Søren and Anders Knudsen grew up on a family farm in Denmark, but they didn’t necessarily plan to make a livelihood from it themselves. Nagging questions about their own family’s operational challenges, however, dragged the brothers back after university.
The biggest problem they saw had to do with machinery: their father owned a lot of expensive equipment that didn’t get a lot of use. Neighboring farms did as well. But as they dug into the issue, they realized that the real problem was farmers’ lack of data about their businesses that compelled them to invest in equipment for tasks they may be better off contracting out instead.
“There are a lot of [knowledge] silos in farming, and the silos begin where the data stop,” Anders Knudsen tells AFN.
The Knudsens developed FarmBackup, an online marketplace where farmers and contractors can advertise and arrange for services—anything from harvesting to grain drying to wood chipping—and put their specialized equipment to greater us, boosting their own businesses at the same time. The platform allows users to browse and list services for free; FarmBackup collects fees from its task management system, which it promotes to farm managers and contractors to help them keep tabs on how many contracts they’re juggling, how much equipment is being used, and how much time they spend per task or contract. (It even has a handy equipment calculator to help users decide if buying a machine is worth it.)
The brothers have been testing the site with a few hundred users in their home country of Denmark. They have just raised €1 million in seed funding from Danish tech investor Promentum Equity Partners to officially launch them into beta mode for a larger Scandinavian market.
Data driven
FarmBackup is the forward face of what the Knudsens believe the farming industry really needs: better data. A key reason farmers spend a lot on equipment they may only use a few times per year is because they don’t have adequate tools for breaking down business operations and costs, says Anders. Rather, most estimate the number of hours they and their machines spend doing specific tasks and often don’t take into consideration factors like the time they spend fixing machines, idle time or transit time, which affects whether time or equipment investments are actually “good for business.”
FarmBackup allows users to log tasks and hours, taking into consideration variables that are specific to the farming sector, like the amount of run-time a tractor spends at work in the field versus driving to a work site. The platform then allows service providers to share data with their clients.
“It should be easier for a farmer to do a task for a neighbor and then share the data related to that task afterwards,” says Anders. He and his brother call this transfer of data “borderless farming,” and it is something that they believe will become increasingly important as farmers depend more on machinery to handle a greater number of human tasks. Indeed, as more people worldwide move to cities and leave agricultural livelihoods behind, those who remain in the sector will need to identify ways to automate tasks to run and grow their businesses more efficiently.
The brothers themselves didn’t fully understand the extent of the data problem when they first started FarmBackup, however. Instead, they saw too many costly but idle machines.
“We could see that farmers and also contractors were struggling to fully utilize their machines. A lot of the time, machines were just standing still,” Anders explains. “There’s a large cost to having machines stand still. They need to run a lot.”
The original iteration of the platform, which they built in 2015, was designed to help farmers get more use out of their machinery. It was set up like an Airbnb for farm equipment, where neighbors could rent machines from each other.
The Knudsens realized fairly early on, however, that this neither addressed the real business problem farmers faced, nor was it a sustainable model. For them, they couldn’t identify a clear way of earning transaction fees. Also, growing conditions were too unpredictable for a platform that depended on advance scheduling.
“With Airbnb you know exactly what day you will arrive and depart. But in farming, the number of days you use a harvester is dictated by the weather conditions,” says Anders. “[That makes] it hard to predict the size of the invoice and keep the right amount of money in escrow.”
They, therefore, redesigned their solution around services and task management rather than the machinery itself, shifting more to an Upwork model than an Airbnb model.
Changing gears
FarmBackup was neither the first to build a farm equipment rental platform, nor was it the first to pivot. US-based equipment leasing business FarmLink split its data and rental segments into separate business entities, and the leasing side, called MachineryLink Solutions, was shuttered soon after. HarvestPort also pivoted from its Tinder for Tractors model to a broader marketplace offering for farm inputs.
Nigeria-based Hello Tractor, which sought to help small farms acquire farm equipment to begin with, stopped building its own machines and instead developed an Uber-like interface to help farmers with tractors get more use out of them and even manage tractor fleets.
And FarMart, in India, started out in 2016 with a tractor rental model before realizing that what Indian farmers needed most was access to credit to cover other business costs.
Like FarmBackup, each of these companies had to reckon with the natural barriers to facilitating a sharing economy for farm equipment. For one, farms are spread out, making it difficult to justify the time and cost of transporting singular machines. Also, machines are often only needed a few times per growing season, during which, a lot of farmers need the same piece of equipment at once.
The time and resources spent trying to overcome those barriers, however, helped each of these companies better understand farmers’ real needs. In FarmBackup’s case, Anders says that he and his brother are confident that as equipment becomes both more sophisticated and critical for farmers, so will data-centered businesses like theirs.
FarmBackup plans to roll out in beta mode in Scandinavia and the UK, and then expand to larger English-speaking markets like the US next year.
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