Editor’s Note: Solinftec is an AgFunder portfolio company. We invested in an extension of its TPG-led Series A round in 2017 as one of our first investments, beginning if our global portfolio.
Brazilian digital agtech company Solinftec has raised $60 million in funding at Series B stage to become the biggest agtech deal on record for the Latin American region. The deal surpasses the recently-closed $23 million Series B for Argentinian agribusiness marketplace Agrofy.
The deal was split into a $40 million equity tranche, led by Unbox Capital, the $100 million investment arm of the Trajano family, owners of Magazine Luiza, the online retail juggernaut for Latin America, and $20 million in agri asset-backed debt, led by Itaú BBA and Gaia Securitizations and backed by family offices and hedge funds.
Existing investor TPG Art, which invested alongside AgFunder at Series A stage, also invested in the round.
Unbox Capital will be an active investor and has already opened the doors to Magazine Luiza executives, including meetings with the company’s chairwoman of the board Luiza Helena Trajano, the CEO of the whole group, and the chief technology officer of one of its leading brands Magalou. Magazine Luiza, which has a market capitalization of R$92 billion ($21.7 billion), was founded over 60 years ago as a bricks and mortar retail business and from the 1990s became a digital business, creating virtual stores and an online marketplace across its brands.
“We chose Unbox Capital over other funds because of their huge knowledge of digital transformation and disruption, which they can share with us,” Rodrigo lafelices dos Santos, Solinftec’s CEO, told AFN.
The funding will focus on the next round of technological development at Solinftec, headed up by cofounder of the business Britaldo Hernandez, who last year transitioned from CEO to CTO. It will also further grow the team, that’s now 500-strong globally, to serve new crops around the US and elsewhere, including opening an office in China.
Solinftec offers a suite of software-as-a-service products, including an AI platform called ALICE, to help farmers optimize their operations to reduce costs and their environmental impact. By helping farmers decide when to spray pesticides, or when to put certain machinery on the field, Solinftec has helped reduce fuel consumption by 25%, crop protection such as pesticides by 15% and has helped increase machinery efficiency by 50% — for one of its biggest clients Cosan, the major Brazilian sugarcane producer, Solinftec helped cut the number of harvesters in use to 220 from 250.
“It’s the operating system for the farmer and we do not see many competitors in the US trying to optimize day-to-day operations in real-time to the same extent,” said Roel Collier from Circularis Partners, the advisor to the TPG ART fund and board member of Solinftec. “Solinftec’s algorithms tell the farmer what he should do when, on a particular day under certain circumstances, so he can make better and more sustainable operational decisions such as around spraying or the logistics of planting & harvesting, taking into account other data such as climate variabilities like humidity and wind, labor, input & machinery availability, specific to the needs of different crops.”
Solinftec is now working on over 20 million acres worldwide across 11 countries and eight crops after starting with sugarcane — it launched in the US last year– with a network of 120,000 users interacting through tablets, computers, cell phones, and over 35,000 pieces of agricultural machinery. In the last four years, the company has grown by over ten times and today counts with 500 employees, of which 200 are focused on technology and product development.
“One of the first things we do when evaluating an investment is put the entrepreneur in front of Luiza Helena, the chairwoman of Magazine Luiza and see how they get on; there was immediate chemistry between her and Britaldo,” Patricia Moraes, a partner at Unbox Capital, told AFN. “It was a great meeting and they were talking entrepreneur to entrepreneur.”
Unbox was attracted by Solinftec’s clear impact on the client, she added. “If you look at some web pages, you see lots of solutions being proposed but very few are actually working; companies say they can do a lot of things but when you get down to it they are really not delivering much.”
To ensure Solinftec was having the impact they claimed, Unbox called their clients, some of which were recommended by Solinftec and some that were not, to ensure they received unbiased opinions. “All the clients knew the quality of the technology was excellent and said that Solinftec created value for them. They also have zero client churn which is not easy to achieve,” she added.
Unbox focuses across industries and the team, which has connections with agriculture including coming from farming families and working in the industry previously, were already familiar with Solinftec. But it’s unlikely the firm will make another agtech investment, focusing on Solinftec for the foreseeable future, according to Moraes, adding that Unbox is a value-add investor.
“This is a strategic partnership and we’ve already kicked off with an in-depth strategy meeting with the CEO of Magazine Luiza. He’s not involved in our investment company but of course a great sounding board to discuss digital strategy. And we also had the opportunity already to bring in the CTO of Magalou to discuss growth pains, how to organize tech teams better and other operational advice,” she said.