Miami — Today, TerraMagna, a fintech based in Brazil, announced the close of $40 million in funding led by SoftBank and Shift Capital, marking SoftBank’s first agriculture-related investment.
The money is being broken down into $10 million in equity financing and $30 million in debt financing.
It’s no secret that agribusiness is one of the biggest sectors in Brazil, and employment in the area accounts for about 9% of total employment in the country. But one of the major problems that’s yet to be solved for, is that farmers don’t have much liquidity. As a result, they often rely on commercial loans from retailers that sell inputs (examples include seeds, fertilizers, pesticides etc.), machinery, and other goods used for farming. But getting access to financial products in Brazil for farming isn’t always easy because the space isn’t digitized and because collections on a foreclosed farm tend to take anywhere from 5-7 years, leaving lenders wary of taking the risk.
That’s where TerraMagna comes in. The startup looks at a host of data sources that it uses to underwrite a farm such as satellite imagery, governmental data regarding environmentalism, climate data and information from the notary, among others.
“If you’re contributing to deforestation, you’re probably going to have a hard time selling your soybeans,” said Bernardo Fabiani, co-founder and CEO of TerraMagna. Fabiani is referring to the value placed by today’s consumers on corporate responsibility. Through satellite imagery and governmental data, the startup can tell if a farmer has been complying with environmental guidelines.
“We have a saying, ‘If you’re operating in the red, you’re not going to care about the green,”’ said Fabiani.
But TerraMagna is more than just a lender. The company operates by offering a POS (point of sales system) to farming retailers, and as a result they are able to capture all sorts of financial data on the retailer itself and on the farmer.
Fabiani said their goal is to be like Toast, an American all-in-one payment processor that also offers a POS.
“We’re able to lend money because we are tightly knitted with the processes of our clients,” Fabiani said.
The Back Story
Fabiani and Rodrigo Marques, the company’s co-founder and COO launched TerraMagna in 2017 and in 2019 they pivoted to the current model. The company has 110 employees today and they plan to use the money from this round to grow the tech and sales team. The company has experienced 3.6x year over year growth.
One would think that the founders of an agritech mixed with a fintech in Brazil would either have a farming or finance background, but for this founding duo, that’s not the case at all. Both founders are electronics engineers and decided to pursue TerraMagna when they realized there was room for disruption in the space.
“What we’re good at is building stuff that works and building stuff that lasts,” said Fabiani.