ProducePay raises $2.5M to bring cashflow to farmers
Image Credits: Pablo Borquez Schwarzbeck
ProducePay has raised $2.5 million to solve what CEO Pablo Borquez Schwarzbeck said is a major issue for farmers — getting paid in a timely manner for their crops.
Borquez Schwarzbeck explained that farmers usually have to cover the cost of not just growing the produce, but also shipping — and then they have to wait for it to get sold before they get paid themselves. And since harvesting crops is expensive, this makes it harder for the farmer to harvest as quickly and aggressively as would otherwise be possible.
In contrast, ProducePay can pay the farmer for their produce the day after it’s shipped.
“We essentially buy the produce at a 1 to 4 percent discount,” Borquez Schwarzbeck said.
The company says it has financed $80 million worth of produce from growers in the United States, Mexico, Chile and Honduras since it launched in September. And again, according to Borquez Schwarzbeck, most of that money is getting reinvested in the farm.
“Farming is becoming increasingly hard in the US, with the huge drought problems in California, and we have big companies buying a lot of farms,” he added. “Family farming is disappearing.”
So in his view, ProducePay can help those farms stay competitive by “collateralizing assets you otherwise wouldn’t be able to.”
The company has also been adding more features, like a marketplace for connecting growers and distributors. In addition to helping the grower, this is supposed to “de-risk” the ProducePay’s investment, allowing it to cover 80 percent of the produce’s value, not just 50 percent. The ultimate goal, Borquez Schwarzbeck said, is to create a “one-stop shop for everything farming,” where growers can also connect with vendors to buy supplies like fertilizer.
The seed funding comes from Menlo Ventures, Arena Ventures, CoVenture, Red Bear Angels and Social Leverage.