In Indonesia, a woman-led impact enterprise named Krakakoa is a bean-to-bar chocolate maker that’s successfully boosting both the economic and and environmental resilience of local cacao farming, thus helping to revitalize rural regions.
In July of 2019, they successfully raised funding from Singapore-based investors IIX Growth Fund and LIC VC, as well as individual impact investor and co-founder of SYSTEMIQ, Jeremy Oppenheim. Impact Investment Exchange (IIX) led the investment round. On track to break even by 2020, Krakakoa will use the funding to provide 1,000 smallholder farmers and 20 female factory workers with sustainable livelihoods, and avoid over 64,000 kg of chemicals through environmentally-friendly farming methods.
Krakakoa was established in 2013 with the mission to improve the livelihoods of Indonesian smallholder cocoa farmers by buying directly from them, supporting them with training programs to improve production quality and yields as well as environmental resilience, and then paying price premiums for high quality beans. Krakakoa also works with female factory workers to provide stable wages, while producing and distributing retail-ready premium chocolate bars and related products.
Krakakoa’s farmers have increased their income per kilogram of cocoa beans by an average of 62% due to the price premium paid by the Company, while improved farming techniques have resulted in an average yield increase of 65%. Moreover, the farmers’ adoption of improved farming techniques have resulted in cost savings of 22% due to the avoidance of chemical inputs. Overall, Krakakoa’s business model more than doubles the income of farmers who implement the new techniques and sell to Krakakoa. IIX’s Impact Assessment estimates that for every dollar invested in Krakakoa, investors generate a net Social Return on Investment (SROI) of US$2.51.
Founder and CEO, Sabrina Mustopo, said “Gearing up to our Series A funding round in 2020, I’m thrilled to receive such support from a diverse range of investors. This speaks to our potential for growth and ability to scale our impact to benefit people, planet, and profit. With this latest funding, Krakakoa will be able to triple the capacity of our production facility, putting us on track to break even by 2020.”
Krakakoa has been recognized as a leader in growing social and environmental impact alongside its business operations. Between 2015-2018, IIX supported Krakakoa as part of the Gender-transformative and Responsible Agribusiness Investments in South East Asia (GRAISEA) Project (funded by the Government of Sweden). Under the program, IIX’s award-winning accelerator program ACTS (Assistance for Capacity Building and Technical Services) supported Krakakoa with impact assessment and investment readiness technical assistance. IIX’s Impact Partners—which claims to be the world’s largest crowdfunding platform for impact investing—matched Krakakoa to accredited impact investors, and successfully raised capital for Krakakoa to expand their Indonesia market presence.
Robert Kraybill, Managing Director and Chief Investment Officer of IIX, said “It is a pleasure for IIX to be able to support Krakakoa across different stages of growth—first through technical assistance and capital raise, and now with direct investment from the IIX Growth Fund (IGF). Targeting to raise US$25M, the IGF has now made four investments into women-led or women-focused IEs, demonstrating how investors can play a catalytic role in women’s economic empowerment. We are excited to see the range of investors involved in this round of funding, reflecting a significant demand for impact investment opportunities with a gender-lens.”
An estimated 1.6 million Indonesian cocoa farmers earn under US$3 per day. Smallholder farmers are often exploited by middlemen or larger entities further downstream in the value chain, earning low prices despite chocolate being a high value product. High costs of fertilizers and pesticides add further financial pressure on farmers, the majority of whom remain trapped in subsistence livelihoods.
Additionally, low- and middle-income Indonesian women in semi-urban or rural parts of the country often lack financial stability with limited access to stable employment opportunities that offer fair wages in a secure, healthy work environment.
Globally, 79 percent of working women in the least developed countries report agriculture as their primary source of income, yet women represent less than 20 percent of agricultural landholders.
Krakakoa is the only Indonesian chocolate maker to have won international recognition for both its packaging and product quality. To date it has received four silver and three bronze medals from the Academy of Chocolate and RedDot Design Awards. Krakakoa produces a variety of products ranging from premium single-origin and flavored bars to more affordable chocolate barks and snacks. Products are sold through its flagship Bali store and at 160+ other points of sale in Indonesia, as well as through distributors in Singapore, the Netherlands, Germany, Belgium and the Czech Republic.
Photo courtesy of Krakakoa.