Remarkable Lessons from Women Entrepreneurs Who Shut Down Their Business

Note from Rania: I met Carolina Medina, co-founder of Agruppa, when I was on a panel of judges at the WeXchange pitch competition. We selected Carolina and Agruppa as the winner of the pitch competition that year. I kept in touch with her and her co-founder Verena Liedgens as they grew their business. I was impressed with their commitment and business strategy. I thought their business was a great example of how business can solve some of the most intractable problems of our time and admired them as entrepreneurs, women, co-founders, and leaders. They had what looked like a winning combination of passion, purpose and a plan. It was hard for me to learn that this business that was designed to help farmers and improve access to fresh produce for people who previously could not get or afford it, did not work out. I can only imagine how hard it  was for Carolina and Verena. Their article below about their experience is powerful, real, raw, insightful, and very helpful to any entrepreneur. Thank you Carolina and Verena for all you did and for the courage it took to share your experience to help others. 
After two years in the market, we decided to close down and want to share our lessons learned with everyone.

Dear Agruppa friends,

Today we write to you to announce the closure of our company. After almost three years in the market and a thousand lessons learned, we understand that the moment to close responsibly has arrived. With the profitability of our business still some way off, the continuing latent challenges in the value proposition and day-to-day operations, and the limited availability and high-risk aversion of capital, Agruppa’s future outlook did not look very favourable for now.

Now, a month down the road from the decision, we look with pride to see accomplishments of Agruppa and the expertise gained.

Our Most Important Achievements


Our Most Important Lessons Learned

Beyond those accomplishments, we would like to share with you some of the most important lessons we learned during our journey, hoping that they can be useful for anyone operating in similar sectors and for current and future entrepreneurs:

1. Reading the investment ecosystem well is key to survival:

Your motivation to create a business is one thing, but in the end you need to understand how your business presents a real opportunity for the investors willing to put money in. In the case of Agruppa, we should have prioritized the development of our technology to make the model “sexier” before building up a large customer base. In today’s landscape, it’s difficult to attract investors without a tech-enabled model. We also should have focused our impact story on the farmers versus the Mom-and-Pop shops since there are more funds available from investors looking for agricultural impact. Agruppa’s model was designed to positively impact farmers anyways but we focused our story on the impact on our customers’ side instead.

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2. Growing forcefully is dangerous without the right foundations in place:

Even if you have committed to reaching a certain growth with your investors, it is better to slow down if you do not have the people, systems, and infrastructure in place to make the growth efficient and sustainable. We aimed at getting to breakeven no matter what, and thought we would put things in order afterwards. Today, we would do it the other way around and reassess how those systems and people are working while we grow.

3. Don’t miss the right time to transition from manual to digital:

Agruppa’s strategy was to prove out the logistical model first. Operating the complete service just on pen and paper, and excel, we demonstrated the demand and our ability to execute on it – showing that Agruppa was “more than just an app.” However, developing and implementing our technology at an earlier stage, especially before initiating the growth phase, would have helped us to standardize processes, track indicators, generate efficiencies, improve communication with our customers, and ultimately would have made us more more attractive to investors. Unfortunately, we had two failed attempts at technology development before nailing it, which cost us two years. While the obstacles to development were unforeseeable as such, we should have halted our growth plans instead of adhering to them as if nothing had happened.

4. Build the dream team for each moment of the company:

Every day that passes with knowledge gaps in your team, is a day that you cannot progress significantly in your business model. Anyone would thus suggest to fill the talent gap as quickly as possible, but it is not that simple. Hiring fast can seem to cover those gaps, but you may bring a person to the team that is just not a good fit. Hiring slowly, however, ensures you get to know the person behind the expertise, and to built a solid plan with clear goals so that – even more importantly – you can quickly assess whether the person is fulfilling her role and reaching the targets in any moment. This, because “firing fast” requires constant clarity about whether or not this person is the one your company needs in that moment. Without permanent attention, it is easy to lose track of it in the day-to-day craziness. The idea of “hiring slow and firing fast” is easy in theory, but when confronted with forced growth and a limited budget, it can become a huge challenge.

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5. You need a deep understanding of incentives in all links of the value chain:

Agruppa connected farmers in rural areas with Mom-and-Pop shops in the city. From the outset, our focus was on the shops, where the demand, the sales and the social impact were. We built on the assumption that by serving more and more shops, we could generate economies of scale in our purchasing of produce, and bulk buy at much lower prices than any individual shop. Today we understand that in order to access the margins necessary to make this business sustainable in the long term and attractive to investors, it is not sufficient to be just another buyer. To make it happen, a different way of engaging with the farmer would be necessary, such as future contracts, input financing, or even growing crops ourselves. Today we understand that our suppliers were our true customers in order to make this business work.

6. Behavior change is difficult and needs constant attention:

Re-segmenting an entrenched market is a difficult proposition for any company. When you add in cultural norms and asymmetries of information, it becomes almost impossible. We were regularly surprised by the often uninformed or seemingly irrational behaviour of farmers and shop owners –  and the many factors that could influence their behaviour. In the end, not being able to set prices on either side of the chain (or create the needed transparency) left us at the mercy of our suppliers’ and customers’ who only looked to the city’s central market – a player monopolizing the supply chain and preventing information transparency. Value propositions may be perfect in theory, but it’s crucial to learn how to test the roles that culture and idiosyncrasies play in its actual rollout.

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We’re infinitely grateful for all of you who in one way or another believe in Agruppa and its team during all these years. Without you, your support, advice and wisdom, this journey would not have been the same. Today that we say goodbye as Agruppa, our heads held high, and that we start our individual next steps dedicated to seizing all our lessons learnt, we hope to keep counting on every single one of you. Be assured that you can count on us.

This is just a “see you later”.

Warmly,
Carolina, Verena & the Agruppa Team

A recognition and huge thank you to all those who supported us in one way or another!