Pula tweaks model to capture 9.4m farmers


At the height of his career, just as his employer was about to pull out a seat for him at the big boys table, Thomas Njeru made a drastic decision.

Instead of snapping up the opportunity he had been working so hard for, he quit his well-paying job to enter the murky world of entrepreneurship.

The 37-year-old actuary by training says quitting employment was one of the toughest decisions he has made.

“I had built my reputation, competency and skills, networks in the corporate world,” says the co-founder and CEO of Pula, an insurtech firm that specialises in digital and agricultural insurance.

His journey in agriculture insurance began while working as the Chief Actuary at UAP, now Old Mutual, where he spotted a gap in the insurance sector.

The problem

“I characterise the low uptake of agriculture insurance as two-sided – demand and supply,” surmises Mr Njeru.

On the supply side, he explains,  the reason the insurance industry doesn't have solutions that work well for smallholder farmers is because the unit economics of insurance is different from insuring smallholder farmers.

“The traditional insurance indemnity-based product requires a physical visit, valuation and loss assessment and if you approach it in that manner for a farmer with a little premium of between $10 -15, it cannot work, so you have to leverage on technology and that’s where Pula comes in.”

He is quick to point out that Pula is not an insurance company but a technology service provider offering distribution mechanisms to bridge the gap and enable the traditional insurance companies to reach smallholder farmers.

Fear of failure and initial misses

According to the semi-finalist in Africa’s Business Heroes, a pan-African entrepreneurs competition, failure is part of entrepreneurship but it is a process and you have to fail several times before you get there adding that everything is a hypothesis, test it first to see if it works.

“At the beginning, we first worked on our flagship product (Area Yield Index) but after launching the product, the question was then how to get it to as many farmers as possible,” recalls Mr Njeru.

He says that they made the mistake of trying to sell it directly to farmers and quickly learned that that approach cannot work because just like everyone else, farmers are optimistic buyers - hoping for the best but do not prepare for the worst.

“All farmers believe every season will be good but the truth is that there will always be a bad season due to floods or drought and when you try to sell it that way, you cannot go far.”

They had to change the model to embedded insurance.

“When a farmer goes for credit, input support programme or contract farming, insurance is included and they consume insurance as part of that package and that’s now our go-to-market model because people think of insurance when it is too late,” he clarifies.

Funding and growth

He says that starting the business as a side hustle while working at Deloitte at times on a pro bono basis helped them secure $1.8 million (Sh263.4 million at current exchange rate) seed funding from venture capitalists in the US and Europe.

“We had to think through our financial plan, business model and ‘founders’ problem feat’ and my professional background worked because you have to convince investors that you are best suited to solve a particular problem.”

He explains that from the onset, the plan was to onboard as many partners as possible and presently, they have partnered with 78 insurance companies in 17 countries, 24 Re-Insurance companies where they have digitised their model on a platform called Pula Insurance Engine.

“Through our embedded model, we have about 200 partners including financial institutions, governments and off-takers spread in 18 countries across Africa, Asia, and Latin America serving 9.4 million farmers with 120 full-time and 1,500 fields seasonal staff,” Mr Njeru reveals.

Read: BIKO INTERVIEW: At the height of my career, I chose a side hustle

He sees Pula’s growth doubling every year because the opportunity is huge and with technology, they are able to build their capability to service double the number of customers they served in the previous year. Their goal is to get to reach 100 million farmers in the next five years.

“We are aiming $100 million (Sh1.46 billion) in revenue and $500 million (Sh73.1 billion) in insurance payments and becoming one of the largest agriculture insurance companies in the world, if not the largest,” he adds.

Tapping experienced hands

In September 2022, Pula appointed former Safaricom CEO, Michael Joseph, as its board chairman to strengthen its corporate governance structure.


Thomas Njeru, CEO and Co-Founder, Pula on August 15, 2023, in his office at ABC Place in Nairobi. PHOTO | BILLY OGADA | NMG

“We stand on the shoulders of giants and have mentors who have showed us the way because every problem you are facing today, there is someone who has faced it,” he adds.

Mr Joseph has been a mentor to the business and Mr Njeru says he constantly says that "if you want to be a $100 million business, you have to start behaving like one and if you want to be a multinational, then you have to behave like one and one characteristic of great businesses is great corporate governance and skilled people with expertise".

“We are preparing ourselves for the future. A business that will withstand the test of time so we have to bring in people who understand what it means to run a big technology company.

He is our coach to help us navigate the different challenges we will go through.”

“Building a business in Africa is like an extreme sport so you have to bring on board people who have done that. You don’t have to reinvent the wheel. People who will challenge you, force you to think 10, 20 steps ahead,” he affirms.

Lessons learned building Pula

Mr Njeru's biggest lesson is to build a great organisation, run it on merit and lead by example.

“I learned the hard way that if you start showing favouritism, the rot starts from there. Promotion and hiring have to be performance-driven and merit-based.”

He adds that as a business person, you have to constantly remember that your reputation is everything and that whatever you promise customers, keep that promise because it is a small world and people talk.

“Defend your reputation at all costs and avoid shortcuts.”

Choosing the right partner and talents

Mr Njeru's biggest challenge has been bringing the right talent on board. He says you can hire people with lots of hope but get disappointed because they can’t deliver.

“We are creating a completely new thing and the talent we are looking for is different. We cannot poach from elsewhere.”

Having tried his hand in other businesses which failed because of the wrong partners, Mr Njeru attributes his success at Pula to his current business partner.

“Picking her was the best business decision I ever made because we complete each other  – she has the passion, resilience, persistence, is hardworking and takes responsibility,” he says of his partner Rose Goslinga.

Just like marriage, Mr Njeru says that selecting the right business partner is the most important business decision one can make and that you need a partner who understands the challenges of entrepreneurship.

“Entrepreneurship is not for everyone and you must be willing to make sacrifices. Fail and pick up. You may have a business plan but something happens that completely throws off that business plan,” he advises.

“In one of the partnerships, we kept arguing about the business plan because things weren’t according to the business plan so one having the ability to adapt as you go matters.”

Read: Insurance startup Pula to pay Coast farmers Sh85.1m for losses

He adds that a business plan is as good as outdated as soon as you put it together and stresses that a war has never been won according to plan neither has it been won without a plan.

He emphasises that as an entrepreneur, you will not always have good times, so be prepared for tough moments and be careful about your costs, revenues, competition and business model.

“Capitalism is rough with cutthroat competition and you have to constantly think of your next move, how you protect what you are building and build a solution that is sustainable,” he adds.

He says all these lessons are based on his previous businesses and seeing what works and what doesn’t and they have helped him to get where he is today.

Investments and cash flow management

Mr Njeru says that there are certain investments they have to make in the next couple of years to achieve their growth ambitions and they are in the process of going through their Series D fundraising to finance their growth plans.

“To raise funds, focus on building a sustainable business impacting the community, that is profitable and generating cash. Money looks for opportunity so be open to speak to people but be careful on the type of investors you bring on board because not all money is the same,” he advises.

“Some people are not honest so focus on growing your business and make sure it can run with or without investors because some of them are coming to be over and above what you can do.”

He adds that as an entrepreneur, don’t be desperate to onboard investors because quite often, they don’t give money to those who need it.

On cash flow management, he concludes by saying that as an entrepreneur, the rule is not to run out of cash and always anticipate the worst-case scenarios if it happens.

“What you do, consistently prepare yourself. We’ve gone through our tough times.

Anticipate and be ready to make difficult decisions well in advance before you get to the hole,” he concludes.

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