Online Ottawa grain marketplace FarmLead sowing seeds of growth

Local firm lands $6.5M financing round for app that allows buyers and sellers of crops to directly negotiate their own deals
Farmlead
Alain Goubau, left, and Brennan Turner founded FarmLead to provide farmers with an alternative to traditional methods of selling their crops. (Photo by Mark Holleron)

Farm boys at heart, pro hockey player-turned-entrepreneur Brennan Turner and business partner Alain Goubau surveyed the agricultural landscape a few years back and saw a growth opportunity of a whole new kind.

After spending much of their lives on family farms – Mr. Turner at a 40,000-acre grain-growing operation near Foam Lake, Sask., and Mr. Goubau on a dairy and cash crop enterprise in eastern Ontario – they’d seen how much technology had changed the way staples such as wheat and corn were produced.

Yet the process of actually getting those products to market was still amazingly antiquated, they thought.

“When I’m getting off a combine at 10 o’clock at night, nobody from the grain company is answering my phone call,” says Mr. Turner, who spent plenty of evenings harvesting crops on the prairies growing up. “We wanted to develop a platform that was going to allow for grain trade to happen any time, anywhere, with potentially anyone.”

The result is FarmLead, an online marketplace that allows buyers and sellers of grain to connect via computer or mobile device and negotiate their own terms of sale.

By setting up a free account, buyers or sellers can post offers, sort and browse offers by location, grain type and other categories and take part in the back-and-forth of negotiations – all on a secure app. FarmLead charges both parties a flat commission fee per metric tonne sold, but the company says it’s more than 50 per cent less than traditional brokers charge.

“We’re changing the way that grain gets marketed,” says Mr. Turner, a former defenceman in the Ottawa Senators minor-league system who brings an athlete’s intensity to his business career.

“At the end of the day, we want to have farmers be better at selling their grain and making sure they’re getting the best possible price. Right now, commodity prices are very depressed. Margins are tight. And every single dollar per metric tonne more that we can get for that farmer through the farming marketplace, that’s why we really exist.”

Founded in late 2014, the fledgling firm is based out of Invest Ottawa’s new headquarters in the Innovation Centre at Bayview Yards. Now at 19 employees, the company expects to double its headcount within a year, thanks in large part to a multimillion-dollar infusion of venture capital announced earlier this month.

Monsanto Growth Ventures, the investment arm of agriculture biotechnology firm Monsanto, led the US$6.5-million series-A round. Avrio Ventures, MaRS Investment Accelerator Fund and Serra Ventures also contributed to the round.

Mr. Turner says much of the cash will go toward setting up and staffing a new sales office in Chicago, a city the company identifies as a key access point to U.S. grain regulators. He says cracking the lucrative American market will be among FarmLead’s top priorities over the next couple of years.

“We’re already there,” he says. “We just haven’t really been aggressively pursuing it in terms of dollars spent.”

 
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So far, Mr. Turner says, more than 4,000 farmers have joined the platform, using it to trade 1.4 million tonnes of grain.

The number of transactions has been growing by about 10 per cent a month, a rate he’d like to see double over the next year. The average transaction is worth about $70,000, and the firm is on track for six-figure revenues in 2017, Mr. Turner says.

While farmers “tend to be a little bit risk-averse,” once they use the app most customers are quickly convinced of its advantages over traditional grain-trading methods, he adds.

“I pick up the phone, I talk to one person,” Mr. Turner explains. “I post on FarmLead, I’m talking to dozens of verified buyers all at the same time. When you have more options to potentially sell to, the likelihood you get a better price is going to increase. How do you sell a vehicle? How do you sell a house? You’re going to advertise it. We’ve given that mechanism to a (grain) producer for the first time ever. No one has ever done this before.”

The company moved into Invest Ottawa’s offices in July 2015, partly to tap into the region’s wealth of tech talent and also because its founders felt the city would make a strategic home base in their effort to penetrate the Ontario market.

“We’ve embraced Ottawa,” Mr. Turner says. “It’s been a great city to us.”

It also helped that the 6-foot-3 former blueliner – who won a Calder Cup championship in 2011 as part of the Senators’ American Hockey League affiliate in Binghamton, N.Y. – was already somewhat familiar with the capital from his playing days. Fittingly, he uses a sports comparison when describing his business philosophy.

“We don’t want anyone else to beat us. I use too many hockey analogies for our tech team, but they eventually get it,” Mr. Turner says with a laugh. “Let’s work towards where the puck is going to be, not where it’s been. We are the leader right now. Let’s continue to be a leader. Let’s continue to innovate.”