Tropical weather forecasting startup Ignitia closed a $1.1 million Series A round led by early-stage SF-based firm Hack VC with participation from early-stage social impact investors FINCA Ventures and Stockholm-based tech-focused impact investor Norrsken Foundation.
Regardless of where a farmer is located, knowing what Mother Nature may have in store is a key aspect of planning day-to-day management as well as long-term decisionmaking. Factor in the havoc that climate change has wreaked through less predictable weather patterns and harsher extremes, and these data become invaluable.
“We have been pretty successful in our B2C business selling weather forecasts to farmers, but we are starting to sell B2B,” founder and managing director Liisa Smits told AgFunderNews. “This money will be used for that kind of new sales, which will focus on input providers like seed companies, fertilizer companies, and anyone who has direct contact with farmers on a daily or seasonal basis. What we are looking for is partners who we can bundle our information with for smallscale farmers.”
For this round of funding, Sweden-based Ignitia took a selective approach opting for investors that had strategic alignment with the startup’s goals and ethos. The ability to introduce Ignitia to new networks or to provide further insight into its customer demographics were particularly attractive.
“FINCA is one of our investors and they are running a microloan program in many countries and also targeting farmers. Clearly, we are hunting for the same kind of customers and they already had a lot of info around them,” Smits explains. “In the long term, we can perhaps help with decreasing risks associated with agricultural loans to this demographic using weather data.”
Join Us! Sign up for our next fund here.
The new round of capital will be used to focus on expanding Ignitia’s presence in Nigeria as well as seeking out new partnerships throughout the agricultural supply chain. It already operates in Mali and Ghana, with Smits describing the company as self-sustaining and generating sufficient revenue regardless of whether its scale-up in Nigeria is a success. It’s the first new dose of funding that the company has received since closing a seed round with five angel investors in 2014.
Nigeria is a focus for the company because it comprises 75% of West Africa and it was a natural progression after establishing in Ghana. It’s already entered into partnerships with major telecommunication companies in the region like MTN Ghana and 9mobile in Nigeria to pinpoint its customers’ exact locations.
“They deliver text messages to customers on a daily basis and we partner with them to launch different information campaigns describing our service. They see, as we do, that 80% of the workforce in these countries are smallscale farmers and that this is a very valuable service for a lot of them. We enter into a revenue share agreement with the telecommunications companies, so they also receive a profit.”
VCs are no stranger to agriculture-focused weather forecasting models, with a number of startups sprinkled across the globe raising noteworthy rounds in recent years, including the poster child of the agtech industry Climate Corp, which started out life as Weather Bill and was acquired by Monsanto in 2013. In December 2017, India’s Skymet raised a $10 million Series C for its service that provides climate, weather, and crop analytics to insurance companies, banks, and agribusiness for the public sector. And in November 2015, US-based aWhere raised a $7 million Series A for its agronomic weather software platform.
Still, Smits and the team experience some challenges when it comes to explaining its core technology to investors.
“Any investor we would speak with would say, ‘We don’t know anything about the weather industry.’ This is, of course, super tough as it is an extremely niche business. We are not just a typical weather company that repackages existing weather forecasts. We start by creating them from scratch and then we have arguably the world’s poorest customers,” Smits says.
Ignitia’s technology is designed to provide hyper-local weather forecasts for over 450,000 active subscribers who are mostly small-scale farmers. Delivered via SMS, the company reports a forecast accuracy rate of 84% for areas as small as 3 km². The core technology lies in Ignitia’s algorithms, which Smits and a team of interdisciplinary physicists spent three years developing.
“We have our own supercomputer that does the calculations. We couldn’t use the same algorithm that predicts weather in the tropics because there are no high-pressure, low-pressure, or fronts to generate weather. Everything is governed by the sun heating up the earth and the earth heating the area above it. Hot air rises and you get thunderstorms that can develop as rapidly as 30 minutes.”
Having consistent accurate weather forecasts helps farmers to make better-informed decisions to improve their farming practices, thus increasing their yields and maximizing their profits to play a key part in stabilizing the value chain as a whole. According to one study from UC Berkeley, the service increases yields by 65% across all crops.
That data, however, is only as good as the farmers’ ability to understand it. Next to developing its tropics-focused algorithm, Ignitia had to figure out a way to communicate weather updates to a population that suffers from widespread illiteracy.
“Most likely, you are illiterate if you are one of our customers, which means instead of reading a text, we use word recognition. Over 90% of our users have learned 7 keywords over the course of a year that communicates the timing of rain and the intensity of the rain event,” Smits explains. “We build up curiosity with the farmer to learn more and there is always someone in the village who can read.”
Farmers don’t need smartphones to receive the texts and Ignitia reports that in many villages the cell phone penetration level exceeds 100%, meaning many folks have two or more cell phones.
As for competition, there are a variety of digital platforms that provide weather data in addition to other insight-producing information as well as private weather forecast companies that repackage global weather data and sell it further or provide it to the public through a website. While Ignitia is focused squarely on Nigeria, Smits reports that the team has broader ambitions for the rest of the tropical belt.
“The bigger plan is to expand to new continents in the tropics. And we already have partners that provide other services, such as Orange in Mali which has launched an ag platform that includes our weather data as part of an advisory service. And our weather technology would not work in the developed world because it is on mid-latitudes where there is no need for tropical weather forecasting. We plan to stay in the tropical belt, which is actually where 40% of the world’s population lives. It’s not a small place by any means.”