Monsanto Growth Ventures Leads Series A for Agtech Startup, FarmLead

March 21, 2017

Monsanto Growth Ventures (MGV) had led a $6.5 million Series A for Ottawa, Canada-based agtech startup, FarmLead. Others in the round include Avrio Ventures, the MaRS Innovation Accelerator Fund, and Serra Ventures.

Founded in 2013, FarmLead has established an online cash grain marketplace, where through its platform, grain buyers and sellers can connect automatically – listing, negotiating, and closing grain deals. Acting as what Tech Crunch calls, “an eBay for grains,” FarmLead’s platform enables farmers, buyers, and sellers to circumvent the challenges created by the traditionally highly localized and relationship-dependent grain market – democratizing the process, extending the users’ market reach, and generating higher return on investment.

“Despite the recent levels of technology innovation in agriculture, very few companies are aimed at the critical commerce piece of the equation that helps farmers realize profits from day one,” said Kiersten Stead, investment director at MGV.

Registering, posting, and negotiating grain deals through the site is free, however, the company takes a small percentage of each transaction, with the average deal valued at $70,000, said FarmLead Founder and CEO Brennan Turner to Techopia Live.

Since its launch, FarmLead has served more than 4,000 farms across North America and has seen its level of traded tonnage increase 200-300 percent year-on-year. The company also has integrated an innovative forward contracting service that allows farmers to sell based on their forecasted yields. However, the startup is not positioning itself in competition with the established grains futures markets – instead, it will focus solely on the cash market.

“We see FarmLead as a tool that creates optionality for farmers, Stead told Tech Crunch. “That’s what is most important to us. But their platform also gives buyers more choices. They can create a large portfolio of vendors to work with, and get access to a more diverse set of crops than what they had before.”

On the shoulders of this success, FarmLead plans to use the capital gained through this round to fund its expansion into the U.S., and the establishment of its U.S. headquarters based in Chicago, Illinois – a hub location to major U.S. grain producing regions.

Beyond the U.S., co-founders Brennan Turner and Alain Goubau expressed to Tech Crunch how global macro drivers of increasing economic strength across Middle Eastern and Asian markets, partnered with declining wheat consumption in the U.S., have set their eye on eventually disrupting international grain trade.

“This investment signals the appetite for a solution that accelerates the rates of commercial grain marketing transactions,” said Turner in a statement. “Our ability to increase deal flow for farmers, enabling them to negotiate better prices and other key trade terms online, allows farms to take ownership of their grain production and marketing lifecycle. This is the future of grain trading and we are truly poised to transform the way agricultural commodities are traded worldwide.”

Waste Not, Gain Returns

FarmLead’s platform also has the potential to be a vehicle that will have the power to reduce food waste and post-harvest loss.

NPR reported in 2014 that the U.S. wastes 141 trillion calories worth of food per year, or 1,249 calories per person per day, according to the U.S. Department of Agriculture. Of this total loss, grain accounted for 18.5 billion pounds, or 14 percent.

In affluent economies, it is difficult to actualize the real economic impact that food waste has, and the potential for return that exists in reducing it.

In 2016 it was reported that U.S. growers spend $218 billion, or 1.3 percent of the country’s total GDP, on growing, processing, transporting, and disposing of food that is never consumed. Additionally, high levels of discretionary wealth translates to over-buying and spoilage.

A report issued last year by the National Resources Defense Council and a coalition of 30 business goes on to state that in the implementation of food waste solutions, U.S. consumers would see a savings of approximately $5.6 billion per year, while there is the potential for producers and businesses in the supply chain to see an estimated $1.9 billion in annual business profits through the revenue and cost savings that come with food waste mitigation, reports CNBC.

“There is a direct profit potential for business,” Dana Gunders, food and agriculture scientist with the Natural Resources Defense Council, told CNBC. “With money spent, money will be saved.”

 

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

 

 

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