Loan marketplace matches investors with farmers to provide much needed access to finance for agricultural businesses
- HeavyFinance provides short-to-medium term financing of €6k-€300k to farmers who struggle to receive loans from traditional lenders. The company already facilitated more than €14 million in loans
- Sustainability is one of the main criteria in the company’s credit scoring algorithm, allowing farmers to get more favourable conditions for sustainable initiatives
- 65% of the loans are aimed to help farmers to shift to more sustainable farming practices. In the future the majority of loans will be issued to sustainability-related projects
HeavyFinance, a Lithuania-based agricultural loan marketplace, has closed a $1 million pre-seed funding round led by Black Pearls VC with co-investments from bValue and Startup Wise Guys. Several angel investors also participated, including Marius Krikštopaitis and Adrian Watson (Lendable). This round of fundraising will be used to scale the team to support faster expansion in existing markets as well as a move into Poland. The startup has facilitated more than €14 million in loans in Bulgaria, Latvia, Lithuania and Portugal, and has helped over 450 farmers – owning more than 45,000 hectares of land – move to more sustainable agricultural practices.
Agriculture is the biggest producer of greenhouse gas emissions after the energy sector, yet small and medium farmers in the EU often struggle with access to finance to automate processes and shift to more sustainable means of agriculture. Due to capital adequacy requirements and other factors affecting unit economics, traditional financial institutions are often unable to issue small business loans to farmers. According to the Fi-Compass report by the European Commission, the total market gap in the European Union is between €19.8 to €46.6 billion.
HeavyFinance is stepping into this market gap by providing short-to-medium term financing solutions for all farming needs, including equipment, land, and working capital loans. Set up as a loan marketplace, HeavyFinance facilitates transactions between investors and farmers. The startup’s financing solution solves a number of big problems modern farmers face - lack of fast financing options, inflexible bank repayment schedules and very low risk toleration. Moreover, HeavyFinance allows for the financing of used farming equipment and takes land or heavy machinery as collateral, something banks and other traditional players do not.
HeavyFinance also offers more favorable loan conditions to farmers transitioning to more sustainable agricultural practices, including the purchase of less polluting equipment, a move to soil sequestration and no-till farming projects. The company is bringing a sharper focus on sustainability to all of its future activities, with plans to help farmers generate carbon credits which can be sold. Currently, more than 65% of the loans are aimed to help farmers to shift to more sustainable farming practices.
Laimonas Noreika, CEO of HeavyFinance, said: “The agricultural sector is a key battleground for fighting climate change and the entire field is being rapidly reshaped by technology. A new generation of farmers is waiting on the sidelines, ready to transition to agricultural models that are kinder to nature. Unfortunately, up until now, access to finance has been a major barrier. There is an outstanding gap in financing for small and medium farms in Europe and a robust investor appetite for high-yield investment products. HeavyFinance is here to address both needs.”
The startup’s risk assessment model is tailored specifically to agricultural businesses, allowing it to more accurately evaluate risk compared to traditional lenders. This specialization and deep knowledge of the sector allows HeavyFinance to make the loans accessible, quick and easy to issue, and does not require any collateral for loans up to €10,000. All loans are administered fully online and include a tailored repayment schedule. The company aims to facilitate €500 million in agricultural loans by the end of 2024.
Wojciech Drewczynski from Black Pearls VC said: “We are very excited to be helping HeavyFinance on its journey to become the go-to-financing platform for European farmers. With an experienced team that has grown a number of successful startups, HeavyFinance is well placed to step in and solve an enormous pain point for farmers. The company’s robust platform, deep sector and market knowledge, and exceptional customer service form a strong basis for building a trusted household name in the farming community.”
“Farmers are a large group of diversified customers that face many challenges including green transformation and moving to more sustainable production methods. Still this group is heavily underserved by banks and financial service providers. We strongly believe that farmers like many other groups are moving online very fast and need seamless solutions that support their businesses, like HeavyFinance” – said Maciej Balsewicz from bValue VC.
About Heavy Finance
HeavyFinance is a fintech marketplace for agricultural loans. Founded in 2020, the company already facilitated more than €14 million in loans for small and medium farmers owning more than 45.000 hectares of arable land. These investments, made by both retail and institutional investors, help European farms to automate processes and shift to more sustainable means of agriculture. The company is regulated as a crowdfunding platform operator by the Central Bank of Lithuania and is fully prepared for an upcoming revision to EU regulations.
About Black Pearls VC
Black Pearls VC is an early-stage venture capital firm focused on supporting the leading tech companies from Northern & Central Europe. It invests from pre-seed to Series A with a typical ticket of anywhere between €100k - €1m. Black Pearls VC is a part of the Kauffman Fellows, a global network of +700 leading VCs.
About bValue VC
bValue VC is a leading early stage VC in Poland with €20m for investments. The company provides a platform of advisors and venture partners to identify and grow best tech teams to become European champions in digital space. Its investment ticket is between €200k - €1m per company and the primary region is CEE. bValue supports founders in: distribution, product validation, recruitment and capital.