AgSmarts, a precision agriculture company focused on embedding intelligence, industrial controls and remote environmental sensing into various agronomic applications, is raising a $750,000 – $1 million follow-on seed investment round. This round is being led by a new, strategic investor, five months after the company went into commercialization and started selling its product.
The Memphis, Tennessee-based company, which uses environmental-sensing technology, predictive analytics, and farm equipment automation, sells sensors, environmental monitoring stations and the software to analyze the data they gather. With this, the company aims to help farmers maximize crop yields, optimize water and energy use and reduce operational expenses.
There are now a few hundred AgSmarts stations out in the field and across various irrigation applications after getting demand from a variety of users since hitting the shelves in March. AgSmarts currently sells its hardware outright and plans to introduce additional hardware components to its platform and complementary agronomic models/algorithms on a software as a service basis starting in early 2016.
“What’s really interesting is the level at which conservation groups have come to the table,” Brett Norman, chief executive of AgSmarts, the precision agriculture service, tells AgFunderNews. “We didn’t necessarily anticipate that and while they won’t be a long-term, sustainable customer base for us, they have really helped grease the wheels for early adopters and helped us market the product.”
AgSmarts’ technology, which can be purchased at seed and input retailers and agriculture equipment dealers across the US, is on target to reach $500,000 in revenues or higher for 2015, its first year of commercialization.
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“It’s been very much a learning year — a beta year — and we will see how stocking orders go, but we should be on target by the end of the year,” says Norman. “We didn’t want to bite off more than we could chew as a young and growing company. We were not sure how the model would play out but we have been quite deliberate with our scaling to set the stage for more success in the future.”
The lead investor in this latest round is a seed and input dealer who shares AgSmarts’ vision to be an agronomic tool and will play a strategic role in the company’s development. He is being joined in the round by existing investors who are re-upping their initial investments from December 2014.
“Historically our type of tech has flowed down through irrigation dealers but they aren’t typically those that help farmers with the agronomic decisions,” said Norman. “We think AgSmarts’ technology is a piece of agronomic strategy; it’s not only about optimizing irrigation equipment. This is about growing more crops, using less inputs and that’s a really powerful message for groups at the retail level. This investor has seen this vision and he will bring some amazing possibilities through his network where he has a great record of success and decades of industry experience.”
Lsat year, AgSmarts raised $825,000 in convertible notes, which were listed on AgFunder. This was shortly after it was named as a semi-finalist to the $1 million Global Action Challenge, in September 2014. The company has used the proceeds to get the inventory it needed to support its commercial roll out, general legal and payroll expenses and some travel, while remaining light on marketing.
“It’s all been about the customers and getting the product into the field to get feedback as fast as possible,” said Norman. “That was important to avoid burning through the capital raise with nothing to show from it.”
“It’s also important for us to iterate on the product immediately based on feedback to prove we are not just a one trick pony,” he added. “So we have been updating the app immediately or bringing a new feature onto the portal. We can’t separate sales from the product.”
The startup, which has hired five people since last year’s initial seed round, is planning to hire another four in software development, business development, tech support and operations.
While it’s too early to make any solid plans, the company, which is dubbed the ‘Google Nest’ for agriculture irrigation, expects to launch a Series A in the third quarter of 2016.
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