Square Peg Capital has invested in Australian blockchain start-up, AgriDigital, in a $5.5 million Series A funding round, it said would help expansion plans into North America.
AgriDigital has built a private blockchain for supply chain finance. It has over 1300 users and more than 1.6 million tonnes of grain has been transacted over the cloud-based system since its first deal in December 2016, involving $360 million in grower payments.
Square Peg Capital partner Tony Holt said the firm was attracted to AgriDigital because of the leadership team, and the company’s solution for simplifying supply chains, which he described as “really complex, distributed and with multiple participants, which means there is huge room for improvement”.
“Whether you solve that with blockchain or another enabling technology, at the moment supply chains are archaic, and the opportunity for a distributed supply chain with multiple participants lends itself extraordinarily well to distributed ledger technology, but also any form of material improvement,” Mr Holt said.
The Square Peg Capital co-founders, (from left) Barry Brott, Justin Liberman, Tony Holt and Paul Bassat. Pat Scala
In the global grain industry, provenance and traceability has proved problematic but blockchain can be used to establish a fact at a given point in time by storing a digitised representation of a real-world transaction or process. This can then be trusted by a third party as proof of the history of the asset.
Grain traders have also found matching payments with title transfers difficult. By linking these, blockchain can remove counter-party risk that currently sits with growers – and leads to millions of dollars in losses every harvest.
AgriDigital CEO and co-founder Emma Weston said the new funding would help launch the agtech platform in North America and build out a blockchain protocol for the global trade of agri-commodities.
A private family investment office also supported the raising but its identity has not been disclosed.
AgriDigital is already working with some of the largest players in global agriculture as traditional paper-based processes are digitised, including Rabobank, a leading agricultural bank. Last year, it formed a partnership with CBH Group, the nation’s largest grains exporter, to help it prove to buyers the provenance of organic oats.
The CBH pilot also involved a digital currency element, with AgriDigital minting an “Agricoin” pegged 1:1 to the Australian dollar.
Ms Weston has been pushing the Reserve Bank to introduce a digital version of the Australian dollar, which could serve as the payment token on the platform and close the loop by allowing value to move across the blockchain, rather than having the payment pushed onto traditional bank rails.
In its reports last year on how blockchain can lift the productivity of the Australian economy, the CSIRO’s Data61 unit said management of supply chains – including trade finance and insurance – was as a “highly promising” use case for the emerging technology.
Data61 said blockchain had the potential “not just to integrate information exchange and improve operational efficiencies across a diverse industry, but also to improve supply chain quality, facilitate provenance of branded goods and reduce cost of regulatory approvals.”
Read more: http://www.afr.com/technology/agriculture-blockchain-startup-agridigital-raises-55m-in-square-peg-led-round-20180223-h0wkbp#ixzz58DfuMEu4
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