Earlier this year Thomson Reuters, in partnership with Venture Capital For Africa (VC4A), launched an initiative to find the best new companies coming out of Africa. Recently the winner of the Thomson Reuters Africa Startups Challenge was announced in Cape Town: FarmDrive from Kenya. We contacted co-founder Peris Bosire of the agri-tech startup that looks to advance bankable farmer initiatives.
Can you describe the problem you identified?
“Potentially creditworthy smallholder farmers are often denied loans because they lack the traditional credit profiles that lenders rely on to evaluate borrowers. Financial institutions do not have well-designed and operationally efficient methods of accurately assessing and managing smallholder farmers’ risk, making them reluctant to lend to farmers. Farmers are therefore left with little access to credit, and financial institutions, with a hole in their client base and product line.”
What is your proposed solution?
“To bridge this gap, FarmDrive has developed an innovative credit assessment model that provides detailed risk profiles of smallholder farmers to financial institutions. This solution will not only unlock millions of dollars of previously risk-averse capital for smallholder farmers, it will improve the livelihoods of entire communities, thereby alleviating poverty, hunger, and inequalities.
FarmDrive’s credit profiling algorithm targets each farming vertical and geographical region by aggregating numerous streams of alternative data, namely environmental data (market data, crop portfolio, soil health, pests), social data (social interactions, FarmDrive app usage) and individual data (demographic, geographic, plot size, production, income).
While the environmental datasets are acquired from external big datasets, the social and individual data are obtained from farmers through FarmDrive’s own SMS mobile phone application. With this application, farmers can track their revenues and expenses and apply for loans.”
How does that work in practice?
“FarmDrive’s comprehensive algorithm generates credit profiles and tailor-made loan products for farmers based on the nature of their farming activities. Thus, when farmers apply for a loan using the mobile application, financial institutions are presented with pre-vetted clients and individualized loan products that are de-risked with weather-index insurance that is bundled with the credit. Furthermore, financial institutions have the ability to digitally manage the entire loan process — from application to repayment — using FarmDrive’s custom lender interface.”
Peris from Farmdrive receives the cheque of 10.000 USD from the Thomson Reuters team in Cape Town.
What makes you different from others trying to solve the same problem?
“The grassroots nature of our solution, the amount and quality of alternative data we are using, and our experienced partnership ecosystem are what set us apart from our competition.
FarmDrive was founded based on the founders’ lived experiences as members for smallholder farming communities. This personal experience means that FarmDrive is uniquely suited to understand and meet the needs of smallholder farmers in Kenya and all of Africa.
Our datasets are also supremely unique. While there are other lenders using alternative datasets to asses risk, no one else is targeting smallholder farmers in the way FarmDrive is. Thus, the amount of data and the specificity of the data in relation to our niche market sets us apart from our competitors.
Finally, we have brought together a partnership ecosystem made up of organizations that are each working at the frontier their field. This includes satellite companies, insurance developers, data analysts, development organizations, and more. By combining FarmDrive’s strengths with those of others who are all working within the agriculture value chain, we are able to both scale and improve our impact tremendously.”
What has been achieved by your team to date?
“In 2015 FarmDrive developed a minimum viable product and launched with Musoni Kenya, a Kenyan microfinance institution, to test and refine. FarmDrive is now onboarding more financial institutions to their system in order to increase lending capacity to smallholder farmers. Since beginning operations in May 2015, FarmDrive has registered nearly 3.000 farmers, and disbursed over KES 13 million (USD $128.000) in loans.”
How did you meet your co-founder Rita Kimani?
“Rita and I met on our first day as students at the University of Nairobi. We quickly became friends due to our similar backgrounds and shared interest in computer science. Throughout our 4 years in university we had many classes together and participated in several ICT4D competitions. It was through these interactions that we became closer and formed the idea for FarmDrive.”
How did you get started? Tell us about the journey you took to get this business up and running?
“Rita and Peris started working on tech projects as early as first year in college with Nokia Research Center and IBM. These projects sharpened our technical skills. Based on our experience growing up in impoverished rural communities, seeing the challenges farmers face due to lack of access to credit, we decided to channel our acquired skills towards solving this problem.
We quit our well paying jobs and used up our savings to setup FarmDrive launching operations in May 2015. We spent most of our early days trying to understand the problem we sought to solve by interacting with farmers and financial institutions to capture their pain points and aspirations. We went through the Village Capital Accelerator Program from Apr-June, getting feedback from investors and other entrepreneurs. We met our first angel investor Duncan Goldie-Scot during this time.”
Why did you apply to the Thomson Reuters Africa Startups Challenge?
“Knowing that Thomson Reuters is a world leader in data and technology, we jumped at the opportunity to partner with them in scaling our innovation.”
How do you partner with Thomson Reuters and how does this help you implement your business more successfully now?
“We are partnering with Thomson Reuters to implement the Bankable Farmer Initiative (BFI). BFI’s goal is to figure out a way to lend to the millions of unbanked smallholder farmers across Africa. Thomson Reuters’ expertise in data analytics, and vast connections to various sectors across the globe is helping us scale our solution and reach millions of smallholder farmers through BFI.”
What is the main opportunity moving forward?
“FarmDrive’s main opportunity moving forward will be scaling our outreach through strategic partnerships with multi-national organizations and institutions such as telecoms, commercial banks, and development organizations. By moving towards partnerships with these larger bodies, we will be able to reach millions of farmers, and access the capital needed to lend to them.”
What are your main challenges you need to overcome to realize this vision?
“FarmDrive’s main challenges moving forward will be push back from regulatory bodies. Currently, because our space is so niche and innovative, we are not regulated as heavily as other industries, However, as more people and organizations begin to occupy the space with us, we fear that this will bring on increased regulation that may be harmful to growth and impact.”
How can members of the VC4A support you?
“We hope that the VC4A community will support FarmDrive in spreading the word about our company and helping us gather as much momentum and recognition as possible, so as to scale our solution and impact as many smallholder farmers as possible.”
Do you have a message for other starting entrepreneurs out there? Any lessons learned or words of advice?
“The first lesson we would give to new entrepreneurs would be to remain tenacious. It may be difficult to get yourself in front of the room to pith your idea, but keep working at it. Make people listen. Secondly, talk to people about your idea as much as possible. This will help you spread knowledge about your business, and most importantly, help you learn from others as they give you feedback and suggestions for how to improve your model.”
Congrats to Peris and the Farmdrive team! Learn more about Farmdrive via their VC4A venture profile.