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ADM, LDC, Cargill back $8m Series A for Brazilian agri app Grao Direto

Grao Direto chief executive Alexandre Borges says high-level interest in digitizing agricultural supply chains has helped attract a steady stream of international investors despite Brazil’s sometimes volatile backdrop.

Archer Daniels Midland, Louis Dreyfus Company and Cargill were among the investors in a $8 million Series A round for Grao Direto, a Brazilian startup focused on digitizing agricultural supply chains.

Grao Direto began operations in 2017, offering a platform for negotiating and carrying out grain transactions traditionally completed by phone.

ADM and Dreyfus already use the company ‘s application-based trading platform and were joined in the round by another customer, Brazilian grain trading company Amaggi Agro.

“Those are companies that are leaders in agriculture,” Grao Direto chief executive Alexandre Borges told Agri Investor. “They understand how agriculture needs modern and more innovative ways to do business. I see them really committed to pushing forward this digitization agenda.”

The company’s application was used to connect 1 million tons of grain sales negotiated through more than 200,000 purchase and sale orders within Brazil over the past year. The company has plans for expansion into other areas of the country and wider Latin American region.

This kind of digital trading, which aims to connect pricing in physical agriculture markets to developments in financial markets, is still in its early stages within Brazil and other markets worldwide, according to Borges.

“In the beginning, we had an article calling us the ‘Tinder of agriculture’ and we have a kind of match-making process,” Borges explained.  “We are building an ecosystem around grain trading emulating the same logic that stock exchanges had centuries ago. Putting direct marketer operators together in a common place to benefit the entire market.”

The Chicago Mercantile Exchange is among Grao Direto’s strategic partners. The Series A is the third fundraising round for the company, whose previous two rounds of $700,000 and $2.5 million included investments from Bayer, Latin America-focused early-stage technology venture capital firm Canary and individual investors including former chief executives of Microsoft Brazil and LinkedIn Latin America, according to Borges.

He added that, though there is a widespread perception that Brazil is a volatile market, the country’s unique role in global agriculture guarantees a certain level of investor interest.

“When we put together agriculture and Brazil, then we have a more stable and thriving interest,” he said. “That’s why we didn’t suffer from these waves in the past and we have been able to attract a lot of different profiles, especially international investors so far.”

Borges said Grao Direto will likely aim to raise more private capital again within about 18 months and envisions some form of public market listing within about five years.

“A lot of Brazilian startups are deciding to do their IPO in the US. Of course, the Brazilian local stock exchange is doing a great job too to attract startups and digital companies to open capital in Brazil,” he said. “It’s still a long way to go. We are very focused on the operation now and building what we want to build, then we can decide the best geography.”