Aiming to both increase productivity and lower costs, Latin America’s agribusiness sector has turned its attention to startups. Although agriculture is considered to be a more traditional business, the truth is it has always made use of technology. The difference now is that the agrifood tech-startup ecosystem in LatAm offers a wider range of solutions for the various stages of the entire production chain; broadening access to valuable data insights for farmers and agribusiness companies.
“From the perspective of gross product value, a technology that effectively meets the pains and needs of this market has a very large potential for scalability,” said Cleidson Dias, an analyst at Embrapa‘s innovation and business secretariat and one of the creators of Radar AgTech Brasil 2020/2021, a document that maps agribusiness startups in Brazil.
Moreover, any positive financial impact is significant, because agribusiness in Latin America is a billion-dollar market and even a minimal reduction in loss can represent a savings of millions. However, so far, agtechs have not yet managed to reach their full market potential.
“It’s a sector that still lacks technologies, with many traditional practices that have been replicated for many years. There are new technologies that bring significant effectiveness to production, but they are not yet known by everyone,” continued Dias.
In other words, there are still many opportunities for agtechs to expand, not only because this is a huge market, but also because there is a vast range of areas in which they can operate. Usually grouped into three major areas – pre-farm, on-farm and post-farm – the solutions developed by agtechs are subdivided into smaller segments.
According to the Radar AgTech Brasil 2020/2021 report, pre-farm solutions encompass seven other categories, including startups working on fertilizer, seed, credit, and input marketplace. For on-farm there are another 13 categories, including property-management systems, drones, machinery and equipment, systems and data platforms. Finally, for post-farm, there are another 13 categories including innovative foods, marketplaces and platforms for trading and selling products, storage, infrastructure and logistics.
The report shows that out of the 1,574 farmtechs mapped, 718 operate in the post-farm category, followed by companies that operate on-farm, with 657 and, finally, those that create pre-farm:199. Considering the type of solution, most agtechs are in the fertilizers, inoculants and plant-nutrition category, there are 293 of them in Brazil. For on-farm, 154 focus on farm-management systems; and in pre-farm, there’s nearly al tie between those that develop fertilizers, inoculants, and nutrients (46) and those that work with credit solutions, barter, insurance, carbon credits, and fiduciary analysis (42).
“Agriculture and agribusiness tend to be very fragmented. There is a lot of diversity according to the farmer profile, from small to medium-sized, or for large agribusinesses. The challenge for agtechs is to segment correctly, define what kind of farmer to serve and what kind of help they need, and then do it responsibly,” said Gonzalo Pérez-Taiman, founder and partner at Arpegio, a Chile-based venture capital fund that invests in agrifood startups.
Arpegio, together with the U.S. venture capital fund AgFunder, has published the LatAm Agrifoodtech Market Map. The mapping shows how this market can still grow a lot. It depends, according to Pérez-Taiman, on technology and investment.
“As a region, Latin America today leads food exports to the rest of the world. And there are technological advances in other regions that threaten Latin America‘s leadership. It is important to invest not only in local startups but to bring in technology from outside to maintain competitiveness and continue as a leader and at the same pace of evolution as the rest of the world,” said Pérez-Taiman.
Pre-farm: Bart Capital
One of the most bureaucratic and complex operations in agribusiness is the barter, a kind of negotiation between rural producers and input companies. Digitizing this process that occurs at pre-farm was the challenge of Bart Digital, an agtech startup founded in 2016 in Brazil.
With an initial investment of BRL 2.2 million from venture capital firm SP Ventures, the startup developed the Ativus platform, launched in February 2020. The timing was just right. “In March came the pandemic and the company had a huge growth leap. We didn’t know the pandemic would boost the digitization of agribusiness so much, especially the financing itself,” admitted Bart Digital’s CEO, Mariana Bonora.
In 2020 alone, the Brazilian agtech handled more than BRL 3 billion in receivables. Now the startup expects to reach BRL 7 billion this year since Bart Digital quadrupled its customer base.
“Until 2020, we had a lot of big clients, industries, and big groups. When we decreased the complexity and increased the roster of profiles we serve, we quickly scaled our user base. We have clients ranging from startups to trading companies, mills, and industries,” celebrated Mariana, who added that Bart Digital is in the fundraising process to expand the Ativus platform.
On-farm: Space AG
There is not much value in a satellite image or a photo captured by drones if there is no interpretation of what it means to the rural producer. It is from this concept that Space AG emerged in 2017. Previously a drone company named Spacedat, Space AG evolved to develop and supply a range of tools to increase crop productivity.
These are tools that detect irrigation deficiency and other anomalies, identify and quantify dead plants, project crop yields, and determine and pinpoint productive or non-productive areas. All these insights are visible to the farmer in a smartphone or computer app.
“There was a whole process of educating the farmer, who is very used to touching the land and saying that water is missing. Today, it is possible to tell which zones are well irrigated or below some parameters with a satellite image or a drone with a thermal camera. Before, this concept was very abstract for the farmer,” said Cesar Urrutia, co-founder and CEO of Space AG.
Headquartered in Peru, where it provides services to the world’s leading agri-exporters of blueberries, avocados, citrus and grapes, Space AG has already expanded into other Latin American countries such as Chile, Colombia, Costa Rica, the Dominican Republic, and Mexico. Today, the startup is valued at $4.8 million and will participate in a Series A funding round soon. It previously raised $1 million in a Seed round.
Blockchain is definitely not a widespread term in agribusiness, but it is paramount for Agree, an Argentinian agtech startup founded in 2017. The startup‘s business is focused on buying, trading and selling grains and their by-products, all within a blockchain. Today there are more than 500 active clients on the platform, through which more than 1.5 million tons of products have been traded.
“In this first phase, we included blockchain to ensure more transparency, traceability and security. The main objective is data veracity. But we are already looking at other more elaborate blockchain features, focused mainly on financing,” explained Nicolás Mayer-Wolf, co-founder and CEO of Agree.
A $2 million investment from Sancor Seguros in a Series A funding round in April will enable this evolution, including expansion to other countries beyond Argentina, Paraguay and Uruguay, where the agtech is already operating.
“In addition to a presence in the main Latin American markets, we want to consolidate our products with new features and even new products. We have a very clear product roadmap to continue growing,” projected Mayer-Wolf.