Pula, a Kenyan insurtech company focused on providing digital and agricultural insurance solutions, has secured $6 million in a Series A funding round. This investment aims to mitigate risks for millions of smallholder farmers throughout Africa.

This funding round was spearheaded by TLcom Capital, a Pan-African venture capital firm specializing in early-stage investments, with additional participation from Women’s World Banking, a nonprofit organization. This latest financing follows Pula’s previous seed round of $1 million in 2018, which included investments from Rocher Participations, Accion Venture Lab, Omidyar Network, and various individual investors.  

Established in 2015 by Rose Goslinga and Thomas Njeru, Pula offers agricultural insurance and digital services designed to assist smallholder farmers in managing climate-related challenges, enhancing their agricultural techniques, and increasing their long-term earnings.

Traditionally, agricultural insurance has been based on assessments of farm operations. In regions like the U.S. and Europe, where larger farms are common, the typical insurance premium is around $1,000. However, in Africa, where small-scale farming predominates, the average premium is only $4.

Notably, the total value of agricultural insurance premiums in Africa accounts for less than 1% of the global total, despite the continent possessing 17% of the world’s arable land. 

This difference arises because the conventional method of assessing insurance risk through on-site farm visits is often too expensive for smallholder farmers. Consequently, these farmers are frequently excluded from financial safeguards against climate hazards such as flooding, drought, pests, and hail.

Pula addresses this issue by utilizing technology and data analysis. Its Area Yield Index Insurance product employs machine learning, crop yield assessments, and data related to weather conditions and farmer losses to develop insurance products tailored to specific risks.

However, attracting farmers to utilize these services has presented challenges, as Goslinga explained to TechCrunch. She noted that Pula has found it more effective to avoid directly selling insurance to small-scale farmers, as they may exhibit an optimistic bias. “Some farmers believe that a climate disaster will not affect their crops in a given season and therefore initially decline insurance. However, if they experience such a disaster during the season, they will seek insurance, which is not beneficial for Pula,” the founder stated during a conversation.

“Our business model is not viable when working directly with farmers. However, banks offer loans to farmers with sufficient margins to cover the cost of insurance. We also partner with government subsidy programs, as they are also committed to protecting their farmers.”

Through its partnerships with banks, governments, and agricultural input suppliers, Pula is central to an ecosystem that provides insurance to smallholder farmers and has established relationships with 50 insurance partners and six reinsurance partners. 

Its customer base includes organizations such as the World Food Programme and the Central Bank of Nigeria, as well as the governments of Zambia and Kenya. Social enterprises like One Acre Fund, startups like Apollo Agriculture, and large agribusinesses like Flour Mills and Export Trading Group are also clients of Pula.

Co-CEOs with Agricultural Expertise

In 2008, Goslinga was employed by the Syngenta Foundation for Sustainable Agriculture (SFSA), where she initiated Kilimo Salama, a micro-insurance scheme benefiting over 200,000 farmers in Kenya and Rwanda. It was through this program that she connected with Njeru, who at the time served as the principal actuary at UAP Insurance, a partner organization to Kilimo Salama.

Following six years with Syngenta and recognizing a demand for standardized insurance offerings for smallholder farmers, Goslinga established Pula alongside Njeru in 2015. However, Njeru’s full-time involvement commenced two years later, as he was committed to a six-year consultancy role with Deloitte South Africa, beginning in 2012. Currently, both individuals function as co-CEOs.

“When Thomas and I founded Pula in 2015, our primary objective was to develop and deliver insurance solutions that could be widely implemented for Africa’s 700 million smallholder farmers,” Goslinga stated. “Our recent funding allows us to expand into new territories. Over the past five years since our launch, we have achieved significant progress with our products. Nevertheless, a substantial number of smallholder farmers across Africa and other developing markets still face uncovered risks to their livelihoods.”

Goslinga noted that the COVID-19 pandemic contributed to a doubling of Pula’s reach and scale, as agricultural activities in rural areas persisted despite pandemic-related restrictions. 

Pula stands out as one of the few African startups leveraging technology to transform the agricultural sector. The Series A funding demonstrates the growing investor interest in agritech companies.

Recently, Aerobotics, a South African startup utilizing artificial intelligence to assist farmers in safeguarding their trees and fruits, secured a Series B funding round of $17 million. Furthermore, last month, SunCulture, a Kenyan startup offering solar power systems, water pumps, and irrigation solutions for small-scale farmers, raised $14 million. 

Apollo Agriculture, similar to Pula, also secured a $6 million Series A investment. Both companies raised equivalent funding amounts and focus on providing financial resources to smallholder farmers. While they may appear competitive, even as acknowledged by Goslinga, she emphasizes that the startups are collaborative partners and offer complementary services.

As part of this funding round, Omobola Johnson, a senior partner at TLcom, will be joining Pula’s board of directors. However, it was her colleague, Maurizio Caio, the firm’s managing partner, who commented on the investment. 

“The potential of the insurance market for smallholder farmers in Africa is substantial, and under the direction of Rose and Thomas, Pula has quickly established a strong foothold across the continent, securing numerous prominent clients. We are confident in Pula’s growth prospects, even amidst the pandemic, and we are eager to collaborate with them as they move forward,” he stated.

For the leading investor, Pula’s investment represents the conclusion of a period of significant investment activity, having led and co-led funding rounds in Okra, Shara, Autochek and Ilara Health in the past year.

Christina Juhasz, CIO at Women’s World Banking, the other investor in the round, explained that their organization provided funding to Pula “considering the large number of women involved in small-hold farming and ensuring the food supply for communities globally.”