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Blockchain for private equity the Swarm Fund is likely to raise $35-million in revenue for 87 500 African farmers in the initiative’s first year by helping sell their surplus crops, says the co-chairman and founder of commodities exchange platform FinComEco, Hirander Misra.
Misra’s company is partnering in with the US-based Swarm Fund in a joint venture together with Block Commodities, (formerly African Potash), which is a vertically integrated platform for the mining, production, and distribution of fertiliser.
In an email to Ventureburn following the announcement of the initiative last week, Misra said he based the estimates off his organisation’s experience in investing $10-million for smallholder farmers in Malawi using traditional bank finance in 2016.
FarmCoin will help create an expected $35-million in revenue for farmers by selling surplus crops on the FinComEco platform
“If more finance was available the figure lent would have been $120-million for that initiative. Hence the need was identified to do this,” he added.
FarmCoin will allow farmers to sell surplus subsistence crops to a warehouse where they will be immediately paid for them or can get financing via a loan of FarmCoins that can then be used to buy certified seeds, fertiliser or education at discounted rates.
The deposited crops are then aggregated and sold via a FinComEco facilitated commodities exchange. Once the crops are sold, the warehouse fees and loan interest are paid and the surplus given to the farmer in more FarmCoins.
The Swarm Fund says the interest rates on FarmCoins will be at a mutually agreed, decentralised rate of interest, expected to be more than 50% lower than the current bank lending rate and 75% less than the commercial rate.
Misra said the first farmer is expected to get assisted in the last quarter of this year. He said the fund hopes to reach 87 500 farmers by the end of this year with typical loans averaging at $400 per farmer. He expects that together the three organisations will grow this to over 1 million by the end of next year.
‘Nothing to do with an ICO’
When asked if the initiative is an ICO, Misa said it is rather a fund on a private equity blockchain, and has “nothing to do with an ICO”.
Added Swarm Fund CEO Philipp Pieper: “(An) ICO is too loaded a term these days.
“It (an ICO) can represent the sale of tokens with no real value to a team with no product or track record. This is the opposite of that. But it is absolutely a way to raise capital. For a real world asset-backed token representing fractional ownership in a JV between experienced parties to expand on proven strategies,” he said.
Pieper said the FarmCoin token is pegged to the US dollar, with each token representing 1 dollar raised on Swarm. He said Swarm has over 20 000 investors from over 60 countries registered on its marketplace.
“Based on feedback from the SWM tokenholder community on the types of investment opportunities they are seeking we expect this project to attract many investors (There’s no way to say just how many),” he said.
‘In talks with family offices’
He said the fund is speaking with a number of family offices about the fund but cannot release names at this time.
“Swarm is providing the infrastructure for this fund to raise capital and is not responsible for operating the venture. However, we reviewed previous and existing operations from the fund owners, and they have successfully operated microfinance programmes in Malawi and potash distribution infrastructure in Uganda.
The Swarm marketplace now has four tokenised funds each in presale. Pieper said these represent funds from the US including a Puerto Rico fund, South Korea, Australia, Malawi, and Uganda.
Featured image: Swarm Fund CEO Philipp Pieper