With $1m seed round, brothers’ agriculture tech startup takes root

The Gerlock brothers' grandfather started JBG Farms in the '50s. It's now a multi-million dollar business on 3,000 acres with operational costs upward of $2 million per year. But, perhaps surprisingly to the farming outsider, the average salary of a farmer is $47,000. That means a lot of money is coming and going without staying

Clarke and Heath Gerlock (pictured) have teamed up with Ron Osborne to found Crop Ventures, an agriculture technology company. 

The Gerlock brothers’ grandfather started JBG Farms in the ’50s. It’s now a multi-million dollar business on 3,000 acres with operational costs upward of $2 million per year.* But, perhaps surprisingly to the farming outsider, the average salary of a farmer is $47,000. That means a lot of money is coming and going without staying in the farmer’s pocket.

“Farmers have little control over what they can buy,” said Heath Gerlock. “You’ll sell your corn for $7 a bushel and then turn around and have to purchase it at $250 a bushel for spring planting.”

Hoping to offer a solution to these high margins, Gerlock, a seasoned designer who’s taken on business roles in recent years, and his brother Clarke, part-owner of JBG Farms in Cumberland, Iowa, teamed up with Ron Osborne of Salus Novus to found Crop Ventures, an agriculture technology company. And with Salus Novus taking the lead on raising capital through its existing relationships and outside angel investors, Crop Ventures recently closed a $1 million seed round to continue developing its suite of products, the first of which will launch in August.

Speaking about what’s to come from Crop Ventures, Gerlock suggested that today’s high margins of farming costs are a result of an antiquated sales model. “It’s still primarily a door-to-door salesman technique. Vendors have to abide by regulations that keep them confined to geographical boundaries.” That means someone selling seed, fertilizer, or pesticide can’t solicit a farmer outside of their area. But a farmer can search for vendors and approach them to make a sale.

“We want to replace the old model with an online store,” Gerlock said. “It’s not new technology, but the industry is prime for disruption. Farmers can find better deals, and we can help them.” The brothers expect 32,000 customers to be using the marketplace within 36 months, supplied by 2,500 vendors. “We’re certainly anticipating some resistance from the bigger companies,” Gerlock said, “but competition is good for everyone. Monsanto, DuPont … they want a more modern design too.”

“It’s not new technology, but the industry is prime for disruption.” – Heath Gerlock

But the marketplace is the tip of the iceberg that is Crop Ventures. “We’re basically about three different things,” Gerlock explained. “Purchasing, management, and analytics.” The purchasing is, of course, the online marketplace for vendors and farmers. The management and analytics involves Crop Ventures’ web application. With 43 percent of farmers having smartphones (even Gerlock’s 82-year-old grandfather uses an iPhone daily), a farmer’s office should be with him wherever he goes. With Crop Ventures, he could input data in the field. Prospective clients can sign up online to begin testing Crop Ventures’ software within 90 days. After the official launch, the pricing of the software is set to scale with size of acreage. That’s $20 per month for 500 acres, $40 for 1500, and so on.

The technology that farmers use in the field today is expensive and fragmented. Touch-screen consoles in combines offer a farmer guidance and variable rate control for example, but cost $6,000 apiece. A subscription fee to the software can cost around $2,000 a year. “And you can’t use it for anything else,” Gerlock added. It’s a single-purpose device for that one tractor. And if a farmer has multiple tractors, well.

“If this was the ’80s, that would be amazing, and I’d be more than happy to have it,” Gerlock said. “But we’ve moved way beyond that.”

After hours in a combine talking about modern tech, the brothers came up with an idea for a tangible upgrade. “We’re building a piece of hardware that’s a sort of docking station within the tractor. We want to replace the single-use technology of the console with the technology that farmers already carry in their pockets: a smartphone.” They must be onto something because 1,200 clients are already queued up for the device.

For more Crop Ventures and the technology it aims to disrupt, check out the company’s promotional video featured on its website (below).

 

*Update 4:40 – When published, post incorrectly stated $10 million per year. The figure was updated to $2 million.

Credits: Photo of Gerlock brothers courtesy of Crop Ventures. Screenshot of graphic from cropventures.com. Video from Crop Ventures on Vimeo.

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