FBN Challenger AgVend Raises $1.75m for National Expansion

Minneapolis and San Francisco-based agribusiness marketplace startup AgVend has raised a $1.75 million seed round to expand its retail platform for agricultural inputs and services. The round was led by Drew Oetting, partner at 8VC, a San Francisco tech VC. Green Bay Ventures, Precursor Ventures, FJ Labs, Seahawk Capital, The House Fund, T-Bird Capital, and Escondido Ventures also participated in the round.

AgVend is an online marketplace where ag retailers can list products and services. Buyers search the product they want based on their zip code and are presented with offers, additional services like application, and terms from various retailers.

“It’s about the details of the offer. The listings are differentiated by price, delivery timing and pickup, as well as services that retailers can bundle in,” cofounder and CEO Alexander Reichert explained to AgFunderNews. 

As purchasing moves online across all categories of goods, agriculture has been slow to follow suit. AgVend is the latest entrant into a small set of players vying for the so far small community of farmers looking to purchase online – all banking on the expectation that that community will grow. Agriculture retail is today a very high-touch business, conducted largely through person-to-person communication over the phone and via email. Reichert says that though those conversations have value, AgVend can offer efficiencies that benefit farmers and retailers.

“There is this level of convenience that you just can’t get from having to pick up the phone and call five different retailers to get the best price. The farmer is out there trying to negotiate with five retailers. He has a guy he prefers to work with, but there will be some products that he’s not getting a good price on.” That’s where comparison shopping online becomes a benefit, he said. 

Reichert said that the user experience on AgVend resembles the early days of travel booking site priceline.com, when users knew the quality of hotel they were booking, the neighborhood, and the price, but not the specific hotel until the final payment. 

This strategy is to protect the vendor, he explained — allowing them to list products on the site without advertising their entire inventory by price nor allowing users to search by vendor, protecting offline pricing strategies.

He further explained that current e-commerce solutions for US farmers cover inputs alone without bundled services, rebates, or delivery options.

“When we were out talking to farmers, there are competitors out there arguing that retailers don’t need to exist. Farmers value the services that their retailers have to offer. and they haven’t come online because there is no way to get that service,” said Reichert. The challenge for the small team was to develop an ecommerce strategy that didn’t disrupt existing channels, but invited the retailers in as partners.

Retailer Relations

Right now the site covers the Pacific Northwest and the Midwest and the company expects to cover the entire US by September 2018. Founded in August 2017 and having launched the site in January, the company has been sprinting ever since – bolstered, said Reichert, by an enthusiastic response from retailers with particular motivation.

Reichert called Farmers Business Network’s (FBN) $100 million Series D round at the end of November “a very pivotal shift as a company.” He explained: “I think 90% of the business we’re looking at right now is inbound.” The greatest challenge for AgVend right now is to decrease the on-boarding time for new retailers to facilitate a more rapid expansion.

FBN started life as an ag data platform with the intention of helping farmers manage their data and gain insights from each other on areas such as seed selection, compare productivity, and benchmark field performance over time. It later launched a seed finder app to share seed performance results and research with farmers to help them make better purchasing decisions.

FBN eventually started selling inputs to farmers with this transparent pricing and it now sells over 1,200 seed, pesticide, fertilizer, and other input products from a variety of suppliers including direct from the manufacturers.

But the company has had a somewhat adversarial relationship with retailers and the entrenched players that rely on them.

“You don’t have to demonize the retailer to be still creating value. Retailers provide much more than prices and product sales; they provide a service including consultancy,” said one ag industry insider to AgFunderNews upon FBN’s Series D funding announcement.

“FBN is trying to disrupt ag retail and grain brokers, not directly the suppliers. In essence, they are attempting to raise more capital than anyone to brute force a business model,” said another industry insider. 

“Retailers needed a response to FBN as they started to suspect that purchases were moving away from traditional channels,” said Reichert. 

$1.75 million is a drop in the bucket compared to FBN’s $200 million total funding, but quick-following, larger raises from ag-focused investors would be a sign that a real race is on.

Reichert doesn’t imagine that retailers will list all of their products on AgVend, nor does he expect farmers to do all of their input buying on the site. He cites the integration of brick and mortar and ecommerce in the cases of Amazon or Warby Parker as examples of how the two can peacefully coexist. Reichert and his cofounder Eli Rosenberg met working at remote sensing startup Mavrx, and previously held product management positions in the ecommerce space. 

“It’s not the case that online retail eliminates physical stores. I think you’re going to see the easier, more commoditized inputs bought online,” said Reichert.

A Global Trend

This raise comes just one month after Argentinian agribusiness marketplace Agrofy raised an oversubscribed $6 million Series A round. Agrofy has similar principles to AgVend, wishing to move ag retail research and transactions online without disturbing the status quo completely. Agriconomie is a European player with backing from agrifood tech VCs Anterra and Capagro. 

“I look at Agrofy and Agriconomie in France as great sister companies,” said Reichert. 

China as well has its own agribusiness marketplace juggernaut in Maihuolang, which raised  $150 million Series A round in 2017.

Global investment in agribusiness marketplaces increased 73% to reach $541 million in 2017 according to AgFunder data. To be sure, FBN dominated this category last year, making up 28% of the total, but so far in 2018 the industry appears to be hungry for competition in this young sector within agrifood tech.