Silo, a marketplace for perishable food producers and distributors, has raised $3 million in seed funding led Initialized Capital, the fund founded by Reddit co-founder Alexis Ohanian and Garry Tan.
Semil Shah from Haystack Ventures, angel investors Kevin Mahaffey and Matt Brezina, and The Penny Newman Grain Company, the grain merchant, also participated in the round.
Wholesale produce — mainly fruits and vegetables — is a booming industry, worth an estimated $165 billion each year and on track to surpass $1 trillion in sales by 2025, according to Silo. Not all the produce that’s grown gets consumed, however. An estimated 40% of wholesale produce doesn’t have a buyer when it’s grown or purchased. Further complicating matters, perishable commodities are highly time-sensitive giving vendors a narrow window to find a final end buyer.
Launched in 2018, Silo, a San Francisco-based startup, hopes to revolutionize the wholesale produce buying system with its real-time platform featuring vetted buyers and sellers. Using AI technology, the platform adapts to existing workflows and automates processes in the supply chain from harvest management to quality control. It also assists with forecasting production volume, negotiating purchase agreements, and provides a method for logistics and payment. The platform includes purchase protection and transaction guarantees, too.
Silo says it generates hundreds of data-driven connections among retailers, wholesalers, food service companies, and processes to make transactions more efficient and effective. This provides members of the industry with an opportunity to make new business contacts that may have gone untapped in the conventional market.
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The new funding will be used in part to generate growth and to develop new financial and logistical tools that the startup hopes to roll out later this year. It hopes to grow its current marketplace user count to tens of thousands of members throughout the perishable agriculture industry in the coming months.
“What Silo is building has the potential to make marketing and distribution of agriculture incredibly more efficient, which is a win both for the suppliers and buyers. We’re excited to support and assist this team as they work to move agriculture forward,” said Eric Woersching, general partner at Initialized Capital, in a press release announcing the funding.
Agribusiness marketplaces are a hot trend these days as entrepreneurs see plenty of opportunities to help farmers and other businesses in the food supply chain find more options, better prices, and smoother transactions. They’re also hoping to cut down on food waste by making the entire supply chain more efficient and accurate through data-driven technologies.
A few other startups have been using technology to help members of the produce industry streamline their systems while fighting food waste. Los Angeles-based Online marketplace Produce Pay is tailored toward fresh produce farmers and distributors. Farmstr is a similar platform.
For grain, FarmLead was an early mover soon joined by Indigo Ag which added a similar grain marketplace feature to its technology suite last year, as did Farmers Business Network. Agree Market in Argentina also trades grain but on an international platform, and Hectare Agritech has a marketplace for grain and livestock in the UK.
Former Climate Corp CEO David Friedberg recently invested in a different type of marketplace Tillable, for farmland leases, through his investment holding company The Production Board.