KENYA – Kenyan agriculture digital-insurance startup Pula, has raised US$6 million in Series A funding round led by Pan-African early-stage venture capital firm, TLcom Capital, with participation from non-profit Women’s World Banking.

The new investment will be used by the insurtech company to scale up operations in its existing 13 markets across Africa where it has insured over 4.3 million farmers. Likewise, the Kenyan startup hopes to propel its expansion for smallholder farmers in Asia and Latin America.

The company has currently set base in Senegal, Ghana, Mali, Nigeria, Ethiopia, Madagascar, Tanzania, Kenya, Rwanda, Uganda, Zambia, Malawi and Mozambique.

Founded by Rose Goslinga and Thomas Njeru in 2015, Pula delivers agricultural insurance and digital products bundled with inputs (such as seeds and fertiliser) and farmer advisory services to help increase their yields and boost their income.

“When Thomas and I launched Pula in 2015, we had one goal in mind: to build and deliver scalable insurance solutions for Africa’s 700 million smallholder farmers. With our latest funding, now is the time to break into new ground,” Goslinga said.

Agriculture insurance has traditionally relied on farm business. In the U.S. or Europe with typically large farms, an average insurance premium is US$1,000. But in Africa, where smallholding or small-scale farms are the norm, the number stands at an average of US$4, indicates Tech Crunch.

It is particularly telling that the value of agricultural insurance premiums in Africa represents less than 1% of the world’s total when the continent has 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 neglected from financial protection against climate risks like flood, drought, pestilence and hail.

“When Thomas and I launched Pula in 2015, we had one goal in mind: to build and deliver scalable insurance solutions for Africa’s 700 million smallholder farmers. With our latest funding, now is the time to break into new ground.”

Rose Goslinga – Co-founder Pula

Pula is solving this problem by using technology and data. Through its Area Yield Index Insurance product, the insurtech startup leverages machine learning, crop-cut experiments and data points relating to weather patterns and farmer losses, to build products that cater to various risks.

But getting farmers on board has never been easy, Goslinga told TechCrunch. According to her, Pula has understood not to sell insurance directly to small-scale farmers, because they can suffer from optimism bias.

So the startup instead partners with banks. Banks provide loans to farmers and make it compulsory for them to have insurance. With the loan, 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.

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

Its clientele includes the likes of the World Food Programme and 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.

As part of the new fundraise, TLcom’s senior partner Omobola Johnson will join Pula’s board.

“The potential for the insurance market for smallholder farmers in Africa is huge, and under the leadership of Rose and Thomas, Pula has rapidly established a strong presence throughout the continent and has several high-profile clients on their books.

“We are confident of Pula’s potential for growth in spite of the pandemic and look forward to partnering with them as they execute the next phase of their journey,” said Maurizio Caio, the TLcom’s managing partner

Christina Juhasz, CIO at Women’s World Banking, the other investor in the round, explained that the organisation cut a check for Pula, “given the legions of women engaged in small-hold farming and securing the food supply for communities around the globe.”

The new funding round came after Pula closed its US$1 million in seed investment from Rocher Participations with support from Accion Venture Lab, Omidyar Network and several angel investors in 2018. 

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