G2VP led a $43 million Series C for Los Angeles-headquartered ProducePay to expand use of the start-up’s financing, analytics and marketplace platform in Latin America.
The round was co-led by the International Finance Corporation and the Inter-American Development Bank’s IDB Invest unit. It also saw the addition of agtech-focused investors that included Finistere and Astanor Ventures.
Partner Ben Kortlang told Agri investor his team has been familiar with ProducePay since about 2015, when the team now leading Menlo Park, California-headquartered G2VP were investing from Kleiner Perkins‘ Green Growth Fund.
That vehicle, he said, began with a focus on renewable energy and eventually branched out to a broader climate focus that included transportation, logistics and agriculture. The fund’s single agricultural investment was Farmers Edge, the Manitoba, Canada-headquartered precision ag and data management software provider that listed on the Toronto Stock Exchange in March.
G2VP was established by the Kleiner Perkins Green Growth team in 2016 to focus on the application of emerging technologies to the same traditional industries, including agriculture.
ProducePay was established in 2014 to offer flexible financing options to growers at every stage of the cycle. It also provides real time pricing and analytics data derived from public and private sources and operates a marketplace connecting growers, distributors and suppliers that has facilitated more than $3 billion in trade across 12 countries in North and South America.
ProducePay was in touch with G2VP again around the time of its $14 million Series B in 2018, said Kortlang, when his firm provided some advice about how to build the business, but was not yet ready to invest.
“When we saw them again at the end of 2020, we were extremely impressed, not just with what they’ve built, but also the going-forward vision, in particular around building what they call their preferred network, which we think has a chance of completely transforming the way the fresh produce industry does business.”
ProducePay’s Series C brought its total debt and equity capital raised to $300 million and will be used to support an expansion in Latin America. For DFI investors like the IFC and IDB Invest, said Kortlang, support for ProducePay is attractive because the marketplace it facilitates can address information asymmetries that often disadvantage smallholders.
Kortlang explained the fresh produce market has historically been an opaque and inefficient industry where the lack of price information sharing makes it hard for distributors to find the best trades.
“We’ve seen that same type of thing play out in many markets across the industrial space and say: ‘This is an opportunity to build a digital marketplace,’” said Kortlang, highlighting used cars as a recent example of a market transformed by such information sharing.
“That market intermediary function of creating liquidity in the market, creating pricing transparency and providing a clean, well-lit place to do business is a valuable function in and of itself. Cast your mind back to [pre-ride-hailing app] 2005 and ask yourself if you would get in a random person’s car and have them drive you to the airport.”