A startup’s journey can take unexpected twists and turns as it learns more about is customers and what they really need.
Canadian aquaculture platform XpertSea initially launched in 2011, offering a data-collection device for fish farms before establishing a marketplace for trading produce. But seeing its users struggle with finance sent it swimming in a new direction.
“After many years of selling technology to farmers, we had some good success, but frankly a lot of challenges,” co-founder and CEO Valérie Robitaille tells AFN.
“Although we were able to help farmers see how much more profitable they could be by better managing their production with data, they never knew how much money they made from their produce. It’s high risk and hard for them to invest in new technologies when their income is not guaranteed. We realized that all this data could be used to de-risk these investments and help them access cash. They don’t have a lot of other options for accessing capital right now.”
The Quebec City-based startup recently announced a $20 million Series B round led by QED Investors and Atlantico with Investissement Québec joining previous investors Obvious Ventures, Aqua-Spark, Future Shape, Real Ventures, and edō Capital to help it chart its new course.
According to Robitaille, most aquaculture producers have to wait between 30 and 90 days before they can receive payment for their harvest. This is a typical timeframe that buyers stipulate in contracts. As a result, farmers often find themselves strapped for cash, without the working capital to restart their ponds, buy inputs, or pay staff.
“What we do is use our technology to prepare an assessment of the value of production, and then we can advance up to 80% of the profit that the farmer will get when they sell their produce. They can use the money to reinvest and grow the business,” Robitaille says.
To assist with the rollout, XpertSea has hired Katie Sokalsky, a fintech expert who previously headed digital product management at Canadian financial services giant Scotiabank. Robitaille says Sokalsky has been “pivotal” in hiring the right people for the fintech expansion in order to scale it appropriately, as managing so many lines of credit can become tricky.
The Series B funding will be used to expand the fintech offering from South America, where it is already available, to Southeast Asia, where XpertSea’s data analytics platform is in use.
Other aquaculture hardware startups that have made the move into farmer financing include Indonesian outfits eFishery and Aruna, the latter of which raised $35 million in Series A funding last month. India’s Aquaconnect recently closed a $4 million pre-Series A round to improve financial access for its network of fish and shrimp farmers [disclosure: AFN‘s parent company AgFunder is an investor in Aquaconnect.]
Robitaille claims that in the 10 months following the launch of XpertSea’s marketplace in Ecuador, there was a 50% month-over-month increase in new shrimp ponds registered on its trading platform, with more than 10 million pounds of shrimp traded. This amounted to 10x revenue growth between Q1 and Q4 of 2020, she says.
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