Paula, a Kenyan start-up that specializes in digital and agricultural insurance to disrupt millions of small farmers across Africa, has closed a $ 6 million Series A investment.
The round was led by a venture capital company early on, TLcom Capital, With the participation of associations Global Banking for Women. The fundraiser comes after Paula closed down a million-dollar seed investment from Rocha’s participation with the support of the Accion risk lab, Omidiar chain and a number of Angel investors in 2018.
Founded by Rose Goslinga and Thomas Jero In 2015, Paula provides agricultural insurance and digital products that will help small farmers navigate climate risks, improve their farming practices and strengthen their incomes over time.
Agricultural insurance has traditionally relied on household business. In the US or Europe with typically large farms, the average insurance premium is $ 1,000. But in Africa, where small-scale farming or small-scale farms, the number stands at $ 4 on average.
It is particularly clear that the value of agricultural insurance premiums in Africa is less than 1% of the total world while the continent has 17% of the agricultural land in the world.
This gap is due to the fact that the traditional method of calculating insurance through farm visits is often unprofitable for these small farmers. Thus, they are often neglected from financial protection against climate risks such as flood, drought, plague and hail.
Paula solves this problem through technology and data. Her way Area Yield Index Insurance Product, the operation of insurtech from a computerized learning lever, crop cutting experiments and data points relating to weather patterns and losses of farmers, to build products that meet different risks.
But raising on farmers has never been easy, Goslinga told TechCrunch. According to her, Paula understood not to sell insurance directly to small farmers because they might suffer from an optimistic bias. “Some believe that a climate disaster will not harm their farms in a particular season; therefore, they do not seek insurance initially. But if they witness one of these climate risks during the season, they will want to get insurance, which does not yield Paula,” the founder said in a phone call.
So the start-up instead partnered with banks. Banks provide loans to farmers and oblige them with insurance. With the loan the banks can pay the insurance on behalf of the farmers at the beginning of the season. But at the end of the season, the farmer has to repay the loan at interest.
“The unit economy does not work for us to work directly with farmers. But in banks we know they provide loans to farmers with much better margins to pay for insurance. We also work together with government subsidy programs because they are also interested in protecting their farmers.”
Through its partnerships with banks, governments and agricultural input companies, Paula is at the center of an ecosystem that provides insurance to small farmers and has accumulated 50 insurance partners and six reinsurance partners.
Its clientele includes global food programs and the Central Bank of Nigeria, as well as the governments of Zambia and Kenya. Paula’s clients also include social companies such as the Van Acre Foundation, start-ups such as Apollo Agriculture and industry giants such as the flour mills and the export trading group.
Co-CEOs with an agricultural background
When Goslinga met Najero in 2008, she worked for the Syngenta Foundation for Sustainable Agriculture (SFSA). There, she started Kilimo Salameh As a micro-insurance program for more than 200,000 farmers in Kenya and Rwanda. She met at the time Najero, who was the chief actuary at UAP Insurance, a partner in the Kilimo Salama program.
After staying with Syngenta for six years and recognizing the need to provide standard insurance products to small farmers, Goslinga left to start Paula with Najero in 2015. However, just two years later Jero joined full-time as he had a six-year engagement. With Deloitte South Africa since 2012 as Consultant Actuary. The duo serve as co-CEOs.
“When Thomas and I launched Paula in 2015, we had one goal: to build and provide expandable insurance solutions for the 700 million small farmers in Africa,” Goslinga said. “With our latest funding, it’s time to break into new ground. In our five years since launch, we have built a strong stretch to our products. However, the fact remains that across Africa and other emerging markets, there are still millions of small farmers with uncovered livelihoods.”
According to Goslinga, the COVID-19 epidemic helped Paula double its footprint and size as rural farming activity continued despite locks caused by an epidemic.
Therefore, the new financing will increase activity in the 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. Also, the Kenyan start-up hopes to drive its expansion for small farmers in Asia and Latin America.
Paula is one of the few African startups disrupting the agriculture industry through technology. Its A-line investment indicates that investors’ appetite for startups in the architectural field is still on the rise.
One week ago, Aerobotics, a South African startup that uses artificial intelligence to help farmers protect bone and their fruits from risks, raised a $ 17 million Series B round. Last month, SunCulture, a proprietary startup that provides solar power systems, water pumps and irrigation systems to small farmers, raised $ 14 million.
Another startup is Apollo Agriculture, which raised $ 6 million Series A, similar to Paula. Not only did the couple raise the same round, Apollo Agriculture and Paula were both engaged in providing financial resources to small farmers. But while the two companies may seem like competitors, even to Goslinga’s acceptance, she claims the start-ups are partners and complement each other.
As part of the new recruitment, TLcom’s senior partner Umobula Johnson Will join the Paula Committee. However, it was a colleague, Maurizio Cayo, the firm’s managing partner, who had something to say about the round.
“The potential for the insurance market for small farmers in Africa is huge, and led by Rose and Thomas, Paula has quickly established a strong presence across the continent and has a number of high profile clients. We are confident in Paula’s growth potential despite the epidemic and look forward to working with them.” In a statement.
For the main investor, Paula’s investment marks the culmination of the busiest investment that has led and led rounds of Maya, Shara, Otochek and Ilara Health in the past year.
Christina JohashThe CIO at World Banking for Women, the second investor in the round, explained that the organization had cut a check for Paula “given the legions of women engaged in small-scale agriculture and food security to communities around the world.”