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Indigo Raises $250m Series E Adding Grain Marketplace to Farm Services Platform

September 18, 2018

Indigo Agriculture, the microbial agriculture seed products-cum-ag products retailer has raised $250 million in Series E funding and taken the next step in its journey to becoming a consolidated farm services platform by launching a grain marketplace.

Indigo says it is on a mission to “decommoditize agriculture” by supporting farmer profitability as well as improve the environmental and consumer health footprint of agriculture.

Indigo, which has now raised a total of $650 million and is understood to be valued around $3 billion, received the funding from its existing investors: Baillie Gifford, Investment Corporation of Dubai, the Alaska Permanent Fund, and the company’s founder, Flagship Pioneering.

Earlier this year the company hinted at a future as a marketplace by launching its Indigo Research Partners platform for other agtech startups, particularly on the data side, to join to tap into Indigo’s farmer client base. The company also has a novel way of distributing its microbial seed products by deploying agronomists to harness this ag data to help farmers grow their products, as well as buying back the crops grown instead of charging for the technology.

Today it launched Indigo Marketplace, initially for the sale of grain in 40 states in the US, but there is opportunity for this remit to expand, David Perry, CEO told AgFunderNews over email.

Three and a half months since quietly launching, growers have entered more than $6 billion in grain inventory on the marketplace and buyers have entered more than 4,000 bids representing over $2 billion in demand, according to Indigo.

Buyers on the platform can source grain with a range of characteristics such as protein content, milling quality, and variety, as well as specific production practices like organic, grain- fed, non-GMO etc. The company argues that this could enable farmers to realize more profit for their crops.

“Directly connecting growers and buyers is a critical step towards a food system that is responsive to the voices of consumers,” said Perry in a statement. “As long as farmers are producing a commodity, they have little economic incentive to produce crops of higher quality or produce them more sustainably. Indigo’s Marketplace enables buyers who want differentiated grain to buy it directly from the growers who produce it and reduces the supply chain costs for the whole industry.”

Agribusiness marketplaces are growing rapidly in number with alternatives cropping up all over the world offerings farmers an alternative to the existing channels they use to buy inputs and sell crops.

We caught up with Perry to find out more about the marketplace and how he views it compared to others.

What was behind the decision to launch Indigo Marketplace? What was the catalyst?

The decision to launch Marketplace stemmed from our mission to harness nature to help farmers sustainably feed the planet. Today, Indigo’s microbial products enable growers to improve the yield, quality, and sustainability of their harvests, but in a commodity system, they are only paid for yield. As long as growers are in the commodity system, they will not be paid for the unique characteristics or growing practices associated with their crop. By directly connecting buyers and growers, we enable growers to earn more by producing what buyers want. This shift incentivizes growers to differentiate their harvests, whether on the basis of grain quality or sustainable agronomic practices – whichever traits buyers are looking for.

In addition, the grain industry represents a $250 billion market in the US alone, and most of this grain changes hands three-to-four times throughout the supply chain. This inefficiency results in farmers receiving only 16 cents per dollar spent by the consumer. By directly connecting growers and buyers, we are building an efficient system, reducing costs throughout the supply chain, and bringing more money back to farmers.

Ultimately, to further our mission, we knew we had to develop an efficient system for allowing growers to get paid for producing high-quality food more sustainably. Marketplace fundamentally enables this by connecting buyers and growers. We believe that Marketplace will effectively decommoditize agriculture and increase the value of crops grown in a way that consumers prefer.

How will Indigo Marketplace differentiate itself compared to other grain marketplaces such as FarmLead or Grao Direto?

Other online grain marketplaces are essentially listing services, which offer little support beyond a page full of bids. These services take a cut from every farmer-buyer transaction. At Indigo, we’re committed, and willing, to make transacting commodity grain free for buyers and growers.

Additionally, we have decided to take responsibility for several key services that enable growers and buyers to successfully transact millions of bushels of grain every day over Marketplace. These include grain quality testing, coordination of grain transport, and assurance of payment.

On top of this, in order for a marketplace to be useful to its customers there needs to be a critical mass of supply and demand. We have the resources (capital, commercial footprint, marketing) to build this critical mass, with thousands of growers and buyers already actively using Indigo Marketplace within just a few months.

Indigo is licensed as a grain dealer across the 40 states in which it currently operates and expects licenses in the balance in the coming months.

Will Indigo get involved in the logistics of the deals it facilitates?

Yes, Indigo offers logistical services to buyers and growers. These services include grain-quality testing, coordination of transportation, and assurance of payment—all of these services are easily managed by growers and buyers through the Marketplace platform.

Do you intend to sell anything else through the marketplace other than grain?

Indigo Marketplace currently supports the sale of all grains. Working in wheat, soy, corn, and rice, we were able to bring growers and buyers onto the platform whom we’d already been working with through Indigo Production. These growers and buyers had described to us their many pain points associated with today’s grain distribution system and were ready for change. In the months since Marketplace launched, we’ve also seen transactions of field peas, oats, popcorn, rye, sorghum, and sunflower, to name a few.

We built Marketplace to fundamentally decommoditize the agricultural system, so we plan to actively expand Marketplace to support the sale of additional crops.

Will you be selling crops grown with Indigo’s microbe-coated seeds Indigo’s through the marketplace?

Yes, we will be selling crops grown with Indigo’s microbial technology on Marketplace. Indigo Corn is already available to transact on Marketplace. We plan to support the sale of Indigo Cotton on Marketplace in the future. We believe that Marketplace is a critical way for growers of Indigo Corn and other microbial-treated crops to not only grow high quality food more sustainably, but also get paid for their effort.

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