Crowdfunding Goes Country
Cropital is a Philippine crowdfunding start-up designed to help farmers
PHOTO CREDIT: Courtesy Company
Deep in mud yet smiling as their backs are bent to plant rice in shimmering fields of green: An image out of Southeast Asian myth or a tourism campaign. The reality for the region’s farmers is less idyllic.
In Southeast Asia, where over 40% of the population relies on agriculture for income, farmers are ageing, climate-related threats abound, and food prices are increasingly erratic. Then there are the financing problems for farmers that tend to less than two hectares of land. “Either you are doing investments from loan sharks or you have a credit line with suppliers of farm implements. It’s hard to get loans from banks,” says James, whose family farms coconuts in a southern province of the Philippines, partly because growing coconuts means spending less on fertilizer, pesticide, and water.
Enter Manila-based Cropital. Launched in November 2015 by founders Ruel Amparo, Rachel de Villa, and Everett Ubiadas, Cropital is a Philippine crowdfunding platform that lets users invest in and finance small farmers. It aims to free Filipino farmers who don’t qualify for bank loans from the grip of loan sharks.
Incubated at the Kuala Lumpur-based Malaysian Global Innovation and Creative Centre, Cropital raised $10,684 from investors for their farms in less than three days at its initial launch a year-and-a-half ago. Amparo, Cropital’s founder and CEO, says, “There are really a lot of people interested in helping out farmers and at the same time…getting modest returns.”
The 24-year-old Amparo, who at 22 quit his job at a major gas corporation to join a Malaysian incubator, was drawn to farming partly because of his grandparent’s farm, where the Manila urbanite remembers visits spent largely paying off loans or getting new ones. That’s how the light bulb behind Cropital was lit.
To be sure, investment into agriculture carries risk. Pests, unpredictable weather patterns, and volatile commodity prices are only the most obvious. Other challenges include nurturing face-to-face relationships with millions of farmers.
There are also other Philippine platforms such as FarmOn.ph and PhilCrowd that offer crowdfunded investments for farmers. However, Amparo argues that while Cropital is a platform that caters to both investors and farmers, the latter is their primary customer.
“Our core business is making farmers credit-worthy by applying different methods and technology to de-risk financing farmers, enabling them to be attractive enough for funders to continuously support them through credit and investment,” says Amparo.
Of the firm’s investors, 60 to 70% range from 18-34 years old. The platform is accessible to both banked and unbanked citizens, with bank transfer, online banking, and over-the-counter cash payment options to fund virtual wallets. Profit sharing between the investors and the farmers varies. Amparo says the average rate of return is 8%.
“Cropital is a very promising start-up as it shows realistic financial projections in terms of sales, margins, and operations. Their idea is compelling, easy to understand, and focused around a clearly articulated problem and market need, which is to improve the income and productivity of Filipino farmers,” says Zerah Carlet, program director of the Young Entrepreneur’s Society (YES) Philippines.
Amparo, meanwhile, is keeping his head down and focusing on other technologies that he says will “further de-risk financing farmers and enable more farmers access to formal credit and investment.” In the future, they plan on extending the reach of the platform. “We hope in the next three years we’ll be covering [all of] the Philippines,” he says. “Then hopefully in five years’ time we have reached Southeast Asia…”
Though too early to say whether Cropital will bear fruit in other Southeast Asian countries, the market for its agrarian peer-to-peer lending seems ripe.