Farmers work to feed the world. Yet somehow, corn, wheat and rice sales are still happening at a local level through antiquated paperwork and phone negotiations. Now, an Ottawa-based startup called FarmLead has raised $6.5 million in venture funding to connect grain producers and buyers automatically online, and help farmers get fair prices for what they grow. The platform is something like an eBay for grains.
Monsanto Growth Ventures led the Series A deal, and was joined by Avrio Ventures, the MaRS Innovation Accelerator Fund and Serra Ventures. MGV investment director Kiersten Stead said, “We see FarmLead as a tool that creates optionality for farmers. 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.”
After they set up a free account, growers or buyers can post sell or buy offers on FarmLead, browse existing offers, sort offers by location or other terms and engage in negotiations. The company generates revenue through transactional fees. The FarmLead app also includes a “forward contracting service and escrow payment option,” which helps growers sell to buyers based on their projected grain yield. Knowing they’ve locked in a buyer helps farms better manage their finances. And for buyers, committing early can help score a good deal.
FarmLead has focused on the North American market, but co-founders Brennan Turner and Alain Goubau often talk about transforming the international grain trade. A growing world population, combined with economic growth throughout Asia, South America and the Middle East, has helped drive demand for grains in recent years. Meanwhile, wheat consumption has generally declined in the U.S. since the 1990s.
Hopefully the adoption of online marketplace and financial technology in agriculture will reduce post-harvest loss and waste of food. “Low capacities to adopt innovations or respond to changing consumption patterns contribute to the post-harvest loss of 1.3 billion [metric] tons of food waste each year,” according to the 2016 Global Food Report from the International Food Policy Research Institute.
Investors expect FarmLead to use their funding for hiring (especially in their Chicago office), marketing and continued product development. “We simply want them to keep making it easier to buy and sell grains,” Stead said.