Venture: Proximity Finance
Mission: Increase the incomes of rural smallholder farmers in Myanmar.
Investment: $1 million loan
Investment Year: 2019
How a subordinated loan helped crowd in investment and test a novel strategy for financing farmers in Myanmar
Proximity Finance’s mission is to increase the incomes of rural smallholder farmers in Myanmar by reducing their barriers to accessing credit. Rather than farmers having no access to credit, or taking on expensive loans from money lenders, Proximity Finance offers credit to farmers pre-harvest, when they need it most.
Why We’re Invested:
Social ventures in Myanmar struggle to find international donors and investors to fund in-country work, where political instability serves both to dissuade risk-averse lenders and impede the movement of money into the country. As Proximity scaled their operations, they struggled finding lenders to cover $13 million in critical debt funding, which would expand their loan portfolio and refinance existing, mature funding.
By providing $1 million of subordinated debt, Rippleworks helped Proximity crowd in another $11 million of senior debt from respected partners like DFC and the Skoll Foundation. The $11 million loan made possible by Rippleworks’ subordinated debt layer put Proximity well on its way to reaching its $13 million funding goal. It also laid a foundation for Proximity to pursue additional funding from existing lenders (some of whom were renewing maturing loans, some of whom were increasing their exposure based on the increased subordinated debt layer) and new equity investors through 2021.
Proximity is Myanmar’s only fully-integrated company for farmers, bringing access to finance, technology, and advisory services.
More About Proximity Finance:
Proximity Finance grew out of a pilot program in 2008. After a cyclone in Myanmar’s Ayeyarwady Delta destroyed vast areas of farmland, Proximity Designs, which has been in operation in Myanmar since 2004, launched a revolving loan program to help 10,000 farming families build their livelihoods back.
Proximity Finance, which officially launched in 2012, now plays a key role in the financial resilience of rural communities across Myanmar. Proximity Finance is the only fully-integrated company in the country’s agriculture sector, serving smallholder farmers with access to finance, technology, and advisory services through the other products that Proximity Designs offers. For rural borrowers, microfinance institutions like Proximity Finance are the only source of financial services outside of informal money-lenders. The families served by Proximity Designs see an average of $250 in increased annual farm profit as a result.