LAVCA spoke with Santiago Gonzalez Venzano, Rodrigo Ramírez, and Tomás Peña, co-founders of Solapa4, who discussed how their company is building a cloud-based platform to help farmers aggregate and make smarter decisions from the large amounts of data collected in the agricultural production process.
LAVCA: Please give us a brief summary of Solapa 4’s business.
Solapa4: Solapa4 is a leading platform for smart agriculture. We help farmers aggregate and make decisions based on the large amounts of data collected in the agricultural production process. Thorough proprietary artificial intelligence algorithms, Solapa4 enables farmers to get useful insight about their fields and interact with their equipment, which provides “georeferenced” orders. This helps them to optimize their cost structure and get better yields, which ultimately improves output and leaves a smaller environmental footprint.
The geo-referenced multichannel software is cloud-based and accessible via web and mobile, and allows farmers to plan, operate and analyze the results of a crop from an individual, organizational and benchmarking perspective. At the same time, the platform allows the producer to work with his supplier of products and services in an integrated, process-driven manner.
Solapa4’s process provides agricultural suppliers the opportunity to develop new products, optimizing their R&D trials over much larger and disperse areas.
LAVCA: How did you come up with your business idea?
Solapa4: Santiago Gonzalez Venzano (Chairman) and Cesar Belloso (VP) together have more than 25 years as agricultural technology advisors. Their experience made them realize that by designing a standardized process with new technology they could develop a georeferenced platform.
In 2005, they merged their team of technical advisors, including Mariano Tamburrino (CTO) and Santiago Barberis (R&D), and in 2008 they asked Rodrigo Ramírez (CEO) to join them in the development of the business model of this concept. In 2011, Tomás Peña (Business Development and CFO) and Laura Lukasik (COO) were invited to structure the company to grow both in Argentina and abroad, launching a round of fundraising for US$2M with an US$8M valuation.
LAVCA: What is in your background that helps you succeed in managing your business?
Solapa4: The Solapa4 founders are leaders in the applied agricultural technology in Argentina, a country that is known as a global early adopter of this technology. They are innovators that led the incorporation of non-tillage technologies, precision farming, georeferenced technologies, and biotechnology products. Solapa4 has incorporated knowledge on CRM, business intelligence and project management. We are currently working with up to five outsourced teams that specialize in GPS technology, Business Intelligence, Mobile, User Experience and Big Data architecture.
LAVCA: What financing have you received thus far? From whom?
Solapa4: We have received more than US$800k in seed money from friends and family, customers and industry leaders.
LAVCA: Given that you just received your first round of financing, to what extent did investors take your own cash flow projections into account in their equity valuation of your company?
Solapa4: Our investors were more focused on the quality of the team and the size of the opportunity. There are 1.3bn hectares of arable land in the world, each hectare can produce up to 5,000 pieces of data per harvest. Farmers can’t cope with that amount of information and they usually use less than 10% of what they collect. Our investors are also looking for new opportunities that are generated by understanding agriculture from a different perspective.
LAVCA: What feedback have you received from investors about where to make improvements in your business model?
Solapa4: They have been very helpful in identifying ways to improve the user experience of the product, and have also been helpful in pointing out minor bugs on the platform in the last two years.
LAVCA: How do you view the role of strategic investors? In your view, what is the most useful way for a strategic investor to get involved in an investment early on?
Solapa4: We believe that the most important value that a strategic investor can provide to us is the knowledge of how to take this business global, how to make the application easy to use, and also how to help us deliver our algorithm in an “Amazon” way.
LAVCA: Is the Latin American (or Argentine) agricultural market for your product sufficiently similar to other markets to allow Solapa4 to grow internationally? How would you view your prospects outside of your home markets?
Solapa4: We are currently working in Argentina, Colombia and Uruguay and we are already working on prospects in countries such as Ukraine, Brazil, the US and Chile with 14 different crops including: soy bean, chia, wheat, rice, chickpeas and corn.
We also see that the Argentine market is highly competitive in terms of technology usage, management, and processes. This means that our product could be adapted to other fertile agricultural areas. Managing different cultures across geographies will be a key challenge. For instance we have been working very hard on this aspect of our business across geographies and have already achieved great success in the case of Colombia.
LAVCA: Who is your competition? What do you see as your competitive advantage?
Solapa4: We know that there are large corporate players (agricultural suppliers and precision agriculture) working on a similar concept of Solapa4, but our competitive advantage against them is that we are independent players. On the other hand, we have many competitors that are working on different individual solutions that we are working on as part of an integrated process. Our key competitive advantage here is the integration of the entire process based on producer needs, and the interaction between the product and service suppliers.
LAVCA: Where do you see your company five years from now?
Solapa4: In five years, we imagine producers around the world walking around their farms accessing Solapa4 with a smartphone to have access to their data and checking what they can do to optimize the return of their crops.
LAVCA: Are you looking for additional financing? What profile of investor are you looking for in this additional financing?
Solapa4: We are looking for a strategic partner to internationalize. We believe that they will have to share and/or incorporate our vision, believe in the team and help us to maximize the competencies needed to understand how to make this bigger, faster, and more user-friendly. Above all, that they will have to enjoy the process of making this business a success as much as we do.
LAVCA: How do you plan to put your next round of financing to use?
Solapa4: The first step is to focus on improving our user interface and enhancing our predictive algorithmsSecond is the internationalization of our platform to serve Brazil, USA, and rest of Latin America, Africa and Asia. Third is the market development in each individual country.
We believe that the biggest investment that we can make is to expand in Brazil and the United States. We think that 70% of the money should go to expanding in those markets, and 30% to marketing and system improvement expenditures.