Dealflow | October 21, 2024

Agrolend raises $53 million to expand financial services for Brazil’s small farmers

Lucy Ngige
ImpactAlpha Editor

Lucy Ngige

São Paulo-based Agrolend, a digital bank, was founded in 2020 by brothers Alan and André Glezer to give small and mid-sized farmers across Brazil access to collateral-free loans at reasonable rates in the inflation-troubled country (14%–20%). The startup’s Series C round was led by emerging market impact investor Creation Investments Capital Management in Chicago and the venture capital arm of global agrochemicals company Syngenta AG.

New investors Vivo Ventures, L4 and Japan’s Norinchukin Bank also participated, alongside existing investors Valor Capital, global private equity firm Lightrock, Yara Growth Ventures and SP Ventures. The startup, which aims to make its debut on the US stock market in 2025, will use the new funding to expand its credit offerings using companies that transmit its loans to farmers, including Syngenta. So far, Agrolend has lent $211 million to more than 12,000 rural farmers.

IPO plans

Agrolend’s vision is to evolve into a digital bank for agriculture that offers comprehensive financial services including insurance, hedging solutions to protect farmers against market downturns, credit cards and checking accounts.

“The conditions have already begun to improve (prices, productivity, margins to farmers), and Brazil has a massive potential for growth in the ag space,” Andre said in a 2021 interview. “With a lot of capital, Agrolend will be able to expand its loan portfolio considerably without taking additional risks through an excessive high leverage ratio.”

Smallholder finance

Across the Global South, smallholder farmers struggle with obtaining financing due to demands for collateral by traditional lenders that overlook the sector’s specific needs and seasonal nature. Farmers request a loan through Agrolend’s digital platform, are vetted with its alternative credit scoring model and receive loan documents via WhatsApp.

Agrolend transfers approved loans to partners including Sygenta, a Swiss based provider of seeds, fertilizer and other inputs that is now owned by China National Chemical Corp. Agrolend raises funds from investors through Agribusiness Letters of Credit sold on digital investment platforms. The startup, which is regulated by Brazil’s central bank, scored $27 million in a Series B round in 2022 led by Lightrock. It drew $1.6 from 30 investors in a seed round in 2021.