FarmLogs Chief Talks Investment, Expansion and Commodities
Ann Arbor, Michigan-based, FarmLogs has begun 2017 having realized multiple achievements including raising its largest funding round to date of $22 million in a Series C, bolstering its influence to more than one-fifth of U.S. row crop acres under management, and expanding its footprint with a new office in Des Moines, Iowa. Jesse Vollmar, FarmLogs co-founder and CEO, spent some time with GAI News to reflect on the agtech startup’s developments and more, including commodity prices and international expansion.
Prior to the Series C round of financing, FarmLogs had raised a total $15 million, making this round the largest of all the previous rounds combined, lifting the tally to $37 million. Vollmar said the company wasn’t out seeking to raise this much capital, but the offer from first-time lead investor Naspers Ventures in addition to follow-on commitments from existing investors was too good to refuse.
“We weren’t running a long fundraising process. We had other offers and then this offer came in and ended up being really the right move for the business to partner with Naspers,” said Vollmar.
FarmLogs, whose technology is designed for row-crop farms, is Naspers’ maiden U.S. agtech investment since the firm expanded its presence into the United States in recent months. Mike Katz, who is now a part of the FarmLogs five-member board of directors, was named to spearhead the effort. In fact, it was Katz who reached out to Vollmar about the opportunity, though the pair knew one another from Katz’s earlier days at Battery Ventures.
“I knew Mike, but I didn’t know anything about Naspers really,” said Vollmar, adding that prior to mid-2016 the investor was known for its involvement in U.S. funds not U.S. companies. “They were not typically the fund that came to mind,” he added.
So Vollmar began his own due diligence. After discovering a link between his future backer and the likes of Sequoia Capital Global Equities (a Naspers investor), he liked what he saw. “It turns out everybody in Silicon Valley loves and respects Naspers,” he said. Vollmar then met with Naspers Ventures CEO Larry Illg.
“We shared about the progress we have been making and the vision for where we’re going, and it made a lot of sense to them that this was an area they should dig into deeper. Ultimately they fell in love with what FarmLogs was doing and we fell in love with what Naspers can bring to the table. And we were able to partner together,” said Vollmar.
Meanwhile, FarmLogs’ mission since the company’s launch five years ago hasn’t changed – to build a better future for farming. The last time Vollmar spoke with GAI News he said that he was in this not for a swift exit but rather to build a great company. Never has this been more true, only now FarmLogs has a partner with a similar approach.
“They are very long-term investors. That’s really aligned with our business and how we think of growing it. There is a massive company to be built here and it’s not going to happen overnight. To have a capital partner like Naspers on board that doesn’t have to return funds on the typical seven-year cycle and that is investing from a very powerful balance sheet, there is a lot of flexibility as a financial and thought partner,” said Vollmar.
FarmLogs is in good hands, evidenced by Naspers’ portfolio filled with investments including Tencent, China’s Google/Facebook combination that is worth a cool $280 billion. “They never sold a share,” said Vollmar, adding that the investor continues to see that company as a growth opportunity. Naspers is also behind Flipkart, India’s version of Amazon.com for which the investor led a $1 billion round. “They have a track record of backing some of the most successful business on the Internet outside of the United States,” said Vollmar, which lends itself well into FarmLogs future expansion plans.
“Today we’re focusing on the United States but it’s a global opportunity. Eventually we will be bringing FarmLogs technology to other parts of the world, and having a backer with Naspers’ operating experience around the globe is tremendously valuable to us.”
The Tech Solution
The current market environment for farmers that has sent prices for commodities such as corn spiraling, has no doubt catapulted farmer demand for precision ag.
“To me it’s not a cycle. These new commodity prices are here to stay. What that means is that U.S. producers must find a way to be lower-cost producers,” said Vollmar, adding that the cost of U.S. production has risen to unsustainable levels, and when coupled with oversupply, has been reflected in farmers’ inability to turn a profit in the past few years. “From what I understand we’re not going back to $6.50 corn. It’s not going to happen.”
Vollmar points to technology as the solution. “Technology is going to lower the cost of production. We’re doing that through our products … to make sure farmers aren’t over spending on inputs but still delivering the best bushel per acre using the most efficient path for the field,” he said.
FarmLogs, with its newfound capital will continue to add to its roster of engineers, data scientists, product designers, researchers, and agronomists and will continue to invest in its product lineup with new functionality in addition to innovation that is yet to come. “We’re transforming the way we do agriculture, the way we grow crops, and opening up whole new opportunities for farmers to manage their businesses smarter and more efficiently. But we’re by no means done. I think we’re scratching the surface of what we’re capable of doing,” said Vollmar.