Pulaa Kenyan insurtech start-up specializing in digital and agricultural insurance to de-risk millions of smallholder farmers across Africa, has closed a $6m Series A investment.

The round was led by a pan-African early-stage venture capital firm, Capital TLcomwith the participation of the association Women’s World Bank. The increase comes after Pula secured a $1 million seed investment from Rocher Participations with backing from Accion Venture Lab, Omidyar Network and several angel investors in 2018.

Founded by Rose Goslinga and Thomas Njeru in 2015, Pula offers agricultural insurance and digital products to help smallholder farmers cope with climate risks, improve their farming practices and increase their incomes over time.

Agricultural insurance has traditionally relied on agricultural enterprises. In the United States or Europe, usually with large farms, an average insurance premium is $1,000. But in Africa, where smallholdings or smallholdings are the norm, that figure averages $4.

It is particularly telling that the value of agricultural insurance premiums in Africa represents less than 1% of the world total despite the continent having 17% of the world’s arable land.

This disparity stems from the fact that the traditional method of calculating insurance through farm visits is often unaffordable for these smallholder farmers. Thus, they are often overlooked for financial protection against climate risks such as floods, droughts, pestilence and hail.

Pula solves this problem using technology and data. Through his Area Yield Index Insurance product, the insurtech startup relies on machine learning, crop-cutting experiences, and data points related to weather conditions and farmer losses, to create products that address a variety of risks.

But getting farmers on board has never been easy, Goslinga told TechCrunch. According to her, Pula understood not to sell insurance directly to small-scale farmers, as they may suffer from optimism bias. “Some think that a climatic catastrophe would not hit their farms in a given season; therefore, they do not ask for insurance initially. But if they witness any of these weather hazards during the season, they will want to take out insurance, which is counterproductive for Pula,” the founder said in a phone call.

Picture credits: Pula

Thus, the startup rather associates with banks. Banks provide loans to farmers and require them to take out insurance. With the loan, the banks can pay the insurance on behalf of the farmers at the start of the season. But at the end of the season, the farmer has to repay the loan with interest.

“The unit economy does not allow us to work directly with farmers. But with banks, we know they give loans to farmers with much better margins to pay for insurance. In addition, we work with government subsidy programs because they also want to protect their farmers. »

Through its partnerships with banks, governments and agri-input companies, Pula is at the center of an ecosystem that provides insurance to smallholder farmers and has 50 insurance partners and six reinsurance partners.

His clientele includes figures such as the World Food Program and the Central Bank of Nigeria, as well as the Zambian and Kenyan governments. Social enterprises like One Acre Fund, startups like Apollo Agriculture, and agribusiness giants like Flour Mills and Export Trading Group are also among Pula’s clients.

Co-CEOs from agriculture

When Goslinga met Njeru in 2008, she was working for the Syngenta Foundation for Sustainable Agriculture (SFSA). There she began Kilimo Salama as a micro-insurance program for over 200,000 farmers in Kenya and Rwanda. She met Njeru, who was the lead actuary at UAP Insurance, a Kilimo Salama program partner, at the time.

After staying with Syngenta for six years and recognizing the need to provide standard insurance products to smallholder farmers, Goslinga left to start Pula with Njeru in 2015. However, it was not until two years later that Njeru joined full-time since he was six years old. one-year commitment at Deloitte South Africa from 2012 as a consulting actuary. The couple are both acting as co-CEOs.

“When Thomas and I launched Pula in 2015, we had one goal in mind: to create and deliver scalable insurance solutions to Africa’s 700 million smallholder farmers,” Goslinga said. “With our latest funding, now is the time to break into new ground. In our five years since launch, we have built strong traction for our products. However, the fact remains that in Africa and other emerging markets, there are still millions of smallholder farmers whose risks to their livelihoods are not covered.

According to Goslinga, the COVID-19 pandemic helped Pula double its footprint and size as rural agricultural activities and operations continued despite pandemic-induced lockdowns.

Co-founders and co-CEOs of Pula (Rose Goslinga and Thomas Njeru)

Therefore, the new funding will scale up operations in its 13 existing markets across Africa, where it has insured over 4.3 million farmers. They include Senegal, Ghana, Mali, Nigeria, Ethiopia, Madagascar, Tanzania, Kenya, Rwanda, Uganda, Zambia, Malawi and Mozambique. Likewise, the Kenyan startup hopes to propel its expansion to smallholder farmers in Asia and Latin America.

Pula is one of the few African startups disrupting the agriculture industry with technology. Its Series A investment attests that investor appetite for agritech startups is still on the rise.

A week ago, Aerobotics, a South African startup that uses artificial intelligence to help farmers protect their trees and fruit from risk, raised a $17 million Series B round. Last month, SunCulture, a Kenyan startup which provides solar power systems, water pumps and irrigation systems for small farmers, raised $14 million.

Another startup is Apollo Agriculture which raised $6 million Series A, similar to Pula. Not only did the pair raise the same round, but both Apollo Agriculture and Pula are in the business of providing financial resources to small-scale farmers. But while the two companies might look like competitors, even by Goslinga’s own admission, she argues that the startups are partners and complement each other.

As part of the new fundraising, the main partner of TLcom Omobola Johnson will join the board of directors of Pula. However, it is his colleague, Maurizio Caiothe firm’s managing partner, who had something to say about the round.

“The insurance market potential for smallholder farmers in Africa is enormous, and under the leadership of Rose and Thomas, Pula has quickly established a strong presence across the continent and has several high-profile clients on its books. We are convinced of Pula’s growth potential despite the pandemic and look forward to partnering with them as they execute the next phase of their journey,” he said in a statement.

For the lead investor, Pula’s investment marks the culmination of his busiest series of investments, having led and co-led seed rounds in OkraChara, Automatic control and Ilara Health over the past year.

Christina JuhaszCIO of Women’s World Banking, the other investor in the round, explained that the organization wrote a check for Pula “given the legions of women engaged in small-scale farming and securing the food supply of communities around the world”.