Welcome back to the Agri Fintech Newsletter and a warm welcome to the 15 new subscribers since my last issue. 😃
ICYMI - I have moved the Agri Fintech party to a new platform with a new home domain - https://www.tograze.io/
If you would also like to share the newsletter and receive some "Happy Days" you can do this below, which is something I am playing with:
🧐 Thoughts ‘10 early state Agri Fintech Companies - part 1’.
This felt too long for one write up so I have opted for a 2 part series with the first part this week and the second next week.
🗞 Relevant News Updates from Geora, Combyne and Bayer combine, CommonGround aka Cashrent, Ecozen (again), and BMO.
10 early state Agri Fintech Companies
I spend a lot of time and devote a lot of content to later stage companies in the sector globally.
But there are some gems at very early stages and I wanted to capture some of these stories. I have collated a long list of early stage companies (recent Series A is the most advanced in terms of fundraising!) and have curated a list of 10.
This issue will start with 5 and my next issue will introduce another 5.
Serious Face moment: Even though I like these companies, if you are investor you should do your own research. I do not work with, nor have invested in, any of the companies.
And exhale 😮💨
Funding Stage: Seed, last round $1.6m in September 2022
Hillridge are an Australia based Weather index insurance software provider i.e. they develop and build the models for regulated insurance companies to distribute.
They operate in the Australian market with a range of products and most notably, distribute their products via Nutrien Ag Solutions, an Ag retail business with a footprint of 400 locations and sales in excess of $3bn according to their financial statements. What a partner to get started with!
The ease at which this structure works engenders trust - a key issue with conventional insurance - especially in markets such as Indonesia or Vietnam, where Hillridge have recently started to introduce their solution.
These markets have insurance penetration of just 3.6% and 3.4% respectively (where penetration is measured as the ratio of insurance premium paid to GDP of the country and is typically 6%+ in the developed world).
Why I like Hillridge: There are a two things to note. Firstly, this is a business which has raised minimal capital so far – just $2.4m including the seed round above and a $200k grant – but has put that capital to use very effectively i.e. they have a scalable product and credible distribution partners.
Secondly, they are well placed in key markets such as Australia and fast growing South Asian markets where insurance penetration is extremely low and even more so in rural economies.
Funding Stage: Seed, last round $4m in December 2022
Mad Capital are one company who are aiming to fill the funding gap for transition based finance in the United States i.e. financing longer term loans to farmers who wish to make the switch to regenerative or organic practices.
According to the business, Mad Capital started out funded by a $817k grant in 2020 to product test within this gap and proceeded to raise a $10m fund for disbursement to farmers.
In December 2022 the company announced they raised a $4m seed round led by Trailhead Capital, a Colorado based impact investor to expand their Fund structures into Perennial Fund II. They are targeting further investment in 100,000 acres in 2023 with a vision to reach 10m acres by 2032.
Why I like this company – this gap is real and problematic. Recent research identified US banks as being ‘slow’ to grasp both the risk and opportunities in climate finance for agriculture.
It is great to set out a vision as they have. Reaching that 10m acre goal will be dependent on moving quickly and finding the right investors to back them all they way as competition is heating up in this segment.
A company and topic to watch in the coming years as this issue becomes more prominent.
Funding: Self funded
"Data plus Product will be the new norm" according to Nick Evans of Oxbury Bank on a panel with Agrigates co-founder Daniel Foy, meaning that physical products will soon become embedded with a data story.
AgriGates provide a data Platform-as-a-Service (PaaS) to store, integrate and aggregate farm level data for producers and buyers in the value chain to address this need.
So far AgriGates have found two markets that are active buyers of this data - academics and food buyers themselves. "Brands will pay for access to metrics and data that proves and shows that they meet Standards and Audit requirements" Foy cites, but shyed away from giving an indicative value for data as the market was still in its' infancy.
AgriGates are very active in the dairy sector in the US, operating with farms, producers and the national brands to design the infrastructure for their data ecosystem. While this conversation is often externally positioned in terms of sustainability programmes, Foy prefers a focus on welfare, both within the animal agriculture sector and the food outputs itself.
The business are self funded, have been part of the Microsoft Founders Hub since 2021 and are reaching out to investors and other partners at present who want to disrupt food and animal agritech.
Why I like Agrigates: There is a lot of activity in the farm data sector, but their focus on a particular physical value chain (i.e. dairy 🥛 ) and its digital ecosystem, makes a lot of sense strategically and for their team, who possess specialist knowledge of the sector.
Funding Stage: Series A, last round $14m in September 2022
Focused specifically on the domestic poultry value chain in Indonesia, this business reminds of the early stage ‘full stack platforms’ that have developed in India, especially those focused around specific physical value chains such as Reshamandi (farm to fashion fibres) or Stellapps in Dairy.
The provide a suite of farm management tools for producers, IOT (internet of things) enabled equipment and guaranteed offtake markets. Around this ecosystem, the company provides financial services, which complement the operational activities.
When I spoke to Pitik in August 2022 they were undertaking a finance pilot using some partners in the market for these financial services. They advised that some of the challenges they faced were:
➡️ financing costs which were higher than their clients were used to as the risk they were bringing to the market was new
➡️ clients were reluctant to complete some of the detailed due diligence checks to make them eligible for government financing programmes.
However, as the business has grown, they have started to resolve both these issues in tandem.
Why I really like Pitik: The opportunity here for Pitik is to become the best in class financial services provider to the huge poultry value chain in the markets in which it operates i.e. Indonesia but also the wider South East Asian geography.
Funding Stage: Seed, last round $4m in December 2022
It feels like a long time ago since I profiled Vendease who are a similar company in Nigeria. Since then they have gone on to do great things including x, y and z.
My fascination with this type of demand aggregation business model remains and frankly, I expect to see many more companies like this develop in the next 3-5 years. I'm surprised we have not seen more actually.
Like Vendease, TopUp Mama and Frubana, OneOrder is a B2B platform that allows restaurants to manage their supplier relationships. This involves the physical management of fresh produce inventory but also the realms of paperwork and payments that trail this trade.
Egypt has 45,000 registered restaurants, but as many as a quarter of a million unregistered all working and consuming supplies. In 2019, the United States Department of Agriculture estimated the overall Food & Beverages/Hospitality market in Egypt to be $13 billion according to this Waya piece on the company.
Why I like this? Egypt has a huge population (100m+) with a very integrated logistics and trade with the rest of the Middle East and North Africa region. It also attracts a steady flow of tourists from around the world.
Execution will be key but bonus marks have to go to the Founder who happens to operate two restaurant chains - Fuego Sushi and Longhorn Texas BBQ. 😋
What do you think?
As always let me know and do tune for the next 5 in 7 days time.
I will complete the list with 5 more companies from the US, Australia, Indonesia, Pakistan and 1 more still to be decided 🤔 (who will it be?!)
The news in this issue is a mix of funding updates, acquisitions and also some updates on the BMO story I covered in my last Issue.
⦿ Geora, the blockchain built agricultural data provider, announced a partnership with National Australia Bank, to provide a trusted data layer for ESG and sustainability reporting.
Geora's blockchain "captures proven, sustainable activities and outcomes in a way that allows farmers to get a lot more back for their efforts" according to a LinkedIn post.
⦿ Combyne get acquired by Bayer to invest in their crop marketing capacity.
This is an interesting acquisition for Bayer as they seek to build out the ecosystem around Fieldview and CombyneConnect have already started to aggregate data and actors in the crop marketing space.
Last year, Bushel and Bayer announced a similar partnership, specifically relating to Project Carbonview so it will be interesting in time to see how these various partnerships and integrations start to gel together.
One thing is clear ➡️ Bayer are keen on an open data philosophy, which is shared by many progressive companies in the sector.
And no, open data, does not mean a free for all, just the ability to share data for those who want. [Touchy subject with some 🙃]
⦿ CommonGround, formerly known as CashRent, raised a $3m seed round from investors including AgFunder.
The Chicago based startup will differentiate itself in the market by having an active farm rental marketplace already in position (as the core activity of the Cashrent business).
⦿ Ecozen, announced that it will use its Series C investment to further expand into other sectors and countries, rather than focusing squarely on the Indian agriculture market.
It added more investment to its' Series C up to $25m, including a debt portion included in that figure.
I think this is relevant as hardware and IOT focused companies such as Ecozen, were one of the earliest - and possibly best? - use cases of embedded finance in countries such as India and Kenya, when pay-as-you-go financing was introduced via mobile money.
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