OnFarm, the agriculture data technology company, has raised $800,000 through online fundraising platform AgFunder in the platform’s first deal.
OnFarm and AgFunder started marketing $400,000 in convertible notes last month getting orders for over $200 million in the first day. New orders soon took the deal to $800,000 making the deal oversubscribed by 200 percent. And there was demand for more beyond that hard cap, according to Rob Leclerc, founder and chief executive at AgFunder.
“There were also additional institutional investors interested in the deal, but they were slow to act and there wasn’t enough allocation for them in the end,” he told Agri Investor in an email. “If we ran it for the whole 90 days I think [OnFarm] could have easily had another $400,000 – $800,000 if the round hadn’t been capped.”
The OnFarm deal book was a combination of institutional and angel investors of which some had a background in agriculture and others were high net worth individuals, according to Leclerc.
OnFarm decided to issue convertible notes ahead of a $4 million Series B institutional investor round in June to enable angel investors to participate as their notes will be converted to equity later, according to Lance Donny, founder and chief executive of OnFarm.
Other market participants are watching AgFunder’s progress closely such as investment analyst Christina Tamer for Invested Development, an impact investment management firm. Invested Development’s $20 million BSP Fund invested in the second round of fundraising in OnFarm before it appeared on the AgFunder platform.
“We are very interested to see how it plays out because we think that there is a lot of potential in agtech,” said Tamer. “AgFunder is doing a great job of getting a network and I think it will be particularly useful for angel investors as they can share due diligence with others.”
Financial crowd-funding platforms like AgFunder have started to appear more as companies look for alternatives ways of reaching investors. CrowdCube and Seedrs are two examples or equity fundraising platforms for start-ups.
These forums can help “solve the problem that the investment market is highly suboptimal and relationship-based”, said Leclerc. “The problem we are solving is bringing both sides together.”
And they are increasing in popularity. “Since we launched in December we have been surprised at the size of deals coming to us, and not just small agtech deals,” Leclerc told Agri Investor. “We now have nearly $1 billion in the pipeline which is a shock to us.”
“For institutions deal flow can be a challenge so we have created an institutional track to give them preferred access. It is still a matching issue, and not all deals are fitting to everyone, but when we see a match, we make the introductions.”
The platform’s online nature is also a bonus that can save time and money, according to Leclerc.
“You can do a lot by bringing the whole process online and doing webinars instead of serial face-to-face meetings saves a lot of time and money,” he said. “It is a market place more than a crowd-funding location.”
The investors that Leclerc and his colleagues have spoken to include private equity funds, family offices, venture capital firms and angel groups in San Francisco and some foundations and non-governmental organisations in Washington.
The size of the transaction will impact which investor base they target, he said. Ideally deals will have an anchor investor, he added.