The cash crisis that led to a smarter business

Agriculture is one of Kenya’s leading industries. However, changes in climate and other external factors have forced farmers to find solutions outside of traditional practises to stay productive.

Consequently, innovation and technology have taken centre stage in the industry today.

One company that’s doing its part in advancing the sector is Illuminum Greenhouses.

The company, founded by Taita Ngetich and Brian Bett, aged 25 and 26, respectively, specialises in building affordable greenhouses and providing sensor-based irrigation systems to farmers across East Africa.

The beginning

They got the idea for their business while in university and looking to make some extra cash.

“My roommate always had money. My friend Brian and I really admired his lifestyle, so we asked him how he sustained it. He told us about his farm at the foot of Mt Kenya where he planted tomatoes for wholesale. We didn’t care much about the tomatoes at the time, but we wanted the money, so we decided to get into the business,” Taita tells Hustle.

The cash they needed to farm tomatoes was Sh45,000.

To raise the money, Taita and Brian convinced four other students to join their venture.

After the first three months, however, they lost their capital after most of the crop was damaged by excessive rain. The other four students dropped out of the business, leaving just Taita and Brian.

“We kept making losses because of different environmental factors. We could have quit, but I think after tasting a bit of business, we wanted to make it work,” Taita says.

“We decided to research on how to manage external factors in farming, and came across the idea of using greenhouses for horticulture.”

Being a relatively new technology back then, most greenhouses were too expensive for the two to afford.

“We discovered that some people were using wood to build cheaper greenhouses instead of the usual aluminium. We took the wood option.”

The investment

In 2013, while still in campus, Taita and Brian shared their idea with their parents. Their biggest challenge was getting land and the initial capital required for the project.

Their parents graciously offered them land in Kericho and helped them meet the capital by investing Sh120,000 into the business. Taita and Brian topped this up with Sh40,000 each, bringing the total investment to Sh200,000.

After completing the greenhouse, it took them three months to get their first harvest. And this time, not only did they break even, they made a profit of Sh90,000.

Based on their success, they started getting enquires from neighbouring farmers on their greenhouse project.

“Initially, we just referred them to the contractor we’d paid to build our greenhouse. Then we thought, why not use this as a business platform? So, we actively started selling the idea of greenhouses to farmers,” Taita says.

“They would pay us 80 per cent upfront, which we used to pay the contractor, and we put a mark-up of 20 per cent, which they paid after completion of works.”

In 2014, they officially registered their company, Illuminum Greenhouses. They charged Sh200,000 for construction of a greenhouse measuring 8 metres by 15 metres, which was the standard most farmers asked for.

At the time, competitors who used aluminium to build their greenhouses charged approximately Sh450,000, giving Illuminum a competitive edge.

In the first year, they built approximately 10 greenhouses, turning over Sh2 million, of which Sh400,000 was their mark-up.

Chasing growth

All this was accomplished while they were still studying. Since Taita was doing engineering, he handled the technical side of the business, while Brian, who was doing economics and statistics, handled the numbers.

In 2015, another challenge cropped up: access to enough water.

“The obvious solution was irrigation systems. But the challenge was that most of these systems used electricity and high-speed Internet connectivity, which farmers in the rural areas didn’t have access to,” Taita says.

“We came up with the idea of using solar sensors, 2G Internet and an SMS system for feature phones.”

Taita and Brian built a prototype, which they pitched at the Global Entrepreneurship Summit in Kenya in 2015, which coincided with former US President Barack Obama’s visit.

“This was a huge deal for us – 30 start-ups from 184 countries applied for a grant. We came in second after Mexico, and secured $15,000 (Sh1.5 million),” Taita says.

The two used their win to reinvest into the company and build their new system. However, they’d underestimated how much capital they would need to get this new technology off the ground.

Facing failure

It took them a year to complete it and at the beginning of 2017, they found themselves in the red by millions of shillings.

“It was a tough time for us. There was a severe drought in the country, which means farmers had run at a loss. They didn’t have money to invest in new things like an irrigation system and many stopped ordering for greenhouses. We were at the brink of closure,” says Taita.

Rather than throw in the towel, he and his partner navigated these waters by restructuring and going back to the basics. They moved to a smaller office and made deals with suppliers to pay off their debts in instalments.

“It was startling to come from high revenue returns and get into debt in what seemed like a very short time. But in business, you have to be like that cockroach that refuses to die. Because if you die, then you’ve outlived your purpose, and who wants that?”

Fortunately, in July 2017, Taita and Brian got a cash injection when they won pitches at an Africa Connect business conference in Rwanda, and American Society of Mechanical Engineers iShow hardware competition.

They were granted Sh2.5 million and Sh1.5 million, respectively, which they used to pay off debts and complete their sensor irrigation system.

“It was a welcome relief. 2017 had been difficult also because not only had we run into high debt, but the first sensors we installed failed after one week. It was disheartening to disappoint the farmers who’d believed in us,” he says. One of the main issues with their initial irrigation system was that there were too many wires. As farmers pruned or planted in their fields, they’d inadvertently cut the wires, which caused the system to fail.

“It seems extremely obvious now, doesn’t it?” Taita sheepishly says. “So when we reworked the system, we used wireless sensors.”

The irrigation sensor system, which they call, FarmShields, cost Sh75,000 to install. The installation comes with two soil moisture sensors, two temperature sensor, two humidity sensors and one flow metre sensor to measure the water that flows out.

The system is connected to a farmer’s mobile phone to allow remote monitoring and control of their farm.

“Essentially, how the system works is that it monitors the condition of the soil, the temperature and the atmosphere and releases the amount of water plants need based on the prevailing conditions,” Taita says.

To date, Illuminum has sold 1,200 units of greenhouses and sensor irrigation systems combined, achieved with a staff of 32 people.

“We absolutely love what we’re doing. We set off to make some money, but we’re now part of revolutionising how farming is done in Kenya. That’s extremely humbling,” Taita says.

“I’ve travelled the world, I’ve been part of the Mandela Fellowship in Washington and the Global Entrepreneurship Bootcamp at MIT in Massachusetts. We never dreamed any of this could happen – and we’ve just scratched the surface.”

Over the next few years, Illuminum plans to raise $1.5 million (Sh150 million) in equity and convertible debt to grow its distribution and provide financing for farmers to access their technology.

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