Agtech venture capital firm Finistere Ventures has helped bring the investment arm of global shipping company Maersk into a $6.5 million Series A financing for TeleSense, which offers hardware and software designed to reduce grain spoilage.
Other investors in the round include Trailhead Capital, Radicle Growth and Rabobank’s Food & Agri Innovation Fund.
TeleSense aims to improve food safety and grain storage through the continuous monitoring of temperature and humidity of stored commodities by softball-sized sensor spheres. The spheres, which cost between $300 and $500 each, are placed into storage bins alongside grain.
The company also sells software designed to incorporate rapid detection and notifications of anomalies by the sensor spheres and help refine decision-making around how grain is stored, handled and traded. Its customers include companies engaged in grain storage, local transport and cold storage.
Finistere partner and co-founder Spencer Maughan told Agri Investor the firm initially became interested in temperature and humidity control through conducting a study on global grain quality, which highlighted room for improvement. After meetings with Maersk at its Copenhagen headquarters and in California, he said, Finistere was able to secure an investment from Maersk Growth, a venture capital unit established last year.
“Especially in the ag and food world, where there is a reasonable amount of consolidation or market complexity, it is helpful to have a market partner,” Maughan explained. “That does not necessarily mean a channel to market, but someone with deep expertise and knowledge of the market and the pain points of effecting their business.”
A 114-year-old VC
For Maersk, participating in TeleSense’s Series A is part of an effort to look for new areas of growth as the company strives to evolve from a shipping company into a provider of end-to end-logistics, Maersk Growth venture partner Peter Votkjaer Jorgensen told Agri Investor.
“When you are a 114-year-old ex-conglomerate, you are not necessarily the most agile people in the world,” Jorgensen said. “In order to be a credible investor, we also need to invest the time and money in becoming a credible partner. We can’t just say: ‘We’re Maersk, that will solve everything.’”
So, in addition to financial return, Jorgensen said, Maersk hopes the TeleSense investment will give the company a new experience in working with entrepreneurs and venture capital firms like Finistere.
“We want to invest in exactly the same way as a Finistere would, yet some of [the companies they invest in], we would want to be in longer term. And we could potentially see ourselves as an alternative to an IPO,” he said.
“We could potentially see ourselves as an alternative to an IPO”
Peter Votkjaer Jorgensen, Maersk Growth
Because most potential investments designed for immediate integration into the wider Maersk platform are likely to be in sectors in which the group already operates, Jorgensen said, the near-term focus has settled on early-stage ventures, especially those tackling food waste.
The unit also recently sponsored Foodtrack by Maersk, a start-up competition focused on businesses contributing to efforts to reduce the 1.3 billion tons of food that are lost annually to waste.
“We transport about 30 percent of all perishables that go into containers in the world,” Jorgensen said. “About 75 percent of food waste is actually technically what you would call ‘loss.’ It happens before the consumer and it’s linked to distribution, logistics, storage, post and pre-harvest elements.”
The need to address food waste is further underscored, according to Jorgensen, by the fact that most of the population growth expected in the next decades is in markets suffering from a deficit of food. That dictates that imports are bound to rise.
Precise measurement of expected maritime food trade flows is made difficult by the poor quality of data generally kept in agriculture, Jorgensen said. But the fact that spending on cold-chain infrastructure has been growing by 10 percent annually in recent years provides a proxy that suggests trade will continue to grow, he argued.
The global nature of the food trade and related waste challenges were also a motivating factor for TeleSense chief executive Naeem Zafar.
Zafar told Agri Investor the company was created after he decided to find an industry that had not yet been impacted by the ‘Internet of Things,’ currently a buzzword among digital start-ups.
Zafar, who has participated in six previous start-ups and sold his most recently launched software company to Oracle, also wanted to make a lasting social impact.
“I’ve done enough capital raising, it’s not about making money,” he said. “It’s about doing something meaningful with my life now that this might be my last start-up.”
“Maybe it’s time that agricultural innovation comes from outside agriculture”
Naeem Zafar, TeleSense
Currently, Zafar explained, higher-end grain silos have wires hanging from the ceiling that are equipped with temperature sensors to monitor combustion and contamination risk. In many instances, Zafar said, owners of grain have to read measurements displayed through junction boxes located outside silos in person and enter the information into their computers manually; a time-consuming process that produces often low-quality data.
“In Australia, for example, in one place they were telling me that they go once every two weeks because it’s an eight-hour round trip to travel to that site and write down the value,” he said. “Our solution is, we have a box sitting next to this box [the junction box outside the silo] and it automatically, wirelessly sends the data to the cloud.”
In future, Zafar said, TeleSense hopes to integrate an artificial learning component to its offerings, which would allow for predictive analysis to help further guide decision-making around grains and transportation.
Outside the box
Working together with Maersk was especially important, according to him, because transportation presents challenges distinct from those encountered when storing grain on land. He explained that grain cargoes often pass through multiple climates and experience changes in humidity and temperature that can be harmful.
“In Brazil, it’s an area of high temperature and high humidity. You pack a bunch of grain, like soybean, and take it China, it’s going to go through some pretty dramatic temperature variation,” Zafar said. “These grains are going through all kind of moisture, mold, disease, infestation and we want to be able to detect it and take corrective action before it becomes a problem.”
He admitted that assembling an investor syndicate behind TeleSense would help it fit in with agriculture’s existing financial and commodity supply chains. But Zafar also believes his limited ag experience in the sector could also serve as a strength.
“In the last 50 years, most innovation has come from someone who is not from the industry. Look at Airbnb; a hotel guy didn’t start it. Tesla; Detroit didn’t start it. Uber; it wasn’t a taxi company that started it,” he said. “Maybe it’s time that agricultural innovation comes from outside agriculture.”