The multi-institutional investment reflects growing interest in providing affordable insurance to cover Africa’s vulnerable smallholder farmers against climate-related risks.
A $20m (€18.8m) series B funding round for Pula, an Africa-focused agricultural insurance and technology firm, has closed, with backing from diverse public and private sector investors, according to impact investment manager BlueOrchard.
BlueOrchard, part of the Schroders Group, led the round through its InsuResilience strategy, which was established on behalf of German development bank KfW. Others involved in the fundraising included the International Finance Corporation via its $225m venture capital platform, the Bill & Melinda Gates Foundation, Kenya-based Hesabu Capital, and existing shareholders.
Swiss-based Pula is one of the largest insurance technology firms providing climate and agricultural insurance to Africa’s smallholder farmers. This is an area where investors believe they can make an impactful contribution towards solving an acute problem, given some 97% of smallholder farmers in Africa lack access to formal insurance, but are increasingly exposed to the negative effects on their livelihoods of climate change-related events such as floods and drought.
To promote uptake of insurance, Pula bundles insurance with other essential products and services such as seeds and credit, helping to make it more accessible and affordable.
The firm has also been able to expand its business, while keeping setup costs low, by using artificial intelligence and automation tools, fed by extensive data collection both on the ground and via remote sensing, as well as by deploying mobile phone-based registration systems. These tools help speed up and improve the accuracy of risk assessment, make the acquisition of new clients easier and make pay-outs on claims faster.
Expansion drive
The fundraising is intended to support Pula in scaling its operations and expanding its reach over the next five years. The company, whose principal African office is in Nairobi, has built a network of over 100 partners. By forging links with local insurance and reinsurance firms, Pula has also helped them to develop their own capacity to underwrite agricultural insurance for smallholders.
The company’s main markets are currently Kenya, Nigeria, Zambia, Malawi, and Mozambique, but it plans to expand its services in Asia and Latin America, as well as Africa.
Richard Hardy, private equity investment director Africa at BlueOrchard told Impact Investment that the African agri-insurance sector presented a substantial market opportunity for those operating in the space, as it remained significantly underserved.
“Particularly, companies like Pula, which have the capability to navigate the complexities of multiple countries, regions, and crops through their technological expertise and extensive experience, are well-positioned to capitalise on this opportunity,” he said. “Given the scale of this potential, we anticipate that other players in the industry, both established and well-run newcomers, can also benefit from the tailwinds in the space.”
BlueOrchard’s partnership with KfW has spawned two insurance-focused funds so far, the most recent of which, InsuResilience Investment Fund Private Equity II, was launched in 2022.
The IFC’s $225m venture capital platform was launched in November 2023 with the aim of strengthening venture capital ecosystems and investing in early-stage companies in the developing world tackling development challenges using technological innovations in sectors such as climate, health care, education, agriculture and e-commerce.
