The Brazilian economic, financial, and business newspaper “Valor Econômico” published an article about Rivool Finance, highlighting the developed Proof of Concept for a better understanding of the business model, and featuring prominent comments from the founders and major partners.

“The idea is to connect the unmet demand for financing from Brazilian agriculture with the international investor’s search for higher yields in fixed income.

Aware of the unmet demand for credit for Brazilian rural producers, the partners at Rivool Finance decided to create an instrument to facilitate foreign investors’ access to this market. To achieve this, the startup will use blockchain technology to tokenize financial products in Switzerland — under that country’s crypto regulation — such as Certificados de Recebíveis do Agronegócio (CRAs) — (Agribusiness Receivables Certificates), Cédula de Produto Rural (CPRs) — (Rural Product Notes), and other types of debt. The project’s first proof of concept takes place in March, with an expected fundraising of R$ 20 million to R$ 40 million in capital from the partners themselves and friends (family & friends).

Tiago Piassum, CEO of Rivool Finance, states that foreign investors see value in Brazilian agribusiness, but currently, they can only access the sector through investments in publicly traded companies, which are extremely rare in the agro world. At the same time, producers need capital for expansion and investment but are almost exclusively served by credit cooperatives. “The middle market, which represents the majority of the credit market, doesn’t get there [to the financial market]”, he assesses. The partners estimate that the demand for rural credit from medium-sized producers reaches $10 billion.

To bring the two sides together, the startup has created a platform which consolidates agribusiness credit products structured by securitization companies and plans to package them into funds that will later be tokenized and distributed in Switzerland. The expectation is that the final product will pay around 12% per year in dollars, a higher return than that commonly found in fixed income securities from developed countries. United States treasury bonds maturing in 10 years, for example, pay 4.3% per year, while German bonds with the same maturity yield 2.4%.

Starting next year, once the proof of concept has been completed, Rivool plans to start raising money in investment rounds after the viability of the products has been proven. “We have already worked on the origination of private credit with Brazil’s main players in securitization. The next step is to tokenize these assets with the international distribution channel”, comments Piassum.

According to Mauro Leite, a member of Rivool’s board, the financial market has created barriers that increase the cost and reduce the scale of credit to rural producers, making it necessary to resort to new technologies to enable a scalable and profitable operation. “Blockchain, with all its capacity for transparency and management of smart contracts to reduce costs and automate processes, allows us to gain scale”, he argues.

The law firm Machado Meyer is acting as the legal curator for Rivool and assisting in shaping the thesis in Brazil.”

Read the full article here.

Translated by the Rivool Finance team.