São José dos Campos, Brazil, November 25, 2020 – Agriculture fintech company TerraMagna announced today that it has raised seed funding in a round led by seed-stage venture firm ONEVC. MAYA Capital, Accion Venture Lab, and angel investors also participated in the round.
TerraMagna is working to improve access to credit for independent Brazilian farmers who finance 80% of their working capital each planting season to purchase inputs including seeds, fertilizer, herbicides, and pesticides. However, farmers are traditionally ignored by banks who lack the branch infrastructures and underwriting capabilities to reach such a geographically dispersed population. As a result, farmers rely on expensive short-term financing from retailers and trading companies, who see themselves forced to provide financing outside of their core business.
TerraMagna leverages satellite imaging technology and various data sources to underwrite input loans and provide affordable access to secured credit for small and medium farmers in Brazil. By partnering with input retailers and helping them to accurately assess farmer creditworthiness and monitor crop collateral, the company is able to reach farmers who otherwise would not be able to access credit. The company also works with large agriculture retailers, cooperatives, and industry suppliers and traders to finance input purchases for farmers, reach new customers, and provide farmers with access to a wider variety of products. TerraMagna plans to expand into additional loan products such as machinery financing in the future.
Considered an essential service, Brazil’s agricultural market has largely been sheltered from the effects of COVID-19. The sector grew 1.6% in the first half of 2020 compared to the same period last year, and reached an all-time high for soybean exports in April. The market for agricultural input credit is expected to continue to expand along with the sector, as the government continues to reduce subsidies and agricultural output increases.
“The high dependency of Brazilian agriculture on financing, the end of credit subsidies, the lack of private players able to directly provide credit to the agribusiness value chain and the low interest rates created a timely and durable USD 30B opportunity gap to connect the field to the capital markets” said Bernardo Fabiani, Executive Director and Co-Founder of TerraMagna. “We are grateful to this group of investors for their support, and look forward to leveraging their expertise in fintech startups to expand TerraMagna’s product offerings and reach even more farmers who are in need of financial services.”
“At ONEVC, we believe the time to invest in agfintechs in Brazil is now,” said Bruno Yoshimura, Co-Founder of ONEVC. “TerraMagna is leveraging a novel technology that is using satellite images that only became available recently for underwriting algorithms and collection strategy. With this technology, TerraMagna can provide safe loans for agriculture, reduce the cost of capital and increase the agricultural loan market. On the supply side of the money, investors in Brazil now have an appetite for such investments after real interest rates dropped to almost zero.”
“Since MAYA’s founding, we’ve been studying the Agtech market. The global relevance of Brazil’s agriculture sector provides the local industry with a strong competitive advantage. Nevertheless, we recognize that small and medium farmers are still largely underserved by financial services and this stunts the potential of the market as a whole,” said Lara Lemann, Co-Founder of MAYA Capital. “At MAYA, we invest in early stage startups that are solving the region’s most relevant problems and TerraMagna is doing just that. With the team’s experience in satellite image and data analytics, they make lending safer for creditors who can then provide better conditions for farmers. This is a huge enabler of continue development in the industry and consequently, in Brazil.”
“TerraMagna is filling a massive gap in financing for Brazil’s small and medium farmers and helping them grow their businesses and support their communities. By leveraging new technologies and integrating with retailers, Terra is not only providing farmers with frictionless and affordable credit, but is also allowing them to access a wider variety of higher quality products,” said Vikas Raj, Managing Director of Accion Venture Lab. “We’re thrilled to add TerraMagna to the Venture Lab portfolio and look forward to supporting them on their journey.”
TerraMagna is reinventing the way credit is underwritten, provided and collected in Brazilian agriculture by leveraging technology and alternative data sources to transform a risky and volatile process into a simple and safe experience. With TerraMagna, retailers, industries and farmers have access to fair credit and investors have high-yield, market-uncorrelated and high-volume assets to invest in. For more information, visit https://terramagna.com.br/.
ONEVC is a Silicon Valley and Brazil-based generalist seed-stage venture firm focused on investing in entrepreneurs that tackle multi-billion dollar markets with solid product-market fit. For more information, visit https://www.onevc.vc/.
About MAYA Capital
MAYA Capital is a venture fund focused on early stage startups across Latin America. We support exceptional teams solving the region’s most relevant problems with much more than just seed capital. For more information, visit https://www.maya.capital/.
About Accion Venture Lab
Accion’s seed-stage investment initiative Accion Venture Lab provides capital and extensive support to innovative fintech startups that improve the reach, quality, and affordability of financial services for the underserved and have the potential to scale. Backed by commercial and impact investors since the launch of its third-party fund in 2019, Venture Lab has invested in more than 40 early-stage startups that operate in 30 countries worldwide. Venture Lab is a part of Accion, a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by – the financial sector. For nearly 60 years, Accion has helped tens of millions of people through our work with more than 160 partners in 55 countries. For further information, visit https://www.accion.org/venturelab