Countless agri-foodtech startups are hoping to disrupt the food system with new digital-focused innovations but for grain trading platform creator Bushel, making an existing system better through digital tools is a more promising venture.
“In the context of the startup world, Farmers Business Network, Indigo, and other players are in the middlemen and disruption positions. We say that we are basically building on the relationship or elevating the relationship of the farmer and grain company,” Jake Joraanstad, Bushel co-founder and CEO told AFN. “The physical infrastructure and players have been at the business for the last 100 years and just need help thinking about the tech aspect. We are trying to embolden a technology roadmap to compete against new disruptions.”
The startup today closed a $19.5 million Series B oversubscribed round led by Continental Grain joined by Germin8 Ventures and Lewis & Clark AgriFood Bushel’s software-as-a-service platform may be designed to help farmers, but the route-to-market focuses on helping trading companies accomplish that goal instead of marketing it directly to producers.
“The farmer uses the tool for free. The grain company buys our platform from us and we install it agnostically across their system. The farmer gets the benefit of not just seeing pricing info with the company but seeing everything such as a scale ticket minutes after making a load delivery, signing grain contracts, and when they are getting paid for which contracts,” Joraanstad said.
The new funds will be used to create new product lines and complete additional hires to run the new products. One of the new offerings, Bushel Wallet, is aimed at addressing what it describes as a payment problem in the industry by letting farmers get paid more quickly for grain purchases. Another new offering is aimed at overcoming business inefficiencies by replacing many of the antiquated paper-based aspects of grain trading with digital counterparts.
Initially, grain companies were hesitant to adopt the platform assuming that farmers would be opposed to the digital, app-based tool. Other efforts to modernize the grain trading industry have largely consisted of clunky, desktop-based platforms that require complex log-ins and that make the process just as difficult as its antiquated version, Joraanstad says.
“There was an initial cycle of ideation for customer portals. Experiences were so poor it just made an additional barrier to entry,” he explained. “The farmer didn’t find enough reason to care about logging into a complicated tool. We made it simple by having their cellphone number as their username and making it app-based. That helped a lot.”
Early adopters touted the benefits that they reaped in-house through enhanced efficiency. Sometimes it takes a grain merchant several hours or days to track down a farmer to sign a contract or it can take several days for the farmer to remember to mail it back. The e-sign feature in Bushel, which requires grain traders to pay $1 per transaction, has been a big hit. One user reported a 50% reduction in phone calls for account-based questions regarding contracts, according to the startup.
So far, Bushel claims to have the most user miles on its platform with over 20,000 active users each month across 16,000 unique accounts. Users hail from across the country from the Pacific Northwest to the eastern Midwest corn belt.
As for competition, Indigo added a grain marketplace to its platform last year at the same time of its $250 million Series E. The service is attempting to alleviate some of the burdens that grain farmers face in the marketing process like quality testing, coordinating transport, and payment assurance. Farmers Business Network added a crop marketing to its platform back in 2017 that allows farmers to track and manage their marketing activities, FarmLead’s platform helps farmers access a broader market of potential buyers online and AutoHedge’s platform is aimed at helping farmers market their grain before harvest.
But Joraanstad is unphased.
“We assume there are some followers behind us but the problem is that the moat is pretty deep. To do this technical work of integrating with these platforms takes effort and commitment. The key has been doing it at scale. We signed on 110 companies in two years across 1,200 locations across the US and Canada,” he explains.
What has been challenging, however, is the weather that farmers have combatted this year including severe flooding early in the year followed by a sooner-than-expected freeze. Grain companies are eager to invest and grow but that’s difficult to achieve when farmers are dealing with the majority of their crop left in the field due to unfavorable conditions.