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Agrograph co-founders, CEO Jim O'Brien (L) and CTO Mutlu Ozdogan (R). Image credit: Agrograph

Startup Spotlight: How Agrograph plans to transform agricultural lending

March 26, 2021

There are plenty of startups working on improving food production methodologies or connecting new supply chain points. But what about the financial mechanisms that help farmers bankroll their operations? According to Jim O’Brien, CEO at Wisconsin-based Agrograph, the agricultural lending industry is overdue for a makeover.

“The agricultural lending process is slow, manual, and opaque,” he told AFN. “It begins at a lender’s office, takes days to weeks to complete, and is based largely on personal reputation. There are no analytical tools or processes to rate a farm, its soil, or yield production against a regional benchmark.”

Instead, ag lenders rely on anecdotal appraisal reports, US Department of Agriculture estimates, and personal experience, he said.

“The result is a slow process with mismatched price versus risk that neither benefits the farmer nor the bank.”

Agrograph’s fintech offering aims to streamline this procedure while providing enhanced transparency and standardization for all parties.

“We see the entire agricultural lending process being transformed. And this begins with process automation and risk-based pricing that is initiated online and provides multiple offers within minutes – resulting in more competition and better rates for farmers in need of financing,” O’Brien said.

Agrograph is a graduate of the Wisconsin-based startup accelerator called Gener8tor. In 2018, it raised $500,000 seed funding from the Idea Fund of La Crosse.

Read on to learn more from O’Brien on how Agrograph hopes to transform the agricultural lending process for farmers and banks alike.

AFN: Can you tell us more about your technology?

Jim O’Brien: Our latest solution is the Credit Score of Agriculture, a tool for agricultural lenders, crop insurers, and service providers.

AGROS is our machine-learning technology that is powered by satellite imagery and field-level crop modeling. We are not a precision agriculture company nor a commoditized grain forecasting company. Rather, we are an agrifinance company whose data solutions are focused on helping the industries that support global agriculture – such as ag lending, crop insurance, land sales, and other ag services. Our technology scales pricing models that account for a grower’s yield potential, historical volatility, creditworthiness, and environmental conditions.

What is the actual product that you sell?

Simply, we sell data.

Our technology can report on over 30 different variables at the field level. We’ve compiled this data into other solutions like our Credit Score for Agriculture which uses that data to assess risk for lenders and insurers.

However, our technology isn’t bound to any one solution. Our data solutions range from our credit score to a sustainability index, yield prediction, grassland biomass, water use efficiency, field readiness, and many more.

That’s the beauty of our platform. Our granulated data can be customized to answer just about any production, climate, or global market question at the field level. Clients can access our data directly using AGROS or pull data into their own system using our API.

Who is your target audience?

We are a B2B data solution focused on agricultural banks, crop insurers, land investment trusts, grain distributors, biofuels companies, and ag service providers.

Our solutions are global. We can provide data for a cornfield in Iowa as easily as we can a rapeseed field in Romania or a soybean field in Argentina.

Do you have a lot of competitors? Is there room for more players in your sector?

If there is a business opportunity, then there will be competitors. What differentiates Agrograph is our focus on risk management, in particular risk-based pricing solutions. Another key advantage of our platform is our global presence. Many data analytics companies in the agricultural space concentrate on farmer-focused precision agriculture – and only for the US market.

Instead, we see a greater challenge facing the ag lending industry. While we provide value to those companies that support farmers we are also opening the doors to more credit for farmers and more favorable interest rates that can be scaled with the changing trends facing the industry. A more open and transparent transaction can open the door for more competition for farm lenders.

We can see larger banks enter the agricultural lending space and scale the farm lending model. In the past, the smaller banks had an advantage over larger institutions because of their tacit knowledge about landowners. Now, any institution can compete for agricultural portfolios, creating greater competition that leads to better rates and better service for farmers.

What are the biggest challenges you’re facing?

If you compared the aggregation of agricultural data to Google Maps traffic data, it would be megabytes per day rather than terabytes per day. Google collects billions of cell phone signals per day to create that. Agriculture will never have billions of users so the ability to collect data will always be a constraint on modeling and training.

But that is where guided artificial intelligence comes into play, along with domain expertise. Agrograph isn’t just throwing computing power to problems – we intrinsically understand the business problem and have built data solutions tailored to those needs.

How has Covid-19 impacted your business?

Covid-19 has impacted everyone but, fortunately, agriculture has maintained this incredible resiliency to ‘plow forward’ – and that’s not just in the US, it’s across the globe. We’ve worked with clients from Kazakhstan to Canada to South Africa, and across the US. Crops are still being planted, loans are still being financed, and crop insurers are still providing coverage.

In fact, Covid-19 has accelerated the trend in agriculture toward more remote-based tools and data-driven technology that benefit analytical companies like Agrograph. Now, the farm customer expects their ag institutions to offer greater convenience, faster process time, increased transparency, and of course more competitive rates. These are the new pillars of success in the post-Covid world.

Any advice for other startups out there?

My advice is to focus on your board of directors.

Your seed funders and board have to believe in your team and your vision. And with that vision, they also have to bring experience, networks, and insights.

We’ve selected our board of directors with industry veterans from sales and marketing, to sector experts. Our directors know how to sell, they know all of the players in the industry, and when they call, people pick up the phone.

We had no prior relationships with our board members other than one member that I worked with nearly 20 years ago. So, like with an investor, we first had to pitch and sell each board member our company, our vision, our team, our product. From there they bought into, supported, shaped, and focussed our product, sales, and business development efforts. In short, a good board is invaluable and we are fortunate to have them.

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