Farmers Business Network (FBN), a farmer-to-farmer digital network offering data insights, input procurement, and crop marketing services, has raised $110 million in Series D funding.
FBN is one of just a few farmtech startups that have raised rounds larger than $100 million: vertical farming group Plenty and biological inputs startup Indigo are two recent examples. This latest round brings FBN’s total fundraising to $200 million.
The round attracted new, lead investment from two large institutional investors: global asset management firm T. Rowe Price and Singapore state fund Temasek. These lead investors typically invest in later stage, private equity deals, highlighting how far FBN has come since its founding three years ago, argues Charles Baron, cofounder and VP of product.
“These are blue chip investors who are investing in the growth and proven track record FBN has built,” he told AgFunderNews. “We’ve built a phenomenally high-growth business with membership doubling year-on-year to nearly 5,000 farms around the US across 16 million acres, taking on another million acres each month.”
To put this in perspective, there are about 50,000 large-scale farms growing commodity crops like corn and soy in the US where FBN has focused most of its attention.
Existing investors Acre Venture Partners, Kleiner Perkins Caufield & Byers, GV (Google Ventures) and DBL Partners also participated in the round.
The company has grown in other ways too: its input procurement business has expanded from selling 170 products initially to over 1,200, it launched a crop marketing business earlier this year, it is expanding into Canada, and its team is now 200-strong, with plans to increase by another 100 in the next 12-18 months.
This growth puts an exit for the founders and investors in FBN in the cards within the next few years, and while most agrifood tech startups plan to exit their businesses through a trade sale to one of the large agrifood corporates, FBN has always planned to remain an independent company, according to Baron.
“We’d like to be a public company that farmers can invest in; that’s the best way for us to realize the vision of an independent company,” he said, adding that a public listing and IPO is likely in the next two to five years.
What is FBN?
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. The platform predominantly collects data extracted from farm equipment but also aggregates farmers’ manually recorded data.
It later launched a seed finder app to share seed performance results and research with farmers to help them make better purchasing decisions.
Using data collected and crowdsourced from farmers about their seed and other input purchases, FBN was able to bring transparency to an otherwise opaque input pricing system.
“Prices are rarely listed online, and zone pricing is incredibly common where input suppliers will divide up the country into zones and charge different prices: a farmer in northern Illinois can pay a totally different amount to a farmer in southern Illinois,” said Baron.
FBN has also used its network to crowdsource genetic information about seeds, and revealed that the exact same genetic variety of seed could be sold by as many as 12 different companies under different brand names and at different prices.
“That’s been a total black box for farmers, but we were able to build up a database from thousands of seed label pictures of the exact seed varieties uploaded by our farmers,” said Baron.
An Input Procurement Business
So the natural progression was for FBN to start 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.
“The way to think about FBN Direct is as an open marketplace; we welcome anyone that wants to supply our farmers from the major agrochemical companies to smaller distributors. Many companies have been blocked from reaching farmers as they can’t get into the highly consolidated retail market that works predominantly with the agrochemical majors; we’re creating more competition,” said Baron.
The input procurement business FBN Direct is now an e-commerce platform enabling farmers to discover and purchase supplies completely online — FBN Direct launched as an over-the-phone service initially — which also offers farmers credit on their purchases through flexible payments or loans via third-party providers. This part of the business, that enables farmers to share their farm data with financial providers, could naturally develop into a more general farm loans marketplace in the future, added Baron.
“The farm economy is not set up to meet the needs of farmers, but to meet the needs of the supplier,” said Baron. “FBN puts farmers first in the system and closer to the consumer by helping them to get the benefit of industry aggregation via the network and the scale of e-commerce.”
Industry insiders tell AgFunderNews that FBN’s business model does pose a threat to ag retailers and the large agrochemical companies: “There is enough money and energy behind FBN for it to be something big ag needs to keep an eye on, especially if you look at how other industries have been disrupted,” said one insider from a large agribusiness.
“Any startup that can successfully harness technology to drive network effects is going to be a huge threat to the incumbents,” said Rob Leclerc, CEO of AgFunder. “Like we’ve seen time and time again in other industries, the incumbents usually don’t get it until it’s too late.”
But some insiders are also critical of FBN’s approach and rhetoric around the role of the retailers.
“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 the insider.
He added that the retailer and agrochemical majors are also starting to move some of their sales online in some geographies so will adapt to the online trend FBN is taking advantage of.
“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.
A Crop Marketing Platform
FBN last raised funding in March of this year with a $40 million Series C and raised the Series D preemptively “to capitalize on its new businesses, particularly crop marketing,” according to Baron.
The company will use the latest proceeds to build out this crop marketing platform with the intention of enabling buyers from all over the globe to buy directly from US farmers.
“This is where an online, digital network can be so transformational; now a food company from anywhere in the world can work with FBN and the best farms in America to avoid going through multiple middlemen,” said Baron. “It also allows farmers to use data to market their crop better, yield them better prices, but also bring them production contracts in advance so that they can know their price and costs before the season has even started to a much greater level of detail.”
FBN will also provide them with cash advances for working capital, “taking the risk with them” said Baron.
FBN has hundreds of thousands of acres under contract for the 2018 growing season, according to Baron.
Moving into New Territory
FBN serves farmers growing 25 different crops across 42 states. The majority still grow the major commodity crops, corn, soy, and wheat, but the company’s footprint is growing in large specialty crops like lentils, and chickpeas as well as orchard crops and vegetables on the west coast, according to Baron.
The company’s offering is slightly different for these farmers as they aren’t capturing the same data from machinery as the broadacre farmers are; it’s more focused on pricing intelligence and input benchmarking, according to Baron.
FBN will also use the proceeds of this round to expand into Canada where it’s opening offices shortly. New territories globally are also in the pipeline, and with investment from Singapore’s Temasek, it’s likely Asia will be a target in the medium term.