TerraMagna, fintech for farmers, receives $ 40 million from SoftBank

Miami — Brazilian fintech TerraMagna announced the closing of a $40 million financing from SoftBank and Shi Capital, marking SoftBank’s first agriculture-related investment.

The money will be split between equity financing ($10 million) and debt financing ($30 million).

It is no secret that agribusiness is one of the largest sectors in Brazil and employment in the area represents around 9% of total employment in the country. Pero one of the main unresolved problems is that farmers do not have much liquidity. Therefore, they often rely on commercial loans from retailers who sell inputs (eg seeds, fertilizers, pesticides), machinery and other goods used in agriculture. But getting access to financial products in Brazil for agriculture is not always easy because the area is not digitized and because collections on a mortgaged property tend to take five to seven years, which makes lenders unwilling to take the risk.

That’s where TerraMagna comes in. La startup analyzes a number of data sources it uses to underwrite a farm, such as satellite images, government data on environmentalism, climate data, and notarial information, among others.

“If you’re contributing to deforestation, you’re probably going to have a hard time selling your soy,” said Bernardo Fabiani, co-founder and CEO of TerraMagna. Fabiani is referring to the value that today’s consumers place on corporate responsibility. Through satellite images and government data, the startup can tell if a farmer complies with environmental regulations.

“We have a saying: ‘if you trade red, you won’t care about green,’” Fabiani said.

But TerraMagna is more than just a creditor. The company offers a POS (point of sale system) for agricultural retailers, and as a result, can capture all kinds of financial data about the retailer and the farmer.

Fabiani said his goal is to be like Toast, an American multipurpose payment processor that also offers a POS.

“We manage to offer loans because we are closely connected to the processes of our clientsFabiani said.

History

Fabiani and Rodrigo Marques, co-founder and COO of the company, launched TerraMagna in 2017 and in 2019 they switched to the current model. The company currently has 110 employees and plans to use the money from the round to grow its technology and sales team. The company grew 3.6 times year over year.

One would think that the founders of an agritech mixed with a fintech in Brazil would have a background in agriculture or finance, but this is not the case for this pair of founders. They are both electronic engineers and decided to found TerraMagna when they realized that there was room for innovation in the sector.

“We’re good at building things that work and that last,” Fabiani said.

–This note was translated by Bianca Carlos, localization specialist for Bloomberg Line.

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