MICROCAPITAL BRIEF: Accion Venture Lab Invests Equity in TerraMagna, Fintech Using Satellite Imagery to Help Agribusinesses Lend to Farmers in Brazil

Accion Venture Lab, a unit of US-based nonprofit Accion, recently took an equity stake of undisclosed size in TerraMagna, an agricultural financial technology (fintech) startup in Brazil that partners with retailers of farming inputs on underwriting and funding loans to smallholder farmers. To review loan applications, TerraMagna uses a “proprietary machine learning platform and monitoring technology to generate a more personalized farmer credit score.” Additionally, it harnesses “satellite imaging to appraise and monitor collateral,” allowing lenders to accept crops as collateral. As the crops near readiness for harvest, the satellite data allows TerraMagna to estimate yields and inform the input retailer of the impending harvest. This helps the retailer ensure that the farmer sells the crop as promised in the loan contract, generally to a prearranged buyer for a prearranged price. TerraMagna monitors 22,000 farms each week with total collateral value of BRL 15 billion (USD 2.86 billion).

Accion created Accion Venture Lab in 2011 to serve as its “seed-stage investment arm.” The mission of the investment vehicle is to support “technology and [other] new approaches that help underserved people and small businesses benefit from the world’s formal economy.” The majority of Accion Venture Lab’s investees are in microfinance and fintech. It typically invests USD 500,000 in early-stage startups. As of May 2020, its portfolio consists of 38 enterprises.

Founded in 1961, Accion is a nonprofit that seeks to alleviate poverty by offering services such as microenterprise loans and business training. As of 2019, Accion has approximately 160 partners in 55 countries across Africa, the Americas and Asia. Its microfinance institution partners have approximately USD 1.9 billion in deposits. Accion also invests through Accion Global Investments and Accion Frontier Investments as well as conducting research via The Center for Financial Inclusion.

By Romil Pandey, Research Associate

Sources and Additional Resources

Direct contact with Accion

Accion press release
https://www.accion.org/how-one-company-uses-tech-to-support-brazilian-farmers

TerraMagna homepage
https://terramagna.com.br/

Accion 2019 financials
https://www.accion.org/accion-2019-annual-report#from-the-ceo-and-board-chair

Past MicroCapital article on Accion
https://www.microcapital.org/microcapital-brief-business-correspondent-sub-k-impact-launching-digital-platform-for-insurance-investing-microfinance-referrals-with-support-from-accion-mastercard/

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