Australian grain management platform AgriDigital raised A$25 million ($17.7 million) in a recently closed funding round, as it seeks to expand its offering to help smaller industry players access same-day working capital loans.
- The funding included both equity and debt components.
- AgriDigital did not disclose the identity of the round’s lead, though a statement from the startup said it is “a large global investor with experience in debt finance.”
- The Sydney-based company has previously raised funds from the US’s 1st Course Capital and Australia’s Square Peg Capital, among others.
Co-founder and CEO Emma Weston told AFN that AgriDigital will use the funds to “enhance our existing platform, grow our supply chain finance fund, and drive our global expansion with key partners.”
As part of this plan, AgriDigital will resume its growth strategy in North America, which had been cut short by the Covid-19 pandemic, Weston says.
“The US and Canada are both major global exporters like Australia, and the structure of the grains industry bears many similarities to Australia.” She adds that in both countries there’s “still an absence of digital solutions built for farmer grain inventory tracking from harvest forward, and financing from the field.”
Why it matters:
Weston, Bob McKay, and Ben Reid — a trio with oodles of grain farming and trading experience between them — founded AgriDigital in 2016 with the aim of ending the manual process-driven, paper-based nature of the ag commodities business.
“Farmers don’t get paid for what they deliver when they deliver it; buyers can’t get the finance to pay the farmers, when they deliver; and consumers don’t really know where their food comes from,” says Weston of the status quo.
At present, about 90% of the global grain trade is controlled by just four companies, she says. “This means farmers and small-to-medium sized grain businesses are stuck in established roles with little ability to gain more value.”
How it works:
The AgriDigital team initially created a software platform to manage inventory throughout the grain supply chain. It enables farmers, brokers, buyers, processors, and elevators to create a digital record of their grain inventory.
This record contains information on things like quality, quantity, location, and transportation history, as well as details on ownership and any contracts and orders affecting the grain.
Building on its inventory management product, AgriDigital uses data and insights gained from the platform to help grain farmers and buyers “collateralize their grain assets to get fast and flexible access to working capital,” Weston says.
“This means they can fund their business and make the right business decisions, without the pressure to sell grain to meet short-term business needs,” she adds.
“And for buyers of grain, they can access the capital they need, when they need it, to buy and hold grain for trading or consumption purposes without having to pay line or facility fees for a whole year at peak funding levels. Instead, they just pay a finance margin on each transaction no matter how big or small, or how long the grain asset is held.”
AgriDigital generates revenue through three main streams: the software subscriptions it sells to farmers and other customers; selling data services to supply chain stakeholders; and the management fees it charges for its financing fund.
By the numbers:
- 920 million bushels of grain worth $4.25 billion in total transacted on AgriDigital’s platform in 2021
- $105 million in financing disbursed to users
- 15% of all Australian-produced grain managed by AgriDigital