Andre Glezer and Alan Glezer brought their take on fintech to support and fuel a massive market. Their startup, Agrolend, has attracted funding from top-tier investors like Lightrock, Barn Investimentos, Provence Capital, and Verde Asset.
In this episode, you will learn:
- Lending in the agricultural space
- How they’ve managed to secure great partnerships for customer acquisition
- Financial arbitrage in lending
- Andre Glezer’s top advice for starting a company of your own
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About Andre Glezer:
Andre Glezer has been working as a Co-Founder & Chief Executive Officer at Agrolend for 2 years. Agrolend is part of the Finance industry and is located in Brazil.
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Connect with Andre Glezer:
About Alan Glezer:
Alan Glezer is the co-founder at Agrolend, a fintech that brings bureaucracy-free credit to Brazilian farmers.
Connect with Alan Glezer:
Read the Full Transcription of the Interview:
Alejandro Cremades: All righty hello everyone and welcome to the dealmakerr show. So super excited today. We have 2 brothers 2 brothers co-founders. You know they’re really building a rocket ship there in barcell and we’re going to be learning a lot about agriculture blending in with banking you know again building scaling. Financing all of that good stuff that we like to hear so without furtherdo. Let’s welcome our guests today Andre and Alan Glisser welcome to the show. Thanks.
Alan Glezer: Thanks pleasure to be here.
Andre Glezer: Thanks pleasure for you. Thank you very much. Thank.
Alejandro Cremades: so so guys let’s do a little of a walkthrough memory lane here. So let’s say let’s give give give me a give me a sense of how was life growing up there in Brazil why don’t we start with you. Alan.
Alan Glezer: Yeah, sure. So basically I came from like an engineering background I was born here in sa Paulo. He started engineering at school mecharonics engineering and then I moved to the financial markets started my career working for a local hedge fund here in Sao Paulo then I was transferred to Singapore in Asia so I had a very good experience. Living in Singapore and cooverver in the markets in the southeast asia region basically invests in credit structures basically structured credits in Southeast asia then I moved back to Brazil back in 2011 I spent like a few years working on the south side here in Brazil covering meows and mining poop and paper. So basically a good experience working on the sell side covering commodities then I move again to the buy side I work for hedge funds here in Brazil to other hedge funds in a more startup kind of style of hedge funds and then we decided to start agro land a very unique model of creating a digital bank for the agribusiness sector in Brazil. Combining my knowledge and res knowledge and then knowledge knowledge of other like 5 3 cofounders to create a very unique model here for us.
Alejandro Cremades: And we’ll we’ll talk about that in in just a little bit. You know I’m wondering you know like for the 2 of you guys. You know how was how was life. You know like they’re being born and and raised in Sao Paulo I mean anyone in the family that was an entrepreneur or or how did they say. You know buck come about and maybe Andre why don’t why don’t you jump in here.
Alan Glezer: Ah, yeah.
Andre Glezer: Yeah, so like our our family they had businesses So Our our parents who were in the tickty of industry. My father started ah a riteo and the industry that used to Manufacture pants jeans. Basically so so he used to be an entrepreneur. Ah, more for lack of alternatives than for for for seeing an opportunity here. So but that’s it I think that’s that’s what we have as intern entrepreneurship in how in our family.
Alejandro Cremades: I mean that’s that’s pretty amazing. Alan you know as well. You know why don’t you jump in here and and tell us how was that experience of seeing you know, let’s say your dad you know, operating the business and going through the ups and downs of being an entrepreneur as well.
Alan Glezer: Yeah that’s a very good point because back in the old days here in Brazil we had like a lot of volatility in the country so we had like a massive inflation the politics like changing every day. So our father was an entrepreneur at that time where we had like a lot of volatility like this scenario changing every day. Kind of like block all the money in the bank accounts. So it was a very unique scenario so we saw like our father building a business and they’re like a very very volatile kind of environment so it was very unique to see and watch him like operate under those conditions. Very stressful conditions but he managed to still keep. Like a very nice space be like calm be with us in a very nice way. So it’s very unique for us to watch that kind of like construction of like a company over that time.
Alejandro Cremades: Now in your case Andre you know, very similar to Allen you know, also from the financial service base you know which is what what you ended up going after but you know in this case, you know more on the investment banking you know advisory as well as private equity. I guess from having you know that experience especially as an investment banker. You know seeing m and a transactions helping on capital racing efforts what were some of the patterns that you were able to see from companies that had what you know they needed what it took versus the ones that. Did it.
Andre Glezer: Ah, that’s that’s a very good question I think well one of the most important part of having um, a good business is ah is a team of founders a team of leaders with with complementary skills so in order to build a company, a durable company with sustainable competitive advantage. And nice Margins. You have to be able to perform in several different areas. So I think one of the most important aspects that we saw in companies in investment banking and why I was an investor at a private equity was the profile of the founders. The profile of the leading Team. And if they were complementary if they were multidisciplinary I think that’s that’s one of the most important aspects that I saw while in my previous previous career.
Alejandro Cremades: Now after you know all that investment banking that private equity experience all of a sudden you know things come together and agro len comes to life. So what was that process like Alan you know, like walk us through what was. Who called who who came up with the a the and what was that journey of getting the 5 co-founders to jump in.
Alan Glezer: Yeah, Andrea was the first one that saw the opportunity he used to work for like a private equity firm here in Brazil focusing the agribusiness sector. So basically there was a thesis of consolidation of retailers in the agi input space here in Brazil. But the real problem was not the consolidation and a unique brand behind the retailers was actually the lack of a proper bank focusing that kind of niche so we decided to put together our knowledges here Andre with a very strong knowledge in the aribes sector and the m and a spectrum here in Brazil. Myself good knowledge on the credit space and also analyzing commodities. Then we had Valeria very strong knowledge from like a compliance illegal background. She’s actually a lawyer then we had little pauldo vettter tech guy. Very good knowledge of developing tech inside the regulated entity by the brazilian central bank. And then we brought Carlos the Agribus guy he he was doing credit in the sector for a long time. So that’s how he managed to put together this amazing team of cofounders to tackle this massive problem. We are talking about 30% of the brazilian gdp in the agribusiness sector brazil is a global leader. The production exports and the cost. So. It’s a very important sector that was lacking a proper digital bank to address its needs but the idea originally came from Andrea that was investing in the sector and had a brilliant eye to spot this very unique opportunity for us.
Alejandro Cremades: So what was that the moment the Andrea like when you spot this opportunity and you are like my god I gotta make those 4 phone calls to get those people to join me.
Andre Glezer: Yeah, it was basically when I was at the fund like we were trying to invest in the agricultural space in Brazil and the idea was never to invest in farms. But to invest in in the supply chain or and the value chain of the farms because that was growing quite fast. And there were spaces where it could reach much higher returns than than farming businesses. But when we look to the supply chain all the companies like the industries that used to manufacture chemicals seeds fertilizers and also their distribution channels. The retailers. That sold to the millions of farmers in Brazil all those companies that we wanted to invest. They had the same problem and and even though they were very nice growing businesses. All of them. They had to finance their end clients. So like there were industries and retailers carrying 1 year payment receivables terms. Ah, because they were financing the crops for the farmers and and that that was cost because there was lack of a bank. So as farmers did it have a bank to provide credit for them. Ah, the responsibility for doing that it was passed to the supply chain industries to the retailers and the suppliers. Of agricultural inputs to the farmers and that was a very bad problem because when you look to those companies even though they were growing. They were notgerating cash the free cash flow was very low because all the money was being sucked up into their receivables into working capital.
Andre Glezer: And and it was a problem for the fund. We decided to not invest in any of those companies given given this whole situation and as as I kept seeing this happen again and again and again in all the companies in the segment we had the idea even still by the fund. So if that’s the problem we should invest in a bank. You know our agricultural bank. So let’s start searching for a bank in the brazilian segment ah who so solving are trying to tackle this problem and there was basically no one so it was impossible to find any company any financial institution trying to solve this specific problem. And and then we had idea I think we started discussing. We saw that this a big big problem. The problem was going to grow. So as Brazil Agricultural industry grows this specific problem was growing even more. So so the Henry had idea to let’s jump stop everything that we’re doing. And then start a company to solve this very specific problem. But.
Alejandro Cremades: And and and you were alluding to it. You know the fact that you guys are five co-founders I mean 5 co-founders is quite the number. So I guess say allen how do you guys go about managing egos so that you guys you are able to really work you know and in parallel and do things effectively.
Alan Glezer: I guess each of us has like a very unique skills and very unique knowledge about a specific part of the business as we are building like a digital bank for the agribusiness sector. We need like a knowledge from like a tech perspective. We need a knowledge from the agribusiness perspective. We need our knowledge from like a compliance legal perspective and with knowledge from like financial markets. So let’s say we balance ourselves very properly to avoid. Let’s say going into another another founder area of knowledge as we know that the other founder has a better knowledge for instance Valeria has a great knowledge about compliance. And the legal aspect of the business. So we we respect very much her knowledge about that area and we don’t interfere with her opinion on that side. So that’s how we balance the ego so we are splitting ourselves in order to create the first ever digital bank in the sector here in Brazil and you need this mix. But you are correct like no, you have to you need some kind of like no conflict to disrupt a market. So this mix of very multidisciplinary kind of like backgrounds creates some kind of like conflicts but they help us to create like a disruption for this market but this is. This is how it’s working for us and.
Alejandro Cremades: So Andre why don’t you jump in here for the people that are listening to really get it. What ended up being the business model of agro len. How do you guys make money.
Andre Glezer: Oh perfect. So we work like exactly like a bank. So. Our business model is we land to farmers to small and medium-sized farmers at our rate close to 23% per year. So that’s that’s how we make money we’re providing loans to these farmers charging 23% per year interest rates. We don’t go direct to farmers. So we have a distribution channel we have a network ofric agricultureal inputs retailers who are on a day-to-day basis selling seeds fertilizers chemicals to these farmers. And these companies they bring the clients to us so when a farmer goes the store to buy any any of those products. The store is going to push the farmer introduce the farmer to aggreland engage the farmer to get a loan and with us if the farmer wants and is approved by our credit model. Ah, his signs are a law on agreement. Everything gets giile everything runs through his mobile through the whatsapp after the loan signed we send the money not to the farmer. We send the money to the retailer. The retailer gives the farmer the product and the farmer is going to pay us back pay the loan back. Post harvestvest. So the average duration of the loans is close to eight nine ten months that enormous harvest time that that we finance so so this is half of the business. This is the asset side of the business then you have the liability side of the business. The other half. So how do we get money cheap money.
Andre Glezer: Back these loans so we land at 23 we do the finding at close to 13 % per year. That’s the basic the current basic interest rate risk-free rate in Brazil so we are a financial restit institution. We are regulated by the brazilian central bank. And we have a license that allow us to raise time deposits like Cds and these cds this time deposits they are guaranteed by the local fdic so we have ah our organization called Efficiac in Brazil and they guarantee deposit it’s time deposits. Up to two hundred and fifty Thousand Hai so like something close to $50000 so we issued this time deposits as they are guaranteed. We decreased a lot of our cost of funding and on top of that as we are financing farmers. We have a specific type of type deposit called. Elilysia lca and this time deposit. It’s also tax-free for the investor he doesn’t have to pay income tax on the income on this time deposit so we are able to decrease materially our cost of funding and again we like a lot the b two b two c model so we don’t have distribution to retain investors that’s not our model what we do is we raise what we call broker deposits so we sell deposits to like platforms investment platforms something equivalent to Charles Schwab Td in the Us.
Andre Glezer: We sell the deposit to these massive companies who have millions of clients in Brazil and they resell the time deposits to their client base their retail client base. So with that we can raise money close to thirteen thirteen and a half percent interest rate per year we land at 23 and we have this 10% net interest margin after that we pay for non-performing loans. We have losses as any credit business we pay for our whole company and and we expect to end a year around five six percent as a total net return over our asset. Asset base. So this is the model raise cheap capital land at a higher interest rates and and cover our npo and operating expenses and that’s that’s how we run the business.
Alejandro Cremades: Now you guys are trailblazers here because as you were saying you know like you guys are merging the banking side of the but the banking side with the agriculture side but you were the first ones to do this so you know obviously part of. The challenge too is not only educating yourself but being able to educate you know future employees being able to educate you know investors you know and and anyone else. So how did you guys go about doing that Alan yeah.
Alan Glezer: So yeah, something that is very important for us is the diversification of the portfolio. So everyone that is joining the company understands that we have to diversify our portfolio of loans. So for instance, we have more than 1000 farmers a single farmer. Doesn’t represent more than point five percent of our portfolio we have more than 100 active retailers helping us to originate loans. The biggest one is like around 8% of the portfolio we have presence in like 15 states a single state. Not representing more than 20% of our exposure and we have some large exposure to soybean crops here in Brazil but still like around 60% and this is manageable so for us managing risks is very important for our culture. And we try to tell everyone that is joining the company that diversification is the most important mitigation of the risk so that’s how we work here and we try to teach everyone that risk is the most important important metric for a bank and it must be well managed.
Alejandro Cremades: So Andre what was the journey of racing money because you guys have done several rounds. How much capital have you guys raised too late and how has it been the experience. Okay.
Andre Glezer: So we are ah we are a young company so we are two years and a half old so we have raised up to today 3 rounds a seed round a seriesion a series b and we have raised close to $43,000,000 so our seed round was one and a half million dollars one one one point six million dollars and it was more like a feine friends around so we brought in close to 30 investors including 4 institutional investors but it was a small investment for for all of them so it was a complex round giving the number of investors. But we’re able to bring a lot of people who we care who we liked and who helped us to to start a company from scratch. So so that was really in the early days so two months after we founded the company raised that round then we raised a series a round of $14000000 have our leading venture capital company in Brazil who is actually based in the us called valor capital and and then in in late last year we raised a series b of twenty seven million dollars which was led by lightrock a very large growth equity fund. Corn invest in profitable and already proven companies and and also we invited a lot of corporate venture capital firms to invest in that round as well. So now we have a very poverized capital base with well-known investors who help us a lot.
Andre Glezer: So so that’s that’s the history up-to-date. We continue to raise capital so we like to think that we are in a capitalto-intensive business model if we even though we are profitable. We need a lot of capital to grow the business that that we are running and and we like we like to say always that all all the time that we have raised money. Always like to tell a whole history to the investors. So after that we finished raising the series b round we have already started to raise the series c so now we have our list of close to 56 investors who we think would lead our series c round we expect to raise a series c round by the end of the year and we already we are already telling the investors. The history of the company and what we’re going to do in the next few months the next next six seven months before we go after them to really raise that that wrong raise that capital. So so that’s it. That’s that’s that’s how we have done up-to-date.
Alejandro Cremades: And typically I mean a company would raise around every 18 to twenty four months I mean here it sounds like you guys are like going very fast. So when it comes to running an effective fundraising process. What have you guys learned alan.
Alan Glezer: It’s important to tell the investors about the movie. So if they only see like 1 picture. They don’t get it So we tell them we’re at point a we want to go to point B Then we get to point B from Point B to point C they must understand that we Deliver. We tell them what are the plans we deliver the plans. This is very important and in addition to that being like a profitable company. Very unique unit economics clear path to profitability and the combination of clear Playf to profitability and the fact that we are. We’ve been Delivery. We tell them you go from point a to point B we go to point B There’s no change of Plans. So I think those are important factors that have like help us to bring the confidence of the investors and raise their rounds.
Alejandro Cremades: And also you have about 50 investors. So I mean that’s a lot of investors. So how do you go about managing them in a way in which integrity is present in which trust is present as well. So that they can continue to support the companies. You guys continue to execute Andre.
Andre Glezer: I think people the the investors that we have they trust a lot about us and basically because we we are always doing what we say that we’re going to do so people have built out of trust in how we execute about the company. We have a board of investors. So which were the largest investors participate. Maybe the 5 largest institutional investor that we have join our mindfully bored meetings where we provide a more structured update about the company and how the business is performing and we also provide to the whole 15 investors. Ah, ah month the monthfully but a quarterly in may update and we also do an annual investors meeting with all the investors that want to join and we send an annual letter with much more details about the company. So so that’s that’s how we do I think we we try to update to everyone. On on, not ah or either on a monthly basis on a quarterly basis with how the business is progressing and people are very comfortable with that with this model.
Alejandro Cremades: So imagine in a world where you were to go to sleep tonight and you wake up and in that world. You know the vision of agraland is fully realized what does that world look like Alan.
Alan Glezer: I believe that the aro business sector in Brazil is massive as I mentioned like know one third of the brazilian gdp we estimate that the market size today in terms of like outstanding loans in the sector we arere talking about $100000000000 or like 500000000000 billion reis if we had like a market share of like five ten percent of these amounts. So let’s say between let’s say 50000000000 Reis of loans in the sector with like a very profitable model I think this is a great vision. So we’ve built like the one and only digital bank in the Agribu sector. Like a massive portfolio market share between 5 to 10 percent of the market and very profitable and we’re running a very slim model very slim team profitable relevant market share and running in a way that is like smooth always counting on our partners. B two b to c model both ways. Big business very profitable. So for us profitability is the key here and it’s our dream to be profitable and big. So that’s the combination that we have here as like our vision for the future. So.
Alejandro Cremades: Andrea would you like to expand on that.
Andre Glezer: I think on top of that like our whole vision is now we do credit and we have 1 specific credit product I think when we look many years into the future. We want to become a more complete ah bank offering much more financial solutions to our clients. So on top of credit. We plan to offer credit cards checking accounts insurance products. So basically farmers can buy insuranceers to crop risks and and other kind of risks hedging solutions to our clients to protect again against the downturns in soybean prices. Exchange rates so we see ourselves now we do credit to farmers in the future. We want to have a massive client base maybe 50000 clients and offering a whole complete set of innovative financial solutions on top of our tech platform. Which basically help us to serve a massive amount of clients in a very easy and simple way with a low-cost structure that makes us very profitable. So so that’s our long-term vision really building a digital bank to farmers in Brazil. As they and and now we go to their vision like to how we see the angrybus industry in Brazil as they grow as our clients grow they want to be there alongside our clients as they continue to grow continue to invest and Brazil continue to dominate.
Andre Glezer: The worldwide agricultural industry.
Alejandro Cremades: And you know obviously building a company is not is not easy. Ah, you know obviously in this case, you have additional uncertainty that you’re dealing with I mean not only the fact that you guys are building a hypergroiled business but then also the fact that you’re building this in Brazil. And also you’re dealing with the regulatory you know hurdles as well of of of building a digital bank. So so how do you guys? you know, think you know in this case about reducing the risk on the path that you have in front of you Allen why don’t you jump jump in on this one.
Alan Glezer: And I think that we are building the risk with a very conservative Pace. So It’s not like an exponential Growth. We go alling and we kind of like lend all the money that we can. We are ah triing the growth in order to be conservative And. We have a chance of learning on the Way. So Basically we are going in a pace that is comfortable to us and we can adjust the path along the way so this has been very important so far so we are not going the maximum risk that we can and we’re going to be more conservative in terms of leveraging. Our financial institution because we understand that as you mentioned there are many uncertainties There could be like regulatory uncertainties weather climate kind of uncertainties price of commodities uncertainties so we have like many different kind of like sources of Volatility. So for us, it’s better to keep a pace. Is not the max pace that we can support but it’s a pace that we can adjust the path along the Way. Ah me make sure that we don’t make mistakes that are not revertible here. So That’s the strategy for managing the pace and the risk of our model.
Alejandro Cremades: Now imagine you had the opportunity. Let’s say I put you into a time machine and I bring you back in time I bring you back in time to that moment that you know maybe you guys were thinking about doing something. And let’s say you know I have the opportunity of of of giving you that chance of of sitting the 2 of you with your other cofounders or just maybe just the 2 of you because maybe you you didn’t you know, know your cofounders yet and let’s say one of you has the opportunity. Or the 2 of you have the opportunity of giving that younger self one piece of advice before launching a business. What would that be and why given what you know now Andre.
Andre Glezer: And that’s a very good question I think there’s just 1 thing that I would change if I could go back in time I think when we so ah I would started earlier I think we had the idea we we have seen the situation. The problem. We had see how we’d structure the company and then we started I think it took us close to six months to really start the company. We tried some things to to work part-time and not full-time developing the company we try to maybe decrease the risk. Of starting a business and and then we learned that that was impossible and if we wanted to do the business we would have to go full time and really take the risk and build a business. So maybe we lost six months seven months in this in this Ah bad start. And then when we fully started the business. The business really worked and then we started growing the business. So if I could change one thing I think I would have built a business the same way that we did I would just have started six months earlier and not lost. This initial initial time.
Alejandro Cremades: And Allan what you but would you tell your younger self.
Alan Glezer: So I agree with Andrea of course like no, that’s a very good point. But my point would be about people make sure you bring like great people that can challenge you that are smarter than you that will go like no to the limit and make sure that they challenge you to the limit. So building. A company is also about building a great team that can you know address the problems the best way possible. So bringing great people would be my advice to my younger self I think that we’ve been following this but I I cannot like no forget to mention this because this is very important. And I think it’s like a key for the success here was to bring a great group of people with like very complementary and different kind of like no multisciplinary backgrounds that combined created a very disruptive model for us. So it’s about people and.
Alejandro Cremades: So for the talking about people for the people that are listening that would like to reach out and say hi. What is the best way for them to do so Andre.
Andre Glezer: You mean to to talk to us the right now.
Alejandro Cremades: That’s right if they would like to if they’re like listening right now they’re like my god you know these brothers they’re amazing. You know how can I get it. How can I get ahold of them. You know like what is the best way for them to reach out and say hello to you Andre.
Andre Glezer: So I think the best channel that we use to communicate with clients and and the whole network is using Linkedin I think we we we do a lot of marketing on Linkedin and like we built a lot of content. To to talk to people to engage our audience our clients our investors and and and everyone in Brazil especially but that’s the best channel to talk to us I think we’re always there talking to to the whole community.
Alejandro Cremades: Wonderful, well easy enough. Well Andre and Alan thank you so much for being on the deal maker show today. It has been an honor to have you with us.
Andre Glezer: Pleasure Our thanks all over. But thanks, Thanks! Very much for inviting us I think it was great. One of the best shows that yeah that we have ever ah participate participate in. Thanks.
Alan Glezer: So pleasure on our side as well. Great. Thanks a lot Aleandra it was a pleasure.
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