consumption of their products and services. While new policies such as ‘extended producer responsibility’ are increasingly being adopted on the African continent to level the playing field, there is still some way to go, but no time to waste (pun intended). 

In the meantime, we hope that our investment in Regen Organics can act as a lighthouse to aspiring circular entrepreneurs – not only showcasing a viable path towards closing local loops, but also shedding light on their scaling journey, which have included a few pivots and exploration of different revenue streams and partnership models to now come full circle. It is important that we as investors recognise our responsibility in securing the foundation for circular pioneers like Regen Organics to thrive.