EXCLUSIVE: SP Ventures closes fund on $42m, adds major financial industry players

Brazilian agrifoodtech investor SP Ventures has closed its latest fund on $41.5 million. The fourth close adds big-name investors to the table including Banco do Brasil, one of the largest financial institutions in the country with 50% of the credit and insurance market in the region.

Also joining the fund are Banco do Brasil Seguridade, a holding company in the insurance space, and Norwegian fertilizer company Yara.

“We’ve always been engaging with Banco do Brasil to discuss technology adoption and new general trends over the past few years,” Francisco Jardim, founding partner at SP Ventures, tells AFN.

“The time has really come for Brazil to build a new high-tech financial services industry across the board. Agriculture is one of the core pillars of this new financial services industry. If you look at the probably 20 unicorns that were built over the past six to seven years in Brazil, most of these were in the fintech space and none of these were in the ag space yet. We believe that the ag fintech space will be a major producer of unicorns. This has started to appear on Banco do Brasil’s and Banco do Brasil Seguridade’s radars,” Jardim adds.

Founded in 2007, SP Ventures focuses on Series A-stage deals across a variety of segments with check sizes landing around $100,000 to $6 million.

In just over a year, the firm has reached its fourth closing date and executed nine investments. The third closing, which it announced in August 2020, brought the International Finance Corporation on board, which is an affiliate of the World Bank. At the same time, it also announced an exit from fintech startup Brain Ag.

In August 2020, SP Ventures announced the first close of the fund at roughly 90 million reals ($16.3 million). It attracted big backers including BASF, Syngenta Ventures, and FoF Capira, which has anchor investors including Bill Gates, Paul Allen, and the Ford Foundation.

In December 2020, it announced the second close with French animal nutrition company Adisseo and Florida’s Mosaic, one of the largest miners of phosphate and potash.

Operating in over 60 countries, Yara is targeting investment opportunities that can decarbonize its food chain. Working with SP Ventures provides it with additional focus on the LatAm market, according to Erkki Aaltonen, head of Yara Growth Ventures.

“We are very bullish on Latin America. There is a robust and growing startup ecosystem full of entrepreneurs with a clear understanding of agriculture who are tackling real problems. We see a lot of white space and latent demand potential across the region,” Aaltonen said. “[SP Ventures] knows the market better than anyone and they’re a pleasure to work with.”

Aaltonen sees startups across all of Yara Growth Ventures’ investment areas including biologicals focused on plant resilience, in-field decision support, supply chain optimization, and farmer financing. 

“It does feel like there has been a particular spotlight on farmer financing this year in LatAm. We will have some news of investments in that space in the near future,” says Aaltonen.

Although fintech has exploded in urban centers, according to Jardim, it lagged in the ag space because the major infrastructure that was necessary to support them like smartphone connectivity lagged. Connectivity has improved significantly in the last two to three years, according to Jardim, boosting digital literacy and smartphone penetration. 

Covid-19 also helped spur connectivity and digital adoption as people looked for ways to stay connected during quarantine.

“Farmers were force-fed digital experiences and they became a lot more digital over the last year and a half. I think that the sense of urgency behind Banco de Brasil and Banco Do Brasil has become heightened.”

Looking to future investments, Jardim sees continued challenges around building competitive and high-ranking syndicates for co-investments in the region. This not only guarantees that more deep pockets come to the table, but it brings more intangible value to the startups that SP Ventures backs. This includes corporate strategic support, operating assets on the ground, brand assets, and potential clients.

As SP Ventures has brought more players to the region, it’s had a key ripple effect on founders, according to Jardim.

“We’re seeing a major heightening of the ambitions of the founders. Now, the founders in the agtech space are really set on building large companies not only because they’re ambitious but because they see they have the means. Adoption is there, infrastructure is there, and the cap tables are there.”