We are living through a time of extreme difficulty — and that’s especially true for the world’s 3 billion people who are left out, or poorly served by, the global financial system. Without tools like savings, credit, or insurance, they are at risk of being left behind as we recover from COVID-19.

We are also living in a time of extraordinary innovation that is changing all our lives. This innovation has the power to solve complex problems at a critical time, and finally bring basic financial tools to those who need them most.

Innovation is chipping away old obstacles that surrounded the world’s poor. Today, no distance is too far, no transaction size is too small, and with data and data analytics, we can understand clients’ needs wherever they may live.

Early-stage fintechs are nimble, flexible, and digitally native — making them uniquely positioned to leverage technology and innovation for the benefit of vulnerable people and small businesses. Here’s how fintech startups in Accion Venture Lab’s portfolio are doing that:
<ul>
 	<li><a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">TerraMagna</a> is using satellite imaging in Brazil to <a href="/how-one-company-uses-tech-to-support-brazilian-farmers" target="_blank" rel="noopener noreferrer">see small farms who are ignored</a> by large banks. They use those images to assess collateral and figure out what a farmer needs to grow and thrive.</li>
 	<li><a href="https://toffeeinsurance.com/" target="_blank" rel="noopener noreferrer">Toffee Insurance</a> has successfully <a href="/a-start-up-innovates-to-give-the-uninsured-a-safety-net" target="_blank" rel="noopener noreferrer">reached India’s uninsured</a> by offering “bite-sized” policies covering risks that are most relevant to consumers, like unexpected illness, bicycle damage, and theft.</li>
 	<li><a href="https://www.fieldintell.com/" target="_blank" rel="noopener noreferrer">Field Intelligence</a> uses AI and data analytics to <a href="/how-tech-is-helping-to-meet-health-care-needs-during-the-pandemic" target="_blank" rel="noopener noreferrer">help community pharmacies</a> in Nigeria and Kenya optimize their inventories and ensure their customers have the medications they need, when they need them.</li>
 	<li><a href="https://www.self.inc/" target="_blank" rel="noopener noreferrer">Self</a> is helping Americans with thin or damaged credit files <a href="/win-from-within-how-fintech-startups-can-grow-by-building-value-for-existing-users#case-study-3.1-self" target="_blank" rel="noopener noreferrer">build their credit scores</a> through innovative credit-builder loans.</li>
 	<li><a href="https://www.creditmantri.com/" target="_blank" rel="noopener noreferrer">CreditMantri</a> is using alternative data sources to <a href="/a-small-business-owner-gets-a-second-chance" target="_blank" rel="noopener noreferrer">help consumers in India</a> who have been invisible to the financial system access credit for the first time. (I recently had the honor of awarding Gowri Mukherjee, CEO of CreditMantri, with <a href="/honoring-two-women-leading-through-crisis-with-the-2020-claugus-award" target="_blank" rel="noopener noreferrer">the 2020 Edward W. Claugus Award</a> for leadership and innovation in financial inclusion.)</li>
</ul>
<h2>Fintechs are meeting customer needs during the pandemic</h2>
New data confirms how fintechs are answering new needs. In the initial months of the pandemic, consumer demand surged for financial products that build resilience, including savings accounts, personal financial management tools, and payment platforms. Fintechs offering these products saw their compounding monthly growth rate go from 7.4 percent to 15.4 percent from December 2019 to May 2020.

<img class="alignnone wp-image-23052 size-full" src="https://content.accion.org/wp-content/uploads/2020/12/if50whitepaper.jpg" alt="fintechs offering payment and saving products are more likely to increase CMGR" width="1112" height="699" />

This insight comes from a recent <a href="https://www.inclusivefintech50.com/white-paper-2020" target="_blank" rel="noopener noreferrer">whitepaper</a> that looks at data submitted by the <a href="https://www.inclusivefintech50.com/2020-cohort">2020 cohort</a> of applicants for Inclusive Fintech 50, an initiative that elevates promising early-stage fintechs driving financial inclusion and resilience around the globe. The initiative provides valuable visibility, resources, and connections that startups need to grow and thrive, especially as they contend with the added problems raised by a global pandemic.
<h2>Fintechs must grow to continue supporting vulnerable people</h2>
Indeed, inclusive fintechs must overcome major challenges to grow, scale, and continue supporting underserved populations. In the midst of a global recession and limited funding, fintechs have had to extend their financial runways while simultaneously finding ways to grow their businesses.

To achieve growth quickly, historically, some fintechs have pursued a “grow at all costs” mentality that prioritizes customer acquisition. But customer acquisition can be costly: bringing on a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Fintech startups should consider more sustainable pathways to growth, namely via increased usage, uptake, and earnings among existing clients.

We explore this concept in <a href="/win-from-within-how-fintech-startups-can-grow-by-building-value-for-existing-users" target="_blank" rel="noopener noreferrer">our latest publication from Accion Venture Lab</a> that highlights how fintechs are doing just that. And building value for current users is very relevant in the era of COVID-19. Vulnerable people need more and new financial service innovations to rebuild their safety nets and livelihoods as their savings and inventories have been depleted.

I was also very glad to join two partners featured in the report, Jaime de los Angeles, CEO of <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">Advance</a>, and Tommy Yuwono, co-founder and director of <a href="https://pintek.id/" target="_blank" rel="noopener noreferrer">Pintek</a> at the Singaore Fintech Festival in early December. Pintek provides credit to students and schools to improve access to education in Indonesia—and has helped <a href="/schools-go-virtual-with-fintech-support-in-indonesia" target="_blank" rel="noopener noreferrer">schools go online during the pandemic</a>. Advance is a salary-on-demand platform that’s been adopted by large companies in the Philippines to provide employees with early access to their wages and <a href="/a-digital-solution-for-people-living-paycheck-to-paycheck-in-the-philippines" target="_blank" rel="noopener noreferrer">promote financial wellbeing.</a>

https://www.youtube.com/watch?v=oOwRSMbk8uI

Inclusive fintech startups are offering inspiring examples of how innovation is answering today’s most urgent challenges. As we look toward building an inclusive recovery from COVID-19, we must ensure they have the tools and resources to grow sustainably and answer their clients’ most pressing needs.

Fintech startups are small yet mighty partners in building resilience—but they need to grow to succeed

<em>A version of this article originally appeared on <a href="https://www.forbes.com/sites/vikasraj/2020/11/30/embedded-inclusive-fintech/?sh=333fe04110cc" target="_blank" rel="noopener noreferrer">Forbes.com</a>.</em>

We have entered a new age of fintech and financial inclusion. Our space, which was evolving quickly until March, was built around the core idea that digitizing everything could create the data and distribution advantages that would let startups finally help the underserved. Now, those core trends have gone into hyperdrive during the pandemic, as the consumers and small businesses that inclusive fintechs seek to serve — everyone from blue-collar workers in Bangalore to small mom-and-pop retailers in Lima — have become increasingly vulnerable and have moved increasingly online.

Platforms already had a big role to play in financial inclusion. Their importance has only grown in the post-COVID era, as small businesses must now connect to digital rails to remain a part of supply chains and consumers can only access core services online. <a href="https://www.forbes.com/sites/vikasraj/2019/11/20/platform-fintechs-are-cominghow-should-startups-respond/?sh=4895f0dc2b0f" target="_blank" rel="noopener noreferrer">In this post last year</a>, I defined how a new generation of “platfin” startups would play a key role in making platforms relevant for financial inclusion, replicating platform advantages by solving core logistical challenges themselves, and then adding financial services over time.

Over the last several months, we have witnessed this transition in dramatic fashion. Large tech platforms from <a href="https://www.grab.com/sg/" target="_blank" rel="noopener noreferrer">Grab</a> to <a href="https://www.mercadolibre.com.ar/" target="_blank" rel="noopener noreferrer">Mercado Libre</a> are become financial services companies, leveraging their unique position as trusted partners with unique insights into the cashflows of their customers to provide financial products. But, perhaps more exciting, we are seeing a whole new generation of platfins – non-financial services companies like <a href="https://sokowatch.com/" target="_blank" rel="noopener noreferrer">SokoWatch</a> in Kenya (a portfolio company of Accion Quona Inclusion Fund) and <a href="https://jumbotail.com/" target="_blank" rel="noopener noreferrer">Jumbotail</a> in India that are solving core distribution and logistics problems first — problems that are brought into stark relief by the pandemic — and layering relevant financial services on top. These companies are embedding financial services into specific use cases — assisting end customers in achieving a goal through access to financial services rather than looking at these services as an end product.

Many of these platfins are themselves being forced to reckon with the complexity of offering financial services, whether embedded or not. Sometimes these offerings are developed in-house by an internal staff working through bank partnerships. Other times, the strategy is outsourced, with the platform finding a fintech enabler to frictionlessly add financial services — a lender, insurer, or investor “as a service.”

Either way, these are the next two key categories in inclusive fintech investing — the platfins and what we will call “inclusion as a service” (Iaas) players. And there are big opportunities for these companies — the platfins that are integrating financial services and the enablers who support them – as they connect, digitize and serve the millions of SMEs and billions of consumers that are still underserved by the financial system. But there are also big risks for the end customer as the connection between financial product and customer is diffused. How do we ensure that underserved populations continue to be served, and that products are relevant? How do we ensure pricing is fair and that data is used responsibly and transparently? Ultimately, truly responsible and customer-centric players must ensure they are embedded <em>inclusive</em> fintech companies.
<h2>What does embedded inclusive fintech look like?</h2>
<h3>Incorporate end customer views and needs into product design and interaction</h3>
It is critical that platfins and IaaS companies continue to focus on the customer when it comes to defining their products and engagement strategies. Lami, an insurance-as-a-service company based in Kenya, integrates with non-insurance companies, enabling them to offer insurance. But <a href="https://www.lami.world/" target="_blank" rel="noopener noreferrer">Lami</a> goes beyond underwriting and claims to ensure that their partners are well-positioned to identify and provide end products — like bus driver motorbike and crop insurance — that reflect the real needs of end customers. Lami and other IaaS companies need to be aware of responsible offerings, and then leverage their partners’ inherent advantages of knowing their customers and being able to access them easily to offer more diverse, tailored, and affordable products. Similarly, <a href="https://somosheru.com/" target="_blank" rel="noopener noreferrer">Heru</a> in Mexico partners with Uber Eats to offer financial services to their contractors, as well as central convening spots for access to financial services. Responsible startups will need to continue to keep customers in mind when they design and evolve financial products for their platforms.
<h3>Enable truly responsible offerings</h3>
When it comes to the core elements of a financial services offering, particularly pricing, platfins and IaaS companies cannot diffuse responsibility for the quality of their end products. In fact, given the expertise and economies of scale platfin and IaaS companies are able to unlock, we expect these types of companies to offer even better terms and pricing than their more traditional fintech counterparts.

<a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">TerraMagna</a> in Brazil, a <a href="https://news.crunchbase.com/news/exclusive-terramagna-sows-2m-seed-for-brazilian-farm-lending/" target="_blank" rel="noopener noreferrer">recently announced</a> Accion Venture Lab portfolio company, works with input suppliers to better underwrite their customers using satellite-verified crop collateral, allowing them to offer more favorable rates than the competition and higher quality inputs. AgriM, an agricultural retailer eCommerce platform in India, enables access to high-quality agri-input supplies at transparent prices. <a href="https://www.alude.com.br/" target="_blank" rel="noopener noreferrer">Alude</a> in Brazil and <a href="https://alquilando.com/" target="_blank" rel="noopener noreferrer">Alquilando</a> in Argentina partner with real estate brokers to offer prospective tenants the possibility of renting without a co-signer or guarantee, at prices that are better than other options. All of these companies prove that new platfins or IaaS companies are positioned to provide better, more responsible products, as well as greater efficiency and reach.
<h3>Embedded but not invisible</h3>
One big advantage of fintech’s movement toward embedded finance is that transactions are seamless and available at the touch of the button. There has been much written about the benefits of making services nearly invisible — the grease that allows the wheels of commerce to grow. However, for true embedded inclusive finance to occur, the financial products need to be visible as well as embedded. Consumers and small businesses, many of whom may be unwittingly engaging with financial services for the first time, need to know the implications of using them — the price, the terms, the data being used.

<a href="https://www.atomicinvest.co/" target="_blank" rel="noopener noreferrer">Atomic</a>, an investments-as-a-Service provider in the US, offers customized investment portfolios for consumers via platform partners. But Atomic doesn’t just provide seamless access and a simplified set of investment options — they also educate consumers about their portfolios and encourage them to make active investment decisions. Rupifi, an Indian fintech that helps platforms provide credit to their MSME customers, ensures that pricing and product details are clear to the borrower throughout. Ultimately, IaaS companies should enable better, clearer, and more transparent products for customers because they can focus their energies and access the expertise and scale needed to design delightful, responsible products.

Platfin and IaaS businesses are the key players in the next stage of inclusive finance. But these new players’ degree of separation from finance is not an excuse for them to play hot potato with the responsibility to create impactful and inclusive products. We will only move toward a more inclusive world if these companies really focus on embedded inclusive fintech.

<em>Note: Some of the companies above are existing or prospective portfolio companies of Accion Venture Lab or Accion-related entities</em>

What does embedded inclusive fintech look like?

Nearly two-thirds of the world’s poor depend on agriculture to survive, and many of these families collect money only once a year, stretching their income from one harvest to the next. But climate change is putting their livelihoods in peril — as global surface temperatures increase, so does the risk of drought, the intensity of storms, and the frequency of natural disasters. Furthermore, our global food supply is at risk because it depends in large part on the productivity of smallholder farmers who live and work in emerging markets. In sub-Saharan Africa and Asia, smallholder farmers provide over 80 percent of the food supply.

In sub-Saharan Africa, nearly <a href="https://blogs.imf.org/2020/06/04/safeguarding-africas-food-security-in-the-age-of-covid-19/" target="_blank" rel="noopener noreferrer">half the population</a> lives below the poverty line and depends on agriculture, herding, and fishing to feed their families and earn an income. Their food supply is extremely vulnerable to climate change and the effects of a food shortage can be devastating — malnutrition surges, school enrollment drops, the economy suffers, and lives are lost.

<img class="alignright wp-image-23023" src="https://content.accion.org/wp-content/uploads/2020/12/kenya-nakuru-farmers-300x200.jpg" alt="" width="400" height="267" />However, when farmers have the ability to adapt to shocks and crises, they can avoid the worst impacts of food shortages. That’s why it’s crucial for farmers to have access to savings accounts, credit, and insurance. For many of us, the idea of saving seems pretty simple: you set money aside in a secure place and earn interest. But, many people around the world lack access to a formal savings account, and <a href="https://www.accion.org/global-challenges" target="_blank" rel="noopener noreferrer">less than half</a> of adults saved at all in 2017. Moreover, <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">235 million</a> unbanked farmers receive agricultural payments in cash, including 115 million women. Since cash is invisible to lenders, it doesn’t generate credit histories and as a result, it prevents families and businesses from borrowing appropriate financing if they need it. In Ethiopia alone, creating a digital agricultural payments system could cut the share of unbanked adults by up to <a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses" target="_blank" rel="noopener noreferrer">60 percent</a>.
<h2>How agricultural fintechs open opportunities in Africa</h2>
<span style="font-weight: 400">Through our early-stage investment initiative, Accion Venture Lab, we’re supporting innovative agricultural fintech startups. These companies build useful tools that give low-income farmers, who are most vulnerable to extreme weather conditions, the opportunity to afford high-quality seeds and fertilizer, save securely, and adapt when challenges arise. </span>

<span style="font-weight: 400">Formal accounts open opportunities for farmers to access a wider array of financial services, including credit and insurance. Insurance and innovative digital products can help smallholder farmers endure climate risks, improve their farming practices, and boost their incomes over time. Accion Venture Lab portfolio company Pula is doing just that in 11 countries across Africa and Asia. So far, they’ve provided over 3.3 million traditionally excluded smallholder farmers with agricultural insurance and data-driven insights and advice to help them increase crop yields in sustainable ways. This has been a game-changer for </span><a href="/for-rose-in-kenya-crop-insurance-is-a-game-changer" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400">Rose Kilonzo</span></a><span style="font-weight: 400">, a Kenyan farmer who now has confidence that she can provide for her family no matter the circumstances. </span>

<span style="font-weight: 400">“When you plant, you have faith it will be taken care of should your crop fail,” she tells us. With a more secure income, she’s looking forward to expanding into commercial agriculture and passing on the trade to her children and grandchildren.</span>

<img class="alignnone wp-image-14546 size-large" src="https://content.accion.org/wp-content/uploads/2018/09/Kitui_0022-1-1024x684.jpg" alt="" width="1024" height="684" />

<span style="font-weight: 400">Another innovative tech-based company we are supporting is </span><a href="/this-agricultural-fintech-empowers-the-farmers-who-feed-the-world" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400">Apollo Agriculture</span></a><span style="font-weight: 400">, an agricultural fintech that helps farmers maximize their profits with financing, farming products, optimized advice, and insurance. Their model combines input financing with sophisticated analytics, remote sensing, agronomic machine learning, and mobile money. This approach opens opportunities for the poorest farmers to purchase high-quality farming inputs, such as hybrid seeds and fertilizer, on credit with flexible repayment terms and post-harvest due dates. </span>

<span style="font-weight: 400">In addition to financing and distributing agricultural inputs, Apollo Agriculture’s integrated solution includes the necessary training to farm effectively and sustainably. This multifaceted approach ultimately allows farmers to increase their crop yields, leading to greater financial security, better livelihoods, and a reliable food supply for the world.</span>

<span style="font-weight: 400">Eventually, Apollo Agriculture plans to leverage its technology to support farmers with personalized solutions based on their specific geographical, weather, and land characteristics. In the long term, these customized farming techniques will improve soil quality and curb erosion, which helps boost productivity and sustainability.</span>
<h2>A tech-based approached to farmer credit in Latin America</h2>
<span style="font-weight: 400">In Latin America, we’re investing in </span><a href="/how-one-company-uses-tech-to-support-brazilian-farmers" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400">TerraMagna</span></a><span style="font-weight: 400">, a Brazilian company that uses their proprietary machine learning platform and monitoring technology to generate a more personalized farmer credit score and an accurate estimate of collateral value. Because family-run farms in Brazil lack access to traditional financial institutions, they often seek credit from retailers where they purchase seeds, fertilizer, and other inputs. TerraMagna partners with these local retailers and uses their tech-based approach to reduce the manual cost of the underwriting process and assess the collateral value with more precision, which lowers the retailers’ credit risk and enables them to provide lower-cost loans.</span>

<span style="font-weight: 400">Lenders in Brazil have typically used land as collateral and have found it difficult to properly accept crops as collateral, given the high fraud risk. Using satellite images, TerraMagna can track the crop status in real-time and help prevent fraud attempts. This approach aligns with our thesis that technology and innovative lending models can work together to create new asset collateral, ultimately granting better access and better credit pricing to family farmers.</span>

<span style="font-weight: 400">We will continue to support smallholder farmers, open opportunities for young people to get into the farming business, and remove the barriers to profitable and sustainable farming for the most vulnerable. As the world’s population grows, so too will our portfolio of partners offering innovative financial and business development services that enable farmers to prosper in a changing climate.</span>

Opening opportunities for smallholder farmers in a changing climate

As an essential service, the Brazilian agricultural market has been sheltered from the devastating economic effects of COVID-19-related shutdowns, but farmers still face enormous challenges. Most of Brazil’s farms are small or medium, and they depend on credit for 80 percent of their working capital each season. But these independent farmers are often ignored by banks because they are difficult to reach geographically and challenging to underwrite. As the government continues to reduce subsidies to farmers and demand for crops increases, the need for responsible financing to support this vital sector of the country’s economy is becoming more critical than ever.

Even before the pandemic started, the <a href="/2020-and-beyond-whats-next-for-fintech-innovation-in-latin-america" target="_blank" rel="noopener noreferrer">Accion Venture Lab team was looking</a> for startups that drive the digital transformation of Latin America’s agricultural landscape with innovative financial products. When we met with <a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">TerraMagna</a>, we immediately realized that the company was in a unique position to help underserved farmers because of their use of satellite imaging to appraise and monitor collateral and their embedded finance model, which allows input suppliers to improve underwriting and reduce costs.

We previously invested in African agri-fintech startups <a href="/for-rose-in-kenya-crop-insurance-is-a-game-changer" target="_blank" rel="noopener noreferrer">Pula</a> and <a href="/apollo-agriculture-raises-6-million-to-help-small-scale-farmers-make-more-money" target="_blank" rel="noopener noreferrer">Apollo</a>, and we are convinced that this is the right time to support the agri-fintech space in Brazil. The current conditions are favorable for a company like TerraMagna to thrive: satellite images are now more accessible, low interest rates make debt funding possible, and new regulations will bring more financing to the sector.

Accion Venture Lab is thrilled to make its first agri-fintech investment in Latin America. We are most excited that TerraMagna is:
<h3>Connecting small and medium farmers with fairly priced credit</h3>
The lack of access to traditional financial institutions forces smallholder farmers to seek credit from expensive retailers where they purchase seeds, fertilizer, and other inputs. TerraMagna addresses this problem by using their proprietary machine learning platform and monitoring technology to generate a more personalized farmer credit score and an accurate estimate of collateral value. This approach reduces the manual cost of the underwriting process, which lowers the retailers’ credit risk and enables them to provide lower-cost loans. Lenders in Brazil have typically used land as collateral and have found it difficult to properly accept crops as collateral, given the high fraud risk. Using satellite images, TerraMagna can track the crop status in real-time and help prevent fraud attempts. This approach aligns with our thesis that technology and <a href="/time-to-shine-for-innovative-fintech-lenders" target="_blank" rel="noopener noreferrer">innovative lending models</a> can work together to create new asset collateral, ultimately granting better access and better credit pricing to smallholder farmers.
<h3>Taking a holistic approach to strengthening the farming sector</h3>
Rather than lending directly to farmers, TerraMagna leverages partnerships with local input retailers to monitor, underwrite, and fund their loans. Since these retailers operate with slim margins and are forced to sell seeds and other agricultural goods primarily on credit, they value TerraMagna’s ability to reduce their loan risk and improve their collateral documentation. TerraMagna’s precise, lower-cost underwriting processes and collateral-monitoring technology allow retailers to provide farmers with loans that cover a larger portion of their working capital and enable them to purchase higher-quality inputs. With broader financing coverage, farmers can ease the pressure on their margins, improve their financial resiliency, and reinvest their profits into their farms.
<h3>Leveraging data to improve the agricultural ecosystem</h3>
As TerraMagna continues to monitor farms across the region and develops relationships with input retailers, they will gather critical data about how agronomic conditions and inputs impact farmer yields. As we’ve seen through our work with Apollo and Pula, this data can generate insights and personalized agronomic advice that helps retailers better support farmers, increasing their crop yields and benefiting the overall health of the agricultural ecosystem.

As QED’s Nigel Morris said in our <a href="/a-great-company-going-into-covid-is-invariably-a-great-company-coming-out" target="_blank" rel="noopener noreferrer">latest podcast series</a>, “a great company going into COVID is invariably a great company coming out.” TerraMagna is a perfect example of this. With their unique technological skills and vast knowledge of the agricultural sector, the team built a product with competitive advantages for the suppliers and turned it into a profitable business. And they went one step further and fully immersed themselves in the fintech world, first by participating in the underwriting process and now by funding some of the suppliers’ loans to provide better pricing and expand their lending capabilities.

We’re continuously impressed by the eagerness of TerraMagna’s team to keep learning and innovating, and we can’t wait to see what comes next for them.

How one company uses tech to support Brazilian farmers

<em>São José dos Campos, Brazil, November 25, 2020</em> – 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.”
<p style="text-align: center"><strong>###</strong></p>

<h3><strong>About TerraMagna</strong></h3>
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 <a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">https://terramagna.com.br/</a>.
<h3><strong>About ONEVC</strong></h3>
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 <a href="https://www.onevc.vc/" target="_blank" rel="noopener noreferrer">https://www.onevc.vc/</a>.
<h3><strong>About MAYA Capital</strong></h3>
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 <a href="https://www.maya.capital/" target="_blank" rel="noopener noreferrer">https://www.maya.capital/</a>.
<h3><strong>About Accion Venture Lab</strong></h3>
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 <a href="https://www.accion.org/venturelab" target="_blank" rel="noopener noreferrer">https://www.accion.org/venturelab</a>

Agriculture fintech company TerraMagna raises seed round to provide credit to Brazil’s farmers

Michael Schlein

Vikas Raj

Ashley Lewis

Federico  Gomez Romero

India

Latin America and The Caribbean

Sub-Saharan Africa

United States

Brazil

Kenya

Crop Insurance

Data Analytics

Digital Financial Services

Financial Service Providers

Financial Technology

Fintechs

Health Insurance

Impact Investing

Insurance

Insurtech

Payments

Saving

Underserved Groups

Access Usage Gap

Challenges and Crises

Credit

Delivery Channels

Enabling Environment

Financial Health

Insurance Companies

MSME/SME Finance

Resilience

Advisory Services

Agricultural and Rural Finance

Rural Populations

Smallholder Farmers

Digital Credit

Article

Press Release

TerraMagna

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

TerraMagna

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Fintech startups are small yet mighty partners in building resilience—but they need to grow to succeed

What does embedded inclusive fintech look like?

Opening opportunities for smallholder farmers in a changing climate

How one company uses tech to support Brazilian farmers

Agriculture fintech company TerraMagna raises seed round to provide credit to Brazil’s farmers

From the Center for Financial Inclusion

Fintech startups are small yet mighty partners in building resilience—but they need to grow to succeed

What does embedded inclusive fintech look like?

Opening opportunities for smallholder farmers in a changing climate

How one company uses tech to support Brazilian farmers

Agriculture fintech company TerraMagna raises seed round to provide credit to Brazil’s farmers