January 17, 2020

By Lynda Kiernan

SP Ventures has returned to lead a $23 million Series B for Argentine ag marketplace platform Agrofy, with participation from Fall Line Capital and Acre Capital, marking the largest funding round for a Latin American agtech startup on record. 

SP Ventures, the most active agtech venture capital fund in Brazil, previously led a $6 million Series A for the startup in March 2018, which also included Bunge, Syngenta, leading pan-Latin American technology accelerator Endeavor Catalyst, high net-worth South American agribusiness investors, and funds provided by existing investors including Cresud, the largest farming company in Latin America.

Co-founded in November 2015 by internet entrepreneurs Alejandro Larosa and Maximiliano Landrein, Agrofy is the fastest growing agribusiness e-commerce marketplace in South America.

This is the second such venture for Larosa and Landrein. In 1999 the pair founded FYO.com with the intention of creating an online ag retail site, however, Cresud acquired a majority stake in the venture which evolved to become a Latin America-focused grain marketplace.

Currently operating in nine South American markets, the startup offers both growers and agribusiness operators a range of services including transaction hosting, sales lead generation in a diverse range of categories including inputs, machinery, farmland, equipment, insurance and vehicles, as well as logistics and financial services. Agrofy counts up to 5 million unique visits per month involving more than 200,000 agricultural products and 500,000 farmer members, with 60 percent of its business generated across the border in Brazil. 

Having the majority of its business from across the line is a definite benefit for the startup at this point and time. Based in Rosario, Argentina, this funding round has been negotiated amid a period of economic crisis for the company’s home country, that is deep in recession, and battling soaring poverty, inflation, and unemployment rates, along with a plummeting GDP last year. 

Compounding these factors, the country’s election of Alberto Fernández in August 2019 led to a drop in the country peso of 25 percent against the U.S. dollar and its stock market to fall by 35 percent. 

However, this also means that this U.S. dollar-based funding will prove more valuable for the startup, even if its peso-denominated revenue falls. Also mitigating currency risk is the company’s foreign business activities, having begun operations in Brazil in April 2019, revenue from this foreign business accounted for almost half of Agrofy’s revenue by December of that same year.

Further complicating matters is the lack of connectivity and “mobile literacy” in rural regions – a key requirement for a digital platform’s growth. While it’s true that Brazil represents the majority of Agrofy’s business, the country was ranked 50th in May 2019 by OpenSignal, an analyzer of the connectivity of internet operators. 

“To create exponential businesses, you need connectivity. And it was not that long ago that the internet arrived in the countryside, ” Francisco Jardim, founding partner of SP Ventures told EXAME.

With an eye toward strength and growth from outside Argentina, Agrofy plans to use the capital from this round to further develop its e-commerce platform, and to establish a new billing platform within its site to facilitate payments, which are now accepted via bank transfer, credit card, or by debit card, and which will help support the implementation of a transaction-based fee system.

Goals also include the expansion of its team and number of offices, a geographic expansion outside South America into Mexico this year, and eventually finding a footing in the highly competitive U.S. and EU markets.

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