FarmDrive, a startup firm which helps farmers gain access to cheap credit, has received an undisclosed capital injection from Safaricom’s Spark Fund.
The investment in the form of convertible notes may see Safaricom gain shareholding in FarmDrive in the future.
Safaricom established the Sh103.6 million ($1 million) private equity fund in 2013 to support early-stage technology start-ups.
FarmDrive uses mobile phone technology to assign credit scores to smallholder farmers. It also links up the farmers to potential lenders through its application.
The three year-old start-up says it will use the funds to improve its credit scoring tools and to enroll more farmers.
“That money and the additional capital that we’ve raised is really going into further product development. We need much more data for us to build a scalable model with very high predictive power,” said FarmDrive co-founder Rita Kimani.
The firm has 3,000 farmers from 16 counties using the technology and has a partnership with microfinance institution Musoni.
The investment in FarmDrive has brought Safaricom closer to depleting the Spark Fund. Last year, the telco said it had spent $800,000 (Sh82.4 million) on four startups. The firm says it will sign an agreement with the sixth and final recipient of the Spark Fund capital within the next two months.
Sendy, a package delivery firm, was the first company to receive Spark Fund money in 2015. In the two years since, Safaricom has invested in Eneza, a mobile phone based education tool; Lynk, a job finding application; and mSurvey, a mobile research platform.
Safaricom says it is yet to decide on the size of the second phase of the Spark Fund although it has indicated that it will probably set aside more money for start-ups.