Koa nets US$15M to scale cocoa upcycling strategies and cut carbon footprint

07 Dec 2023 --- Swiss-Ghanaian start-up Koa has raised US$15 million in equity from both existing and new investors in a Series B round to finance and scale up its cocoa upcycling strategy.

The closing comes just a few months after the inauguration of its new cocoa fruit factory in Ghana. It allows Koa to finance its ongoing scale-up while expanding the cocoa fruit upcycling and spearheading a shift to regenerative and climate-smart agriculture.

In May 2022, the company captured US$10 million in funding to raise its processing tenfold at its plant in Ghana. The company also plans to share its upcycling technologies with 10,000 additional cocoa smallholders.

This recent round is led by the Land Degradation Neutrality (LDN) Fund from global asset manager Mirova, an affiliate of Natixis Investment Managers dedicated to sustainable finance, with a US$9 million investment.

Among the new investors is also the Regenerative Growth Fund 1, a new SFDR 9 fund managed by the Venture Capital team at Zebra Impact and the Swiss bank Mirabaud. The fund aims to invest in nature tech solutions to address today’s challenges related to nature loss and climate change.

The round is completed by contributions from other new investors and the support of Koa’s existing shareholders, including Haltra, which led Koa’s Series A equity round in 2021. 

Tapping into upcycling 
Founded in 2017, Koa is said to be “transforming the cocoa industry through its innovative upcycling of the cocoa fruit.”

The company is the first in West Africa to have unlocked a new value chain around the so far discarded cocoa pulp. Working with cocoa smallholders in Ghana, Koa reduces on-farm food waste and generates additional farmer income while bringing unique new ingredients to the food and beverage industry.

“We have closed our Series B round in this challenging market environment for start-up funding while at the same time having found once more like-minded investors that are fully aligned with our mission and ambition to expand and create more impact around the cocoa fruit,” says Fabien Nizard, head of corporate finance and investor relations at Koa Switzerland AG.

Meanwhile, Gautier Queru, managing director of Natural Capital at Mirova, adds: “We support Koa’s development, in line with the LDN Fund’s ambition to support the development of a sustainable and fair economy in emerging countries where investment needs are huge and the economic potential attractive. Koa contributes to transforming the cocoa value chain to reduce food waste and provide local producers with additional income.”

Driving sustainability in the cocoa value chain
The Series B round is critical for Koa as the company recently inaugurated its new factory in Akim Achiase in the Eastern Region of Ghana. 

Koa is said to be “transforming the cocoa industry through its innovative upcycling of the cocoa fruit.”With this facility, Koa has set the foundation to increase its production output tenfold while cooperating with an additional 10,000 cocoa farmers. 

The equity financing provides Koa with the funding required to scale its operations, develop more cocoa fruit products, and expand its marketing and distribution activities.

New business expansions allow the company to extend the cocoa fruit upcycling and intensify regenerative agriculture practices — a necessity in light of deteriorating soil fertility and the high carbon footprint associated with traditional cocoa farming in West Africa. Poverty, coupled with a lack of training in sustainable farm practices, is one of the key reasons most smallholder farmers struggle to uphold their crop yields against the negative effects of climate change. 

By making regenerative agriculture a cornerstone of Koa’s strategic expansion, the start-up aims to improve the resilience of cocoa farms while also reducing the carbon footprint of cocoa.

Sourcing sustainable ingredients 
Sustainability, specifically in chocolate and cocoa ingredients, is also rising. 

The F&B industry is rapidly embracing sustainability to meet environmental concerns and consumer preferences, with a notable 5% global average annual growth in launches featuring ethical claims over five years from July 2018 to June 2023, according to data indicated by Innova Market Insights. 

This includes a spectrum of practices like sustainable sourcing and farming, the promotion of healthy eating, innovative packaging and the integration of circular economy principles.

Sustainable cocoa NPD in the F&B industry is gaining momentum as companies seek to address environmental and ethical concerns. Brands are sourcing cocoa from certified sustainable suppliers, promoting responsible farming practices and supporting local communities.

Reducing waste in food value chains
Rescuing ingredients that would otherwise go to waste is the hallmark of the upcycling trend that is ever more present across several F&B categories. 

Among recent developments, tea leaves, coffee grounds and cocoa shell waste have all been highlighted in the upcycling movement. 

Meanwhile, with one-third of the food produced globally being lost or wasted somewhere in the value chain, this number is set to grow. 

One of the ways to address the pressing need for food waste reduction is through upcycling, using byproducts from typically discarded side streams to unlock their highest value and improve the way the industry uses resources when producing F&B products.

Outside of cocoa and chocolate-based ingredients, IFF recently revealed it is tapping into its product design expertise using its range of upcycled flavors and ingredients, which can help the company and its customers create sustainable products.

Edited by Elizabeth Green