This is a giant of a category and the largest for fundraising - no surprise when you see the names involved. These are companies that offer marketplaces or actively capture trade data and process that for users.
To discuss this category I am going to split the companies into 2.
👉 There are a bunch of companies on here such as Grainbridge, Agrofy, Ag.Supply, Agriconomie and AgriMarketplace who may not yet consider themselves in the Fintech category. At least not openly that I am aware of and I have no intention of trying to trick them into making any admission. 😇
But when I look at their activities, their management and their investors I see ‘Fintech adjacent’. I see it and I can’t unsee it! 😁
👉 The rest are clear Fintech companies who openly want to offer direct financial services such as Pinduoduo, Bushel, FBN, Silo & co.
Some of these companies offer direct credit to customers on top of the trade/ market facilitation or other products such as payments and wallets. But these products arrived later in their roadmap after solving their initial problems.
Here are some interesting things to note and think about:
1️⃣ These companies are more mature with most raising funds at Series C and beyond. And the rounds are big. For example Pinduoduo raised a $1.1bn post IPO round (as you do!).
Indigo and FBN raised $535m and $250m respectively in 2020 taking advantage of liquid markets and two major Series C’s were announced by Bushel and Produce Pay in 2021 to further their own Fintech ambitions. AcreTrader and Bijak raised sizeable Series A with $12m each.
I have a strong suspicion that Fintech product roadmaps will increase valuation. At a basic minimum, they capture more economic value by leveraging the existing distribution and strengths of each company. How much value? It is estimated that SaaS businesses can increase revenue per customer
by 2-5X by adding Fintech products according to A16Z.
2️⃣ The later stage companies give a glimpse to where the earlier stage companies will go - they will move towards financial services offerings. Yes - this will happen in Agritech companies and as evidenced, it already does.
This is part of my reasoning for not being able to ‘unsee’ the potential Fintech propositions above - it is jus the done thing for similar marketplaces in other sectors.
❓ Do any of these platforms intend to become open❓
Marketplaces can be trade platforms or innovation platforms, which are open and allow third party apps to be built on top. Imagine being able to build an app for Pinduoduo or on top of FBN, Indigo or Bushel!
Will they pursue an innovation platform strategy or stay like closed transactional ecosystems?
Personally, I love open platforms as they allow genuine innovation and generally tech and finance are moving that way - open data, open finance, open banking - maybe Open Ag?
I would propose that Agri Fintech firms should pursue an open strategy based on the fact the market is large and the only thing they have in common at present are problems not clients. I am sure exceptions will exist.