Open Prairie has extended a $2 million loan to MyAgData, a cloud-based software platform that helps farmers manage various reporting requirements.
The loan is the second investment from the firm’s Rural Opportunities Fund, a growth-stage vehicle that carried out its first transaction via a $5.2 million loan to Tillerman Seeds of Grand Rapids, Michigan last week. Launched in September, the fund reached a first close on $55 million in January.
Last week, Jim Schultz, founder of Effingham, Illinois-based Open Prairie, told Agri Investor the firm had raised $75 million for the vehicle. He expects it to reach its $100 million target sometime in the third quarter.
Founded in 2012, MyAgData collects, integrates and formats layers of geospatial data required for reporting to crop-insurance providers and the USDA’s Farm Services Administration. It makes software that is available in both mobile and desktop formats. The company plans to use Open Prairie’s investment to support the expansion of its sales and marketing team.
Open Prairie vice-president Jason Wrone – who declined to specify the interest rate, term or covenants related to Open Prairie’s loan to MyAgData – said the decision to structure the investment as debt rather than equity suited both sides.
“The debt format fitted MyAgData’s needs and the convertible feature allows for Open Prairie to potentially be involved in a future equity round of financing,” he said, adding that MyAgData’s growth will help determine whether the firm looks to exercise the right to convert the debt.
Put away your pencils
While much attention has been focused on on-farm technologies that can help food production to keep pace with global population growth, Wrone reckons supporting platforms such as MyAgData can also play an important role.
“There is a need for technology outside the field that can take information generated by precision-ag and aggregate it for better use and more efficient production and farm management practices,” Wrone said.
Currently, he explained, farmers visit local Farm Service Administration offices and communicate directly with USDA staff to submit crop acreage reports by identifying properties on paper maps and reporting directly what was grown there. USDA has encouraged a streamlining of this process, according to Wrone, that would see the percentage of respondents filing such reports electronically rise from current levels of 5 percent to 90 percent over the next five years.
“With the MyAgData platform being one of the only solutions to facilitate that transformation, to Open Prairie, that’s a very compelling investment opportunity.”
Wrone said MyAgData will look for other areas where regulatory compliance can be streamlined by the use of its platform, including the possible inclusion of reporting requirements related to the Food Safety Modernization Act.