This is the third investment out of the new 90 million real ($15.7 million) fund that SP Ventures launched in August 2020. The fund, which is backed by Syngenta Ventures and BASF, focuses on Series A deals in Latin America’s agrifoodtech sector.
Launched in 2018, Traive offers a range of financial products and services for the agricultural supply chain, in both Brazil and the US. These are built around what it describes as “innovative and proprietary technologies,” including “unique models for risk analysis and diversification” aimed at protecting lenders from credit risks, and saving money for farmers taking out loans.
The B2B company works to help ag retailers, input companies, and other ag supply chain businesses provide farmers with working capital loans. Using its algorithms and proprietary data, Traive generates real-time risk assessments for each client at a lower cost and with greater accuracy, according to the company.
“The risk assessment model is what I call the first layer of financial solutions. Over this, we build a much more complete layer which is what I now call the platform,” Fabricio Pezente, CEO at Traive, told AFN.
“This is where the range of financial solutions is actually delivered because the risk assessment itself is just one [part]. It goes from the credit application and processes to many other things like management, documentation, [and] alerts.”
It will use the funding to build out its team while also expanding its product lineup and acquiring data to improve its credit risk models, Pezente said.
Traive opted for a B2B model because of the cost of client acquisition, he explained. ‘B2B2C’ also allows the startup to take advantage of some of the historical data that lenders already have stored in their systems. If the company worked directly with farmers, it would have to build many of its data sets from scratch.
“It’s common to start with the B2B [strategy] and to eventually think about whether a platform works on a C2C side. But this is the ultimate goal – to bring [farmers] an offering that can allow them to fund themselves in a cheaper way,” he said.
“In countries like Brazil, they need to take credit risk because the regular financial players are not there […] There is a huge shortage of regular funding in the pump. This forces non-financial players like ag dealers and ag chemical companies to be creditors.”
Traive was spun out of Massachusetts Institute of Technology with the goal of filling this financial gap plaguing medium-size producers, with existing credit resources hesitant to provide support to borrowers.
Fintech for ag is a small but active segment. Startups like Farmecco in Australia, Tulaa in Kenya, Tarfin in Turkey, and DeHaat in India are trying to solve some of the antiquities that plague credit and finance solutions for farmers in those regions. [Disclosure: DeHaat is an AgFunder portfolio company. AgFunder is the parent company of AFN.]