Instead of scouring newspaper ads, fliers, and facebook, farmers can take control of the equipment buying process on Tractor Zoom using keyword searches and auction alerts.
If you wanted to start farming tomorrow, you’d have to cough up a pretty penny in farm equipment to get your venture started — even if you opted for decent, used equipment. A basic beginner’s list would run you somewhere around $715,000, according to Successful Farming, including things like a tractor, combine, grain cart, trailer, and other accouterments.
To make that pricey pill even tougher to swallow, you’re going to have to work hard to spend that money, scouring newspapers, fliers, and even Facebook to find each item on your list in the extremely antiquated agricultural equipment buying industry. Just ask Tractor Zoom CEO and founder, Kyle McMahon, who attended 1,000 auctions over a four year period.
“I was in farmland private equity with a group in Northern Iowa and I also wanted to buy equipment for my own farm. I recognized the inefficiencies in the marketplace and said we have to make this better and we have to figure out how to make money doing it,” McMahon told AFN. “There hasn’t been that one-stop-shop to find equipment until now.”
Tractor Zoom is hoping to ease the financial hit that most farmers take when it comes to purchasing crucial equipment through its digital marketplace that connects farm equipment auctioneers and buyers. Auctioneers can sign on to the platform and list equipment offerings. Currently, it touts 266 farm equipment auction companies using the platform to market their equipment, 97,000 subscribers, and 102,000 pieces of equipment that have come through the system since it launched in 2017.
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“Farmers can go to the site and type in the exact make and model that they are looking for and see every auction where they might be able to find that equipment. What we really offer in terms of value is a keyword or itemized search function including auction alerts. Farmers are busy and can’t always make it to the auction, but Tractor Zoom allows them to receive a text alert or email notification for a specific piece of equipment when it comes up,” McMahon adds.
The platform is monetized through traditional ad buys, primarily consisting of banks and insurance companies. Farmers have to provide their zip code when using the platform, which allows local vendors in the same county to advertise as he or she shops.
There are always challenges when trying to digitize an antiquated industry and farm equipment buying is no exception. Having grown accustomed to placing ads in newspapers or on paper fliers, the auction companies don’t always provide the robust equipment descriptions that encourage buyers to pay full price.
“We have to repurpose the information that auctioneers are accustomed to into newspapers for the site. That’s where AI kicks in. We have a natural language processing technology that helps us aggregate and separate data for reader usability,” McMahon explains. “Including information like the number of hours a piece of equipment has run and the serial number will garner more attention from buyers. The description definitely affects the price we find.”
The Iowa-based startup recently captured an undisclosed follow-on investment from Ag Startup Engine (ASE) to help it add its own Iowa team while growing into agricultural regions beyond the Corn Belt. This follows a $1 million seed round in September 2018.
“They are an awesome group of people and extremely ag-focused,” McMahon says about Ag Startup Engine. “If you have a question about agriculture, their network can help you solve the issues. Being part of that community gets you more than just access to capital.”
ASE’s fund aims to provide agtech startups with a way to move from the idea stage to a seed-ready business. Working in partnership with ISU’s Startup Factory Accelerator, the program has an infrastructure for mentoring, rapid prototyping, product development, customer acquisition, and financing. Some of the other ag startups that it’s backed include VetMeasure, ClearFlame Engines, Leah Laboratories, automed, FarmlandFinder, Performance Livestock Analytics, Nebullam, Gross-Wen Technologies, and Smart Ag.
Over the next six to twelve months, ASE hopes to add five more agriculture technology startups like Tractor Zoom to the portfolio, ranging from animal health to precision agriculture.
Ag-focused digital marketplaces are on the rise
The number of new online marketplaces for the agriculture industry seems to be increasing lately. It’s unclear at this point how many digital marketplaces the industry can bear, but as the space becomes more crowded, purveyors will need to differentiate their offerings in order to stay competitive. The flux in marketplaces could end up mirroring other meteoric rises in the foodtech space, such as third-party food delivery apps and meal kit services. Although an idea may initially catch on like wildfire, there’s only so much fuel available to fan the flames.
For now, investors and entrepreneurs are bullish on the concept. Former Climate Corp CEO David Friedberg recently invested in Tillable, for example, an online marketplace that’s targeting the $32 billion farmland rental market. The platform wants to help landowners optimize their leasing experiences by capturing multiple offers for leases and aggregating information on fair market prices to ensure that the landowner gets the best going rate.
At the end of last year, Indigo Ag launched Indigo Marketplace, initially for the sale of grain in 40 states in the US, but there is an opportunity for this new venture to expand according to the company. FarmLead has been offering a digital grain marketplace since 2017, while Grão Direto operates a digital commodities trading platform in Brazil.
Marketplaces are also showing promise when it comes to increasing profitability and supply chain efficiency in developing regions like India and Africa. Wefarm, a mobile phone-based farmer network and collective for smallholders farmers in Africa, is working to launch an agribusiness marketplace to help farmers secure better access and cheaper prices for critical inputs like seed and fertilizer. Meanwhile, India’s DeHaat is also working to provide farmers with better prices, more buying power, and access to financing and capital.
They’ve also proven useful in the food waste space as a means to connect eager buyers with farmers who don’t have an alternative distribution channel for their misshapen or otherwise unwanted produce. Examples include Reddit co-founder-backed Silo and B2B end-to-end service Full Harvest.