December 5, 2018

Overstock.com’s blockchain accelerator and investment platform Medici Ventures has made an equity investment of $2.5 million in GrainChain, an agricultural blockchain software platform designed to facilitate ease and security for payments to farmers, buyers, and elevators engaged in the grain industry.

Founded in 2013, GrainChain is an end-to-end, harvest-to-table system comprised of software products that eliminate manual processes of weighing and documenting agricultural output through the use of Internet of Things (IoT) devices that accurately measure grain weight and quality. Additionally, the blockchain-based platform’s financial settlement system allows grain producers, buyers, and seller to create smart contracts through which to secure funds through grain transaction processes, eliminating both the potential for error through human error, and the potential for fraud through the actions of bad participants.

“Agriculture is the backbone of our global civilization, but producers operate on razor-thin margins and are up against a host of factors far beyond their control,” said Jonathan Johnson, president of Medici Ventures. “GrainChain helps to support those producers by simplifying and securing the measuring and payment process and bringing unprecedented transparency to the industry.”

Grains of Truth

The grain industry and commodity traders in the space have been some of the first to adopt and apply blockchain and data-driven technologies into their businesses models.

In January of this year, BlockGrain, an Australian agtech-blockchain startup, raised the equivalent of approximately $1 million in cryptocurrency from the $90 million NEM Blockchain Investment Fund. Through its integrated logistics platform, the startup provides greater transparency to grain farmers, helping them determine grain quality, connect with global markets, better navigate the supply chain, and improve margins.

Months later, IoT technology startup TeleSense raised $6.5 through a Series A led by ag investment pioneer Finistere Ventures for the advancement of supply chain, food safety, and grain storage solutions.

Most telling however, in late October, ADM, Bunge, Cargill, and Louis Dreyfus, the four global behemoth agribusinesses known as the A-B-C-D’s, announced they are partnering to pursue ways to use technology to digitize and standardize the global agricultural commodity value chain.

Understanding that the integration of technologies such as AI and blockchain will provide opportunities to increase transparency and efficiency for customers while also reducing resource and time-intensive processes for suppliers, the companies are also seeking broad-based industry participation in support of global access and adoption.

“We expect an industry-wide initiative of this nature to be able to accelerate improvements in data management and business processes, and bring much-needed automation to the industry,” Soren Schroder, CEO, Bunge said at the time. “Promising technologies will not only provide synergies and efficiencies for ourselves, we believe they will prove vitally important to serving customers better by laying the foundation to enable greater transparency.”

As an initial goal, the four companies will focus on technologies that work to automate grain and oilseed processes that occur post-trade, as these are often the most manual and high-cost points of the supply chain.

Furthering this initiative, Archer Daniels Midland (ADM) and Cargill then partnered through a joint venture to launch Grainbridge, a technology platform providing grain marketing decision support and e-commerce and account management software for farmers in North America.

Looking South

Currently, GrainChain’s platform is available in the U.S. and Mexico, however, the company plans to use the funds raised through this investment to expand its reach into grain markets in Central and South America.

Understanding that the majority of agricultural goods produced worldwide are done so by small and medium-sized farming operations without the resources to modernize through access to high-level technology, GrainChain states that it provides an affordable path for farmers and buyers to implement the tools needed to secure their business, and which will give then the confidence to do business with previously unknown parties beyond their immediate geography.

“We are making the grain transaction extremely efficient, transparent, safe and secure, and we’re giving not only the farmers but also the buyers a safe marketplace to do business in,” said Luis Macias, co-founder and CEO of GrainChain. “At the end of the day, we’re just leveling the playing field for the farmer, giving them much more power and control over the selling process.”

-Lynda Kiernan