Vosbor Raises $7M for First Digital Ag Commodity Exchange

August 17, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

“Without traders, global food security would not exist…,” said Soren Schroder, former CEO Bunge Ltd. “Trading companies are crucial in navigating supply and demand imbalances, as they swiftly move commodities around the world from surplus to deficit regions.”

The landscape through which global traders navigate is fraught with challenges. The majority of countries are not self sufficient, relying instead on food supplies that are sourced far from where it is consumed, importing food and feed from breadbaskets such as the U.S., Ukraine, Brazil, and Russia.

When these finely balanced trade flows are disrupted, due to any number of possible reasons, the fallout rapidly cascades in a domino effect, as we’ve witnessed during the global food crisis of 2008, again in 2011, and today, as a result of a global pandemic and the war in Ukraine. 

However, another underlying factor that has continually been compounding supply chain challenges is climate change. The impacts including water scarcity, rising temperatures, and extreme weather events have affected agriculture on a global scale, and have reduced harvests in multiple countries.

Last year, even before the war in Ukraine began, the U.S., Canada, and Brazil experienced periods of extreme heat and drought that drove up the prices of corn, wheat, coffee, peas, and other crops. And despite this, demand never stops. Farmers will still be called upon to grow more with less, to feed an additional 2 billion people by 2050, and another 1.5 billion by the end of the century, according to the UN. 

Complicated by urbanization and underinvestment, average crop yields are not increasing at a proportionate rate to meet this demand. Even more foreboding, crop modeling recently released by Stockholm Environment Institute (SEI) and NASA has revealed that yields of our most critical crops are declining due to climate change. Yields for corn – the top crop grown in the world, which along with rice and wheat account for about half of all caloric intake – could potentially fall by 24.2 to 27.2 percent by the end of the century. 

Amid all this, Schroder noted that it is the agricultural commodity traders who not only ship commodities around the world, but store, process, mill, and consume (i.e. feed production), creating vast efficiencies within markets. 

“Without traders, global food security would not exist,” said Schroder, “especially under market conditions like we have today. However, this doesn’t mean there is no room for improvement.”

“From the coffee you drank this morning, the wheat in your muffin to the palm oil in your toothpaste or the livestock feed needed for your milk — most of it is still traded over the phone, executed by email, made binding with various hard copy contracts and involved many different intermediaries. This results in high operational costs, complex execution and little market data to enhance decision-making.”

But thanks to technology, there’s a better way.

Vosbor, the first digital marketplace for global trade in bulk agricultural commodities, announced that Lux Capital has led a new $7 million Seed round for the platform, joined by Market One Capital, FJ Labs, 7percent Ventures, Athos Capital, and Nucleus Capital.

Vosbor’s flagship platform is currently being piloted by 35 of the world’s leading ag commodity trading companies, and has announced that Chris Mahoney, the former CEO of Glencore Agriculture, and Soren Shroder, the former CEO of Bunge, are co-investing and have joined the company as Board members.

“The agricultural commodity trade — the backbone of our global food supply — still takes place offline, although more than $30 trillion in physical commodities and otc derivatives is transacted every year,” said Maarten Elferink, CEO, Vosbor.

“Vosbor brings the agricultural commodity trade online, allowing buyers and sellers to trade more efficiently, simplifying risk management in a world where supply chain risks are mounting, and providing market data unavailable today to enhance decision-making. We make commodity trading cheaper and markets more accessible.”

Elferink also noted that the company is developing new derivatives that will offer retail investors a better opportunity to participate in commodity markets while also lowering basis risk for industry participants including farmers, traders, millers, crushers, and manufacturers.

“Farmers especially stand to gain,” said Elferink, “as worldwide there are few who make use of futures to hedge price risk today.”

Peter Hébert, co-founder and managing partner at Lux Capital, added, “By digitizing the agricultural trade, Vosbor is effectively taking the first critical step in alleviating the threats to global food security, as existing offline markets are inadequate to build systemic resilience.”

“Vosbor’s vision is bold and they’re led by an exceptional team capable of transforming vast commodity markets,” Hébert continued. “Lux Capital is honored to be a part of Vosbor’s journey and we are eager to work closely with the team to ensure its long-term success.”

 

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.

Join the Global AgInvesting Community

Share your email to be notified about upcoming events, receive leading industry news and more.