Ugandan agritech start-up Emata has achieved a significant milestone by raising $2.4 million in seed funding, marking a pivotal moment in the company’s mission to transform agricultural finance in East Africa. The funding comprises $800,000 in equity and $1.6 million in on-lending capital, sourced from a group of high-profile investors keen on empowering farmers through digital agri-loans.
Backing Emata’s vision are a consortium of investors with a shared commitment to driving positive change in the agricultural sector. Leading the investment charge is African Renaissance Partners, a prominent venture capital firm dedicated to supporting entrepreneurs in East Africa and the Horn of Africa. Joining them are Norrsken Accelerator, the investment arm of Europe’s largest impact tech ecosystem, and Zephyr Acorn, a key player in nurturing early-stage technology businesses in East Africa.
Emata’s fundraising efforts also attracted the attention of renowned Swedish angel investor Marcus Boström and the globally esteemed venture philanthropy firm, the Draper Richards Kaplan Foundation. This diverse group of backers underscores the universal recognition of Emata’s potential to revolutionize agricultural financing.
Bram van den Bosch, Founder & CEO of Emata, expressed his excitement about the successful seed fundraising, stating, “Emata dares farmers to dream big and eliminates traditional obstacles that have made agricultural finance unavailable for the vast majority. Our solution turns a lifelong struggle into a five-minute process and is already tangibly impacting thousands of East African farmers.”
The need for agricultural finance in Sub-Saharan Africa is substantial, estimated at a staggering $240 billion by consultancy firm Dahlberg. Emata, with its focus on East Africa, addresses a market valued at $13 billion. Founded in 2020, the company harnesses technology and forges partnerships with agricultural cooperatives to provide farmers with accessible, digital financing. Instead of traditional collateral requirements, Emata utilizes alternative credit scores based on data points like a farmer’s delivery history.
With this fresh infusion of capital, Emata is poised to expand its agri-loan offerings across East Africa. The expansion will encompass its debut market of Uganda and an imminent international foray, with Tanzania being the most likely destination. Emata’s primary focus will remain on scaling its core markets, particularly in the dairy and coffee sectors. However, this multi-crop company also has its sights set on oilseeds, maize, and the potential expansion into potatoes.
As East Africa rapidly embraces digital transformation, Emata’s business model addresses the region’s longstanding challenge of inadequate agricultural financing by providing automated loans to farmers. This approach significantly reduces costs and enables lending to smallholders at rates up to five times more affordable than informal loans, which have been a common source of funding for farmers. Instant lending and data-driven decisions benefit all farmers, eliminating the need for collateral.
Emata has fully digitized the lending process and integrated itself into the agricultural value chain through partnerships with cooperatives and farmer-based organizations. These strategic collaborations not only facilitate rapid scaling but also reduce the risks associated with Emata’s business model. These partnerships ensure access to a direct source of repayment, as loan repayments are deducted by Emata’s partners on its behalf. By addressing the financing challenge, Emata is not only empowering farmers to improve their productivity but also contributing to increased income and food production.
In 2022, Emata demonstrated its growth potential by expanding sevenfold year-on-year, establishing partnerships with 50 agricultural stakeholders, and reaching over 40,000 individual farmers. The company has disbursed an impressive $1 million in loans, demonstrating its commitment to driving positive change in East Africa’s agriculture sector.