Welcome back to the Agri Fintech Newsletter and a warm welcome to the 20 new subscribers since my last issue 7 days ago. Yay. 😃
ICYMI - I have moved the Agri Fintech party to a new platform with a new home domain - https://www.tograze.io/ so please share this with your network.
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 before releasing my Agri Fintech Investment report later this month.
🧐 Thoughts ‘10 early state Agri Fintech Companies - part 2’.
Hopefully you caught Part 1 last week and wanted to come back for more.
🗞 Relevant News
I didn't catch many news items this week dedicated to Agri Fintech so I've posted some resources below covering Letter to Washington re Crop Insurance, Embedded Finance and the Opportunity for B2B Payments.
Early Stage Agri Fintech companies
Last week I devoted some time to 5 very early stage companies globally and this week it is time for 5 more.
As last week, this is not any sort of investment advice, so please do your own research. 🧐
Funding Stage: Pre-Seed, last round $2.5m in December 2021
The Indian Agritech scene gets a lot of attention globally from investors and the international Ag companies, whereas its’ neighbour Pakistan is a few years behind in terms of Agtech ecosystem development. Jiye Technologies are a leading contender to become the largest food trade platforms in Pakistan, a huge market of 243m people.
In 2022, Jiye started the year with a focus on distribution to retail buyers but, realising this came with huge logistical challenges in a competitive market, they pivoted towards just serving commercial offtakers such as food processors, millers and exporters. Their partnership roster is growing with a recent collaboration announced with Syngenta to expand the retail footprint for the International seed and pesticide giant.
They position themselves in the market as "closed-loop" with services providing end-to-end coverage in seed-to-harvest value chains. Their fintech loan book is small but growing and facilitates both input finance and post harvest warehouse receipt finance (an old favourite of mine 😁).
Why I like Jiye: Yes, they are in a competitive market and are joined by lots of interesting companies, although it is very early days - one investor coined the Agri fintech scene in Pakistan like India 7 years ago!
I began speaking to Jiye over 12 months ago and during this time frame they have executed on their plans and also made a difficult pivot to the formal offtake market. This requires management courage and execution capability, plus, in my view, an easier client base to work with.
Bonus marks go to them for sending me Quarterly updates on the business with their actual performance and targets for the coming quarter.
Funding Stage: Seed, last round $1.6m in September 2022
Oceanfarmr is a farm management app specifically for oyster farmers and shellfish (clams, scallops etc) but is also developing functionality for offshore mussel farming and seaweed growers.
Ocean farms do not have the assets that traditional land based agriculture has to pledge as collateral and in a market with a whopping US$150 billion – $300 billion infrastructure base, Oceanfarmr cater to clients with their "Farm to Buy" offering.
Under the Farm to Buy model, Oceanfarmr will supply new gear like oyster baskets and oyster seeds which are needed to expand a farm. The crop is monitored using their app, which farmers use to provide monthly compliance reports and collect data on their own farm practice.
According to one of their Founders, the team have spent the past 5 years building the tools and data and realised early on that the financing component was key.
Why I like Oceanfarmr – this is a pure play use of data, especially in the absence of hard (or liquid) assets as collateral. Recognising this issue for finance upfront allowed the team to focus early on developing the financing component and work alongside investor to provide tailored financial services to this niche market.
Funding Stage: Undisclosed, last round, September 2022
Koltiva began in Indonesia and are a technology service company empowering over 750k producers to access markets and 6,300 business users to enable traceable and transparent supply chains across 38 countries. They describe the offering as triple-tech “AgriTech, FinTech, and ClimaTech” (an ultra niche newsletter idea there for someone 😉). They complement this triple tech offering with boots-on-the-ground agronomic advisory, which makes a lot of sense.
Their core products are currently Kolti Trace, Pay, Trade and Skills which includes farm management platform, payments, commodity trade including carbon and extension services. KoltiTrace is active in 38 countries whereas the Pay and Trade product is limited to Indonesia currently.
KotliPay in particular offers a range of rural financial services including savings, loans and payments for bills and other services, including inputs. It acts as a bridge between producers and financial institutions in Indonesia.
Why I like it: active in more valuable value chains such as Coffee, Cocoa, spices, or rubber which makes sense not only from a commercial points of view (better clients, therefore more sustainable business) but also from an impact perspective as linking smallholders to export markets is more likely to increase their financial benefits than subsistence farming.
Funding Stage: Bootstrapped so far
Agriculture investment projects targeting retail investors such as peer to peer or crowdfunding is a recurring theme in my newsfeed and notes in the past 12 months. There are US pioneers such as AcreTrader and FarmTogether, the Brazilian team at Campo Capital and various projects dotted around Europe, Australia and South Africa.
But what about in India? I was delighted to discover some companies already in this space through LinkedIn and GrowPital stood out. They operate an Agri investment platform for Indian investors to gain access to real world assets in the local agriculture sector. There are a few key hooks for this - increased returns (up to 16% per annum), environmental and social benefits of the investment and tax free. Yip.
Their investments focus on horticulture and they generate returns by setting up dedicated Partnerships for each project, leasing land from the owners, operating the project through a series of partners and managing off-take.
They currently have 2,100 acres under management and have managed over $2.5m in capital. (This is about 25% of the Mad Capital Perennial Fund 1 that I highlighted last week for example).
The tax free status is an interesting one and I loved this take on the topic from Finshots. Basically, blame the British. And now farmers. 😂 Well... there is a bit more to it and the article is a well considered piece on the background to this particular facet.
Why I like them? They have an experienced team and have executed this model really well, demonstrated by continuous growth in funds managed. The contracting structures show they understand the risks and the sector and I suspect they will be able to start taking the strides which the other P2P models above have to attract more capital from different types of investors.
Funding Stage: Bootstrapped so far, raising later in 2023
DairyFi are a very early stage company in the huge livestock and dairy sector in India, where primary milk collection centres procure 205bn litres of milk annually.
The company are building a digital ecosystem for livestock trading, which provides both Farmer financing to purchase livestock, but also Trader financing to buy and sell livestock.
Their trader finance product is the one that really caught my eye. Traders in this market currently pay 1-2% per week according to the DairyFi founder, but they have developed a proposition than will cost between 18-30% per annum. This is a third of the cost of the current market norm and DairyFi can do this by collecting data from the ecosystem.
Their early stage pilots have worked with 1,200 traders across 200 milk collection centres and facilitated loans of $1.25m equivalent via some local lenders.
Why I like DairyFi: Their offering is at the heart of the livestock market and they have targeted a very specific - but huge - market which they know very well. Like Growpital they have managed to achieve quite a lot so far on their own capital.
💡 Some content and news which I found insightful this week.
⦿ Letter to the USDA on Crop Insurance - this caught my attention as it really gives a good overview of the importance of crop insurance within the US production sector but also with the signatories. According to the letter:
Crop insurance allows producers to customize their policies to their individual farm and financial needs and policies are based on fundamental market principles, which means higher risk areas and higher value crops pay higher premiums for insurance. Crop insurance and its links to conservation further ensure that the program is a good investment for taxpayers.
⦿ Embedded Finance - this is a key theme, which I think is worth keeping at least one eye on, maybe two or even three if you have them.
Below I have included the categories of companies I include within the AgriFintech universe and most that fit into the Distribution box relate to embedded finance (more on that later).
This is an excellent article from David Birch, a UK based payments and fintech guru, which talks through the general embedded finance theme and what it means.
⦿ Digital B2B payments in the US - Another relevant piece summarising the opportunity and challenge of digital B2B payments in the US. This article is targeted at banks but really made me think of companies building in Ag Retail and for the Cooperatives (mainly Bushel) as I feel they are more likely to - and have already - started to accept this challenge to be part of a long term opportunity.
We believe there is a tremendous, untapped opportunity out there: an $11.8 trillion pie in the form of 2.9 billion B2B checks.
And that is all for this week folks. The newsletter will be back in 2 weeks and revert to a 2 x monthly cadence. ✌️