The Trailblazers in Impact Interview Series celebrates some of the partners we’ve worked with over the years in creating positive social and environmental impact.
In this edition, we speak with Founder and CEO of Krakakoa, Sabrina Mustopo, who has been working with Impact Partners since 2016. In 2019, IIX invested in Krakakoa through its IIX Growth Fund, together with co-founder of SYSTEMIQ Jeremy Oppenheim and LIC VC.
Krakakoa is a bean-to-bar chocolate impact enterprise established in 2013 with the mission of improving the livelihoods of Indonesian smallholder cocoa farmers. It does this by buying directly from smallholder farmers with price premiums and promoting better farming techniques. Krakakoa also works with female factory workers to provide stable wages, while producing and distributing retail-ready premium chocolate bars and related products.
Prior to founding Krakakoa, Sabrina worked at McKinsey, with a focus on climate change and agriculture related topics.
Enjoy the read!
- Tell us about yourself, how you decided to become an entrepreneur, and how you created Krakakoa.
I started Krakakoa about 5 years ago. In my former life, I was working in management consulting in the Agriculture and sustainable economic development sector. At the time we were working a lot with public organizations looking to meet different goals and targets in the agri-sector such as self-sufficiency, increasing investments towards the sector, etc.
I initially started Krakakoa when I learnt about the issues in the Indonesian cocoa sector. For example, farmers were not making enough money, there were unsustainable farming practices, poor crop quality and lack of value addition within Indonesia. I saw an interesting opportunity to create a company that could address all these issues while being a for-profit entity so it could tap into private sector funding and keep running in the long-run.
Krakakoa started off as a way to create change in farming communities and create change within the cocoa sector as well. Everything that we do goes back to our main mission which focuses on helping farmers get a better livelihood as farmers and make sure farming becomes a more sustainable practice in the country.
- What pain point are you addressing and how are you addressing it? When you look at the value chain between the farmer and the consumer, there are about 5-7 intermediaries. Krakakoa fulfills the role as the only intermediary between the farmer and the consumer. This allows us to do a few things differently: (i) Provide training and resources to the farmers for them to improve their crop quality; (ii) We give premium prices to farmers so that we can return a bigger proportion of the price to the farmer; (iii) We provide them with price stability as compared to the volatile fair trade price premiums, allowing farmers to produce the amounts they need and think rationally in terms of where to put their time, energy and resources.
- What are your main challenges in growing your company?
Since Krakakoa is fully integrated as a company, we are taking on the role and responsibilities of different intermediaries. This differs greatly from the type of work cocoa mills would focus on – they would generally mostly focus on sourcing as opposed to also thinking about their branding and marketing.
For us as a company, the challenge is to do everything across the value chain: We need to train farmers, source beans, have adequate supply of cocoa, branding, distribution and finally the coordination — this function is the most difficult part of the work. Nothing ever moves in tandem so we have to use a great deal of distance to understand what needs to be done at different points across different time periods.
- What is your growth strategy?
I would say we’re pretty determined to continue to grow in the chocolate sector and we do not have immediate plans to diversify into other commodities for now. We still have a lot of room to grow internationally with our chocolate.
Our current customer segments are mostly Business to Consumer, but we are strongly considering expanding to Business to Business, which would be an area of great potential for us.
- How do you communicate your impact to investors? Each impact investor has different mandates and we work together with them to determine what is important to them and make sure we set out to measure those. With the majority of our investors, we measure the following components:
- Number of farmers trained
- Increased productivity of farms
- Price premiums
- Increase in farmer income as a whole
- How many women stakeholders we work with (farmers and employees on the production side), Environmental impact (by looking at number of hectares under sustainable and organic management).
We look at a combination of social and environmental KPIs.
- What would you advise other impact enterprises when raising capital? The advice I would give would be highly dependent on the stage of growth the company is in, how they want to grow, how much capital they want to raise, how they think of impact and return, etc… Each stage of growth would require different sets of strategies but I would say that having a clear stance on each of these components is a crucial start.
- What keeps you motivated and how do you avoid Founder burnout?
I do an exercise every year where I map out different aspects of my life that are important to me. For most entrepreneurs, work takes up a disproportionately large part of our time, effort and energy. Life has other important aspects and it is critical to acknowledge these aspects of your life and you should be intentional about what the goals are for each of these aspects.
I would say most of us are not very intentional with other aspects of our life. My chart is broken out into 3 different components: Work, Relationships and Myself. On work, I would break it down in terms of different business units that I have. Relationships, I would think about my friends and family. On myself, I would think about how I see my personal growth, hobbies, activities etc
Overall, I think about what success looks like for me in all these different dimensions. At the end of 2019, how would I think that it was a good year in terms of all these dimensions. Doing it this way helps me to understand what balance looks like to me and what dimensions of my life I’m happy with or would like to pay more attention to.
- What is it like working with IIX? IIX has been helping us at different points of time and intervals, they have really helped us with baselining our social impact approach and have been very helpful in connecting the company with potential impact investors. As an organisation, IIX does a really good job at thinking at what is needed on both the investor and company side.