As long-time IoT investors, for years we had our sights set on agriculture given the enormous potential for efficiency gains through technology. Over a multi-year period we dug deep, but a repeating theme continued to emerge: despite having compelling technologies (both software and hardware), most companies were unable to achieve significant distribution with the economics needed to build a viable standalone business. A challenging cold-start issue existed where companies would struggle to prove ROI without scale, and farmers were becoming ever more skeptical of spending what little cash they had on hand. What most companies lacked was an alignment with farmers. US farming is highly fragmented, and facing unprecedented pressures. For years row crop farmers have been squeezed by the large agricultural input providers as input costs have continued to rise even as yields (and prices) have plateaued. As the horizontal consolidation of input providers and grain buyers has continued, farmers' margins have become razor thin. Against this backdrop, strong technology companies were struggling to reach scale, despite the fact that their technology is needed more than ever. Enter Indigo.
We had been tracking the business for several years and knew the business well. We knew the company had developed an industry-leading portfolio of IP in the plant microbiome. But around the time of their Series D financing, the Indigo team, led by CEO David Perry, was beginning to leverage this microbial technology to build something even more ambitious: a comprehensive platform for agriculture built on a partnership model with growers. Beginnings: Indigo started out as a microbiome company, identifying naturally-occurring bacteria that had a positive effect on crop performance and reintroducing them to plants in the form of an organic seed coating. Their seed product exhibited step-function increases in yield, and with it came the opportunity to fundamentally change the business model for agriculture. Using their yield boosting seeds as a wedge, Indigo is able to offer growers the ability to significantly increase their profits and allow them to grow their crops in a sustainable manner. In order to do so, Indigo partners with farmers to offer them a de-risked business model that creates a strong incentive alignment and opens the door for Indigo to push technology to the farm at no risk to the grower. By offering growers a clear route to increased profitability, Indigo has been able to reach scale more quickly than any other ag tech platform in history. Indigo manages the largest farm footprint in the United States.
Looking to the Future: With alignment comes access to land, and with access to land comes the ability to implement IoT technology at a scale where it can achieve real ROI. Acting as the central platform for agriculture, Indigo partners with best-in-breed ag technology partners to deploy their technologies (both hardware and software) at scale. Indigo not only benefits from the economies of scale (they can use the same piece of equipment across many farms) but from the increases in yield, as Indigo captures a portion of GMV. Furthermore, the data collected during the planting and growing seasons provide for visibility into the ag supply chain and continued improvement of the core microbiome solutions. By partnering with growers at the time of planting and providing agronomic support throughout the growing season, Indigo can predict local yield data and supply volume well before harvest. They can partner with grain buyers, ingredients processors, and CPG groups ahead of harvest to provide a differentiated supply of crops with premium characteristics, such as non-GMO or high protein content. With the recent launch of a digital crop marketplace, Indigo is opening up a range of supply chain and sourcing possibilities that represent a significant improvement from the one-size-fits-all regime of industrialized agriculture. In doing so, Indigo improves consumer choices and shares the profits of this improved system with the farmers that make it possible. Activant led Indigo’s Series D round in 2017 and participated in its Series E this past summer in support of the Indigo mission.