View profile

Innovation in Embedded Agri finance

Agri Fintech
Innovation in Embedded Agri finance
By Niall Haughey • Issue #4 • View online
I have started the Newsletter by setting the scene for Agri-Fintech and this issue continues that theme.
So far I have discussed:
Next, in this issue, I want to look at some of the business models that are still being tested in the market, in particular how they are driving embedded finance solutions in Agriculture.
🤔 Could they represent breakthrough models that will be global examples?
🧐 Can they radically alter agricultural finance by developing an embedded finance ecosystem using their pioneering data ?
I think all of these companies could and some have already started!
By the time you get to the end, you will know:
🚜 Who you could use to value or sell a 30 year old tractor;
🐮 Who might be good at creating a credit score for a cow or even a goat (yes, I think that would be a great use case!);
🌳 Where you might go to create a financial profile of a macadamia tree and who to use to auction off the produce.
Revue doesn’t do Table of Contents yet (but I have asked nicely!) so for now here is my attempt 👇
  • Data Innovators;
  • Marketplaces and Trade;
  • Credit, Savings and Investment;
  • Sustainability;
  • Bundles
Before we get started, please don’t forget also, my next Issue will be talking about Blockchain in Ag. Where are all those companies that raised funds in 2017 and 2018? And what killer use cases are there now - if any??

Data innovators
Hello Tractor (Nigeria) allow IOT enabled farm equipment to be managed remotely and creates a marketplace for these assets to be bought, sold, hired and financed. Hello Tractor allows expense management and recording so a full financial profile of an asset can be generated. I love this innovate tool as it is one of those ‘infrastructure - as - a service’ plays Carl Lippert has discussed in his Newsletter.
Just imagine in 10 years time how this product will interplay with production, storage and marketing when a lot of those activities become autonomous 🚜. Hmm.
Telesense (US) solves a problem I have spent a LOT of time thinking about 🧐 : How to manage grain quality and quantity remotely. (Anyone else? OK - just me) They have developed sensors which can track grain quality in storage and are hoping to further develop the product to include quantity also. The sensors can be used for produce other than grains - it just needs to be programmed with the specifications such as moisture, protein content etc.
The IOT enablement also allows information to be submitted to a dashboard for making marketing decisions, which is beneficial given you can track the quality over time and Telesense will be able to model quality deterioration and price impact. IOT -> Data -> Artificial Intelligence.
I can easily see this being used in remote collateral management for assets - so now I can stop thinking about it 😅 and get some sleep 💤.
CowTribe is a digital livestock management platform based in Ghana. The service operates in the last mile of logistics in rural Africa, which is another one of those thorny problems that technology will ultimately assist in solving - I hope! CowTribe has two unique aspects which overlap with Fintech.
🐮 Firstly, the platform has started to bundle livestock vaccinations with inputs and credit, to increase accessibility of the service.
🐮 Secondly, they have started to develop an ERP system for rural AgroVets to manage, store and finance inventory of medication, feed and other suppliers in the livestock space.
ZoomAgri (Spain) are building out another key puzzle piece to the trade and finance of commodities - globally. They provide sensors which grade commodities based on variety and quality using computer vision and AI. This is extremely efficient as it allows almost immediate grading of goods and intake at warehouses or on inspection. Grading drives price and hence, I can easily see ZoomAgri being used in the valuation of grains, not just by buyers but also by financiers for asset finance such as warehouse receipts, or commodity trade finance risk management.
In other words, if I was developing either of these products from scratch now, I would use tools like ZoomAgri.
SeeTree (Israel) is a fascinating example of a vertical SaaS AI offering, in this case Tree crops.
‘Where is your farm losing money?’ they ask. SeeTree uses data collection techniques from the air and also on the ground to collect intelligence on the health of Trees. It can provide this to growers on a platform and make suggestions on irrigation, pest and disease management and fertilisation.
🌳 This is not a Fintech product, but if you were investor or lender in Tree crops, would you not want this information as basic risk management? This is way more useful than any month end balance sheet or cashflow statement.
OmnioFarm are a company in the poultry sector in South Africa which digitise management practices, facilitates monitoring and performance management. Their IOT tools enable an early warning system to ensure that production levels are kept up to international standards in broiler houses.
As above 👆, this for me screams “risk management” and I would not be surprised if some of the more innovative South African banks (of which there are many by the way!) start to integrate with their IBM developed system.
FarmDrive are based in Nairobi, Kenya and have been innovating in the space for 5-6 years now by utilising various remote and precision agriculture tools to develop an alternative credit score for smallholder plots using machine learning. They have also facilitated credit by partnering with local financial institutions in Kenya. FarmDrive have the backing of SafariCom, the mobile carrier network which give birth to the the infamous mobile payments network mPesa. (SafariCom are also a keen investor in the agri fintech sector with investments in Digifarm and iProcure, also featured on this list).
Traction Ag are a relatively new player in the farm management software sector in the US after being founded in March 2020. However, they have an exceptional leadership and founding team which has spun out of Farm Works Software, one of the major desk top providers in that vertical. Traction are positioning themselves as cloud based, which coupled with the experience makes them an interesting proposition and one to watch. Will they start thinking about their fintech offerings?
Yagro are another entrepreneurial farm management platform actively working on their fintech proposition. They are a young organisation founded on the principles of data analytics and are really seizing some of the opportunities in the UK at present.
The Ag sector in the UK 🇬🇧 is going through some interesting changes following Brexit and subsidy reductions. Yagro are making the most of these changes to drive their data agenda as a means to counteract some of these losses.
But, they are not resting on their data laurels, they are an active agri insurance broker and run an inputs marketplace - two adjacent opportunities to their existing data business. Take note📝
Market and Trade Innovators
There are many of these, due to my inability to deal with my own bias and fondness for these types of businesses.
I have broken these down into:
  • Inputs;
  • Livestock;
  • Produce;
  • Others
➡️ This section reminded me of one of my favourite activities to do when looking at marketplaces and exchanges. I previously performed an analysis for the Agricultural Commodity Exchange documenting the preconditions for success. I will cover this topic in a later issue which summarises the salient points as it is a very useful toolbox when looking at these types of business both from a market entry perspective and competitive positioning.
➡️ I have also included a general note on Marketplaces at the end informed by some comments from Janette Barnard, whose Prime Future blog is a must read for the Livestock sector 🤔
Inputs
iProcure were one of the first companies offering a B2B digital trade solution to agricultural input providers and retailers in Kenya. The magic of these trade solutions comes in the data intelligence gathered which can be used by the manufacturers to better design and target products to users and can reduce risk for users by offering some sort of quality control or supply. iProcure has developed its own logistics around this data. (Last raised $1m, Venture round, 2017)
Digifarm is an integrated mobile first platform in Kenya which offers advisory, inputs, financing and market linages. Digifarm is one of the key products of SafariCom the major mobile network operator, which also owns mPesa and has invested in iProcure and FarmDrive. Caveat: having not actually used the app or spoken to the company yet - that will be for later - it is not clear to me if it integrates iProcure or Farmdrive workflows or is standalone.
Either way, this is a key project of a major organisation famed for innovation. [Incidentally, Safaricom now makes more money from financial services than it does from its telecoms business.]
WeFarm offers one of the most unique models in AgTech globally. It has established a farmer to farmer (F2F) community of millions of producers, who can connect and share tips on growing or marketing product. What is also distinct about the Wefarm model is the aggregation potential of its platform.
🗣 After raising a $24m Series A earlier in 2021 it spoke of its B2B inputs platform on a Clubhouse event which has a run rate of GMV (gross merchant value) of well over $1m per month and carried out $29m in gross sales to date. Wefarm are certainly one to watch given their positioning and expansion plans for India and further into East Africa.
Agrim are applying a similar B2B approach to iProcure in the huge Indian market, where it is digitising the process for retailers and offering credit alongside trade. As with the east African providers, the credit products are tantamount as they solve a huge working capital problem for these merchants and by digitising the tradeflows it is easier to manage credit risk and build models.
Livestock
Swiftvee operate a livestock auction and sales platform with live data coming from across South Africa. What really interests me about these style of platforms - auctions in particular - is the potential for price transparency. The real transaction data produced is invaluable for people in the industry and that includes owners and financiers a like. Over time a very interesting data set develops, which can be used to benchmark pricing for less commoditised goods such as sheep, goats, calves… you name it 🐮.
SwiftVee have also started to integrate insurance into their platform alongside one of the major insurers in South Africa.
Pashubajar operates an e-commerce platform for Goats. In India. (Admit it, when you started reading this, you were not expecting that, were you!?). At a high level this may seem like an usual vertical to target but this trade is huge, centred around religious festivals and family celebrations. For example, Sudan is one of the biggest livestock exporters in the world, sending almost $1bn in goats to Saudi Arabia for holiday festivals. Here is one goat for $3.4m.
AgriChecker - equipment marketplace targeting the dairy and livestock sectors in in South Africa. This again is more of an e-commerce type business but some of the team behind it have assured me Fintech is very much part of their roadmap. This makes sense given the success other businesses on this list (and the Agri Fintech 50 scaling List) have had in moving from e-commerce into the fintech space.
AquaConnect - Not quite livestock but thought it slotted in here better than in other sections. I don’t quite have a favourite on this entire list, but if I did i think AquaConnect would be up there for ingenuity and innovation. Aquaculture is a developing sector in agri terms and Aquaconnect have developed an end to end platform for operators in that space which provides inputs and equipment, gives advice and provides a marketplace for output. This information is then used to risk score projects and offer credit. That is amazing.
🐟 Maybe there are similar platforms like this, but I have not seen any and they have certainly taken a bold position on a lucrative market, where there will be limited financial services capacity to serve.
Produce
HelloChoice are one company in the South African market who are targeting the huge fresh produce segment. HelloChoice are appealing as they operate their auction enabled platform in some very lucrative niche segments such as Macadamia, of which Southern Africa, generally, is a large producer. They are one of the many teams I have been lucky to speak to directly and they see their aim as moving produce globally, so we might see more from them on that front, similar to their inroads into the Macs market.
FoodLocker are part of the Founders Factory Africa Fintech portfolio and are based in Nigeria. They operate a D2C model for fresh produce and also processed foods, which inevitably means they are tackling multiple problems along the food value chain in Nigeria.
AgroCenta is one of the major market linkage platforms in sub-Saharan Africa, specifically targeting the Ghanian market. Their cropchain platform allows depositing of crops, mostly grains such as Maize and Sorghum, into warehouses for seamless traceability and marketing. The company also operate LendIt which is specifically to promote financial services such as crop insurance, input credits and mobile payments.
Ergos operate GrainBank a digital warehouse receipt system in India. They have recently closed a Series A round for $10m in order to fuel geographic expansion and further their financial integrations with Non Banks and Banks in India. What I admire about Ergos is its proactive approach in working with these financial institutions and taking an open approach to their platform - ‘OpenAg - rather than trying to do it all in house.
📝 I really need to do a full deep dive on the warehouse receipt landscape in India, so let me know if you would like to hear more about this particular segment and how it is organised.
AgriDigital offer a sleek platform experience for producers and marketers in the grain trade in Australia and the US. They have two products in Waypath and AgriDigital. The former tracks physical grains, whereas the latter, Agridigital deals with the business end of things such as contracting, payments, invoicing and also finance.
💵 AgriDigital are already giving out some very fintechy vibes. For example, they offer 100% commodity backed finance to their users (assuming via a partnership) and have done several interesting collaborations, including with Geora, an Australian blockchain project (whom I will touch on in my next article on blockchain) and also a traceability project with Genesis Feed Tech in North Dakota. FWIW, traceability will become a major theme in Agri-Fintech.
Kibanda TopUp is again a fascinating use case. Its stated aim is to increase restaurants contribution to GDP and it works directly with informal restaurants in Nairobi. Their platform is built to work directly with restaurants and serve their unique needs in terms of ordering, delivery and financial services. Think of this, like a kind of Toast, but for restaurants in emerging markets. I say kind of as Kibanda will be solving a lot more issues in the supply chain I suspect.
Other
TractorZoom operate a farm equipment auction finder platform and possibly have one of the best Twitter timelines with all sorts of vintage tractors. They are aiming to move into the auction business themselves and they also appear to provide data on auction related sales across the US, with 450+ auctioneers on their platform. This gives a very unique data set to those interesting in valuing equipment or even financing it and they do work with some banks in this regard. I think this is a fascinating proposition.
FarmTogether is a farmland investment platform which democratises access to sustainably managed farmland as an asset class. They currently have $100m in assets under management, all of which are enrolled with the Leading Harvest Sustainability Standard. This emphasis on sustainably managed farmland makes them unique in this fast growing sector.
General Marketplaces
In researching this I encountered an excellent Tweet thread from Janette Barnard. I really mean 'encounter’ as it did stop me in my tracks and reflect.
Janette Barnard 🌵
Entrepreneurs in ag: let's start a marketplace!

Nobody:

Me: "come for the tool, stay for the network" is the ONLY way to get a B2B marketplace to liquidity, IMHO. Enough venture $$ can get you a ways down the road but it is insufficient on its own. 1/
Marketplaces are a very sassy category. But extremely difficult to manage as Janette alludes to in her thread. Personally, I would hate to set up a marketplace, as you really have Product Market Fit x 2 (or maybe even ^2) to figure out. It can be gamed by enticing so many of one side of the market that the other side just shows up. But that is still onerous and $$$.
A lot of the agri marketplaces are offering bundles so they are already conversant in the essential ‘value added services’. In Ag, these typically mean advisory, inputs or credit before even getting to the ‘marketplace’ activities. I have included marketplaces who have generally taken this bundled approach and if they don’t have a fintech offering yet, they are most likely gathering data for it.
But it was a timely intervention from Janette and is an important point to consider! Marketplaces for the sake of a marketplace are not a great idea.
Credit and Banking Innovators
FarmRaise helps producers in the US access finance from numerous sources, including government channels and grants. They claim that farmers using their service are, on average, entitled to $122,000 per year, which is not to be ignored. Users can register with their service for $20/ month and submit financial information which FarmRaise use to send to funding applications to USDA and partnering banks.
Simbuka run an agricultural lending as a service model for agricultural finance. They currently operate with banks in the East African markets such as Rwanda and Tanzania and also in some Asian markets. Their cloud platform offers tools for Know Your Client workflows, loan management and also credit scoring using their Scorecard Engine. Simbuka work alongside both Cordaid and the Rabo Foundation to promote agricultural financial services with banks in developing world.
The Livestock Wealth platform is a peer to peer investment platform for ‘crowdfarming’ in South Africa. This platform is intriguing as it democratises access to investments such as Macadamia, Free Range Ox, Pregnant Cows and the Connected Garden for horticulture investments. They also offer Farmers Club, a direct to consumer beef product, which I personally think is the future of many high end food products in major markets.
🧐 The team at Livestock Wealth have done a lot to put this in place and manage the investment risks by becoming a registered credit provider in South Africa and introducing an advisory board. This speaks of a team who are in this for the long run and want to be seen as a credible investment manager in the local market - governance is a forgotten risk that not many people think about it fintech (or any sector really).
Sustainability innovators
There are a lot of sustainability focused startups around at present, but I wanted to zero in on some niche ‘infrastructure-as-a-service’ type plays.
Coldhubs and EcoZen operate solar powered cold rooms in developing countries, notably Nigeria and India respectively. These companies solve a huge issue of post harvest losses (where up to 45% of all food spoils) and allow producers and traders to aggregate and store their goods in their micro facilities to extend the marketing period. Ecozen also offer solar powered water pumping and market linkage technology to capture goods in production and then assist with the marketing. As with other capital intensive goods, Ecozen offer leasing or community based ownership models for their storage equipment.
MobiWater is not directly agri or fintech related but I thought it was worth a shout out as its model is fascinating considering the importance of water in most Ag value chains and its increasing importance as a commercial input. The company operates an end to end cloud based water monitoring platform which can be used to monitor water use and billing. As with some of the other companies on here, I can see this type of service dovetailing nicely into an ecosystem as part of the infrastructure stack. And that is exactly what it is doing in Kenya, tapping into the growing demand for water managed and climate smart agriculture projects.
Bundled innovators
Fasal offers a full stack precision ag platform for the horticulture sector in India. As they track the farm level data and inputs used, they also track expenses and sales to record finances. However, what really jumped out to me was their water credit initiative. They claim their users have saved 3 billion litres of water to date by using their technology and these users will now get credit for this work.
💧 This is extremely forward looking as India is one of the most water stressed countries on the planet, with Agriculture obviously using up to 70% of available water resources. Currently, there is an explicit focus on soil carbon and sustainability, but there is a lot of energy being put into issues such as sustainable water use and biodiversity and how mechanisms can be developed to account for these.
Good Nature Agro is very unique as it is an integrated platform for seed 🌱 . The model allows small producers in Southern Africa to grow directly for seed companies which promotes better agricultural standards for these growers, increased revenue and also direct market access. Good Nature Agro assist the growers in this process and facilitates credit to the growers, which is one of the problems in this sector.
Mozare3 is an integrated platform for producers in Egypt. It operates a similar model to the other integrated platforms by bundling inputs, advisory, market linkages and credit.
I find Mozare exciting as Egypt 🇪🇬 is such a huge market with over 100m people, many of whom work in agriculture (55%). It is also one of the largest food importers globally with over 13m metric tonnes of Wheat imported annually, worth over $3bn.
Conclusion
😌 This issue has covered a lot of ground.
Let me summarise to say:
➡️ These innovators are all operating in very specific contexts, which can be value chains (e.g. Livestock, Aquaculture, Equipment, Land etc) or even countries (e.g. UK, Egypt, South Africa)
➡️ They develop proprietary data sets and touch points which give them unique insights on customer problems and solutions. Others facilitate the collection of the data and the distribution of products.
➡️ These unique insights allow these Agri fintech companies to embed unique financial journeys and products into their customers lives. This is the essence of embedded finance as they are products created in the context, rather than acting as a distributor for existing banking products.
➡️ There are probably thousands of similar use cases in Agriculture It is likely there are millions in other industries 🤯
And finally
What is your context? Based on these examples, what conversations do you need to have with your clients?
Did you enjoy this issue?
Niall Haughey

Twice monthly insights on fintech innovation in the global food and agri sector. Subscribe ⤵️

"If you want to go deeper on Regenerative Finance, Niall Haughey does a great explainer" @sytaylor on Issue 16

"For those interested in learning more about blockchain and the application of blockchain in agriculture, this is a robust overview to check out!" @shaneagronomy on Issue 5

In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue