The Chilean entrepreneur Mario Bustamante founded its first IoT (Internet of Things) company about 12 years ago. Bissen was sold to a South American retailer in 2015. “I’ve failed a lot, and I’ve learned a lot,” says Bustamante in an interview with LABS. One of his learnings turned out to be Instacrops, a spin-off of his first project.
Part of Y Combinator‘s accelerator batch, Instacrops is also featured in 2021’s Latin American Startup Directory of LAVCA (the Association for Private Capital Investment in Latin America) as one of the region’s agtechs that raised over $1 million in disclosed financing in 2020 and 2021’s first half.
In fact, Instacrops has raised $3.1 million in Pre-Seed and Seed rounds so far, and it is likely to announce a new round in December. The agtech is currently live on 280 farms across the region and has reached more than $200.000 in monthly revenue, growing 41% month over month. “Closing next year, we want to triple that,” says the CEO.
Yet, the Chilean startup is managing to be at the center of venture capital firms’ attention as investors are getting eager for agrifood tech. “We were talking with over 70 venture capital funds, all of them in Y Combinator, and I think 3%-5% of them are engaged with agtech. It’s a pretty low percentage, because sometimes, on the stage that we are, we are seeking to raise money from insiders, from agtech investors. It’s tricky because sometimes funds are afraid to invest in this industry, but I think we have five years to make this momentum of agtech in Latin America.”
The startup was born in 2014 to “help farmers maximize crop yields in Latin America,” as Bustamante describes. The first problem that the startup focused on solving was the frost condition. “We provide a solution that alerts farmers about this frost condition, and they can detect it and make better decisions to save their crops.”
With IoT sensors on the field, which Bustamante calls “the internet of plants,” the Saas platform combines data with satellite analysis to provide data-driven information to farmers. As a result, Instacrops claims to increase farmers’ crops yield by 22% on average.
It also says there are 2.9 billion acres of farmland in Latin America, making the region a $50 billion market. Today, the agtech has 43 people working in Chile, Colombia, Mexico, Uruguay, and Argentina. “Our challenge now is to grow our business in Latin America, mainly in the most important markets, Mexico and Brazil.”
Even though the company has been working with colossal agribusiness companies such as Bayer, it is now pivoting its product to tackle direct sales to farmers.
“We’re getting closer to the end-user and also working with third-parties, such as irrigation companies, to reach the [a new] customer base,” explains the co-founder.
Besides connectivity issues – as there are fields in Latin America with no connectivity – Instacrops has to overcome the financial challenge of finding new ways of improving its revenue through B2C products and also through new payments models.
Asked about how to sell directly to small and medium-sized farmers, Bustamante says the company is innovating to pivot to a more SaaS model and is considering implementing annual recurring revenue payments.
“A farmer ROI (return on investment) occurs in the crop’s season, so if he is earning $100 per month, he is recovering [the investment] in the first year. [So] It’s affordable for customers to pay an annual subscription cost,” he claims.
From its Chile office, the startup is operating in Uruguay, Argentina, Peru, and Guatemala, and from Colombia, it is doing pilots in Venezuela. From Mexico, the company wants to start exploring the United States. “We want to conquer Mexico and then Brazil; we are seeking North America and Europe after [that]. On average, Chile has farmlands of about 60 or 80 hectares, but if we go to California, we’ll see this average grow to 200 hectares, on average. Mexico is 25 times bigger than Chile, thinking about the market. So we have a lot of fields and farms to tackle.”