Empowering small-scale food producers with fintech

With support from Taiwan, startup HeavyFinance is changing Europe’s agricultural landscape

Intuitively, industrial agriculture on a large scale may seem like the easiest solution to feed the world’s growing population, but this will be somewhat short-term. Smallholder farmers not only produce around a third of the world’s food, but they also play an important role in supporting rural economies and are crucial to the preservation of ecosystems, which will make all the difference in the years to come.

Unfortunately, however, small farmers are struggling, not least when it comes to access to finance.

Lithuanian fintech startup HeavyFinance is on a mission to accelerate financing for small and medium agricultural businesses by connecting farms with the global investor community.

The European Bank for Reconstruction and Development (EBRD) has supported the company through the TaiwanBusiness ‒ EBRD Technical Cooperation Fund.

Put your money where your mouth is…literally!

Running a farm of any size is an expensive endeavor. A lot of upfront expenses are required to keep the business going, all in the hope and expectation that future sales will cover the high costs.

With affordable loans, farmers can more easily upgrade their machinery and buy cutting-edge technology, such as smart sensors, dramatically increasing the efficiency of their farms.

“Smallholder farmers are key to tackling the food security issues facing the world, but they also increasingly face obstacles to profitability,” says Laimonas Noreika CEO and co-founder of HeavyFinance. “Although the transition to new agricultural technology is helping to increase crop productivity, smallholders do not always have access to an affordable source of credit to take the plunge. And let’s not forget that they also need to invest in education to learn how to best use these new technologies.”

The startup, which launched in 2020, created a fintech marketplace where farmers can meet investors to get funding to meet their exact needs, whether it’s seeds, equipment, arable land or the means to pay employees.

“What sets us apart from other financial institutions is that we stay very close to what we sell. Some of us are farmers ourselves, so we speak the same language, says Laimonas.

The business of carbon farming

Soil is the most valuable resource for farmers. Similarly, agriculture is one of the most critical global drivers of climate change. HeavyFinance believes that we can transition to better, more resilient soils while reducing biodiversity loss and mitigating climate change. The question is how.

But how?

“The idea of ​​modern agriculture started in the 1940s, but many farmers still haven’t switched to this climate-friendly way of managing soil,” says Laimonas. “No-till farming – also known as ‘shaving’ the soil instead of plowing – is one of the most viable options for increasing carbon sequestration while producing food.

The way it works is simple: When farmers don’t plow, carbon is sequestered in the soil, which helps provide other crops with the nutrients they need. At the same time, the carbon is not released into the atmosphere, which prevents the emission of approx. 2 tonnes of CO₂ per hectare each year. The company is on a mission to remove and store 500,000 tonnes of CO₂ in agricultural land by the end of 2037. This corresponds to capturing CO₂ emitted by an average gasoline-powered passenger car driving 1.2 billion kilometers, or traveling to the moon and back more than 1,550 times!

By switching to no-till farming or other sustainable land management practices, agricultural entrepreneurs will also reduce fuel consumption and fertilizer costs.

“This practice is quite profitable, but it takes time,” explains Laimonas. “Due to the use of fertiliser, the soil has ‘forgotten’ how to eat, so it takes some time, which can be expensive in the short term. This can be quite daunting for farmers, but when they have access to good, secure financing, they feel much more inclined to switch to carbon farming.”

“We encourage farmers to transition to no-till farming and other sustainable land management practices by providing zero-interest loans,” says Laimonas. “We also send our team members to take soil samples to generate carbon credits that are later sold on the international market, providing an additional source of income for farms.”

This type of sustainable agriculture is slowly growing all over Europe. In Lithuania, around 10 percent of farmers have implemented it. HeavyFinance is committed to converting the other 90 percent.

“Access to finance for small providers can change everything. There are many terrible crises happening now in the world, but climate change is the biggest battle we have to fight. We cannot be distracted, says Laimonas.

Company of the year

HeavyFinance was selected for Wise Guys’ Fintech intensive five-month acceleration program at the end of 2020. The program ran in cooperation with the EBRD through the TaiwanBusiness – EBRD Technical Cooperation Fund and was managed by the growth accelerator Startup Wise Guys.

HeavyFinance’s participation in the program helped to structure the company in a way that was financeable. That allowed it to raise as much as 60 percent of the funding it needed and receive guidance from top industry experts.

The startup now has a community of more than 5,000 investors and has already helped close to 1,000 farmers, with an average loan size of around €31,000. It provides 27 million euros in loans to small and medium-sized farms in two years.

HeavyFinance was also named company of the year in the Lithuanian Fintech Awards 2022, recognizing it as one of the most promising firms in the fintech space.

“It was unexpected,” says Laimonas. “Lithuania has many great fintech companies that make financial services easier and more accessible to consumers, so the jury made a bold decision to highlight the importance of agricultural finance in supporting rural economies and tackling climate change. Being named fintech company of the year in a of the global fintech hubs… that’s huge!”