Golden Sunland's David Chen discusses his company's new business, AgriG8, which connect investors with the smallholder farming community
The Ready For Launch series asks questions of entrepreneurs to get the inside story behind a new startup or product launch.
In 2020 and 2021, Covid-19 and political unrest gripped Myanmar. For Golden Sunland, a B Corp-certified rice company co-founded by David Chen, these events threatened the livelihoods of the local farmers it works with and made it difficult for the business to grow at its original pace.
Chen started the company in 2017 as an iteration of his family’s rice business, driven by a mission that would help the Southeast Asian nation regain a part of its glory as one of the world’s top rice exporters. Golden Sunland serves as a “whole value chain enabler”, which partners with the local farming community as well as industry players and international NGOs to ensure that rice production is sustainable for both Myanmar’s smallholder farmers and the environment.
But the pandemic and 2021 coup forced the company to pivot, leading it to launch a new startup, AgriG8, together with the Trendlines Group, an innovation commercialisation company that invents, discovers, invests in and incubates ventures working on medical and agricultural technologies.
Chen shares more about the vision and story behind AgriG8.
Can you introduce AgriG8 in one sentence?
AgriG8 (pronounced as “aggregate”) is an agri-fintech company connecting the capital market with the underserved smallholder farming community, enabling the value chain to make better decisions towards creating a sustainable food system.
How did AgriG8 come about and who are its investors?
The circumstances of the back-to-back black swan events pushed us to innovate, not just for our own survival but also for the farmers. At the same time, I was introduced to the Trendline Group, which was sourcing for companies that were interested in co-creating startups within the agritech space. This presented a unique opportunity for Golden Sunland.
As pioneers within the rice industry, we always knew that smart sustainable financing was the key to improving the livelihoods of the farmers. But we could never find the right time or resources to develop a solution. Knowing that we would have to tackle this issue one day, we started collecting farmer data as early as 2018.
Our management team saw this as the perfect opportunity to pivot the company and monetise three years worth of data. What started as scribblings on scrap paper, is now a fully functioning startup with partners in more than three countries.
For someone who has been in agriculture for 14 years, I’m still getting used to the pace at which AgriG8 is moving. The strong interest from financial institutions and farmers is a great indication that we are moving in the right direction.
Who is AgriG8’s target consumer?
Our platform aggregates all stakeholders within the ecosystem; financiers, suppliers, farmers, distributors can meet on our platform regardless of geography and come together to create opportunities that were previously unavailable.
With AgriG8, the key challenge is reaching out to those who are apathetic about the shortcomings of the existing food system. It is a lot like climate change narratives; you can’t be too aggressive or too casual about it
What is its value proposition?
Better farmers make better borrowers. AgriG8’s edge lies in its ability to use data and insights to drive behavioural change in farmers. We encourage sustainable agricultural practices through a gamification mechanism that results in real-world incentives. We identify good farmers via our proprietary appraisal system and further empower better farmers through our assurance module. These insights help lenders access an untapped market they have yet to efficiently monetise by lowering engagement cost and improving risk mitigation.
AgriG8’s goal is to set a new standard for sustainable agri-financing by providing the financial institutions with the right tools to access, appraise and be assured of their loans to smallholder farmers. Harnessing the power of big data and machine learning, AgriG8’s credit rating platform integrates yield prediction technology with its proprietary farmer behaviour algorithm, proving that agri-financing can be a win-win situation for both financial institutions and smallholder farmers.
What is the size of the potential market?
Smallholder and family farms produce up to 80 percent of the global food supply, according to a recent study. To support and sustain this underrated food system, at least US$240 billion is required annually, but only a small percentage of this amount is currently made available to the sector.
Commercially, our goal is to facilitate the flow of this capital. Holistically across the entire ESG (Environmental, Societal and Governance) spectrum, the impact of transiting towards better agricultural practices brings far greater value. Rice, a staple that feeds more than half the global population, is our first choice of crop due to its ironic status as both climate change victim and contributor.
Tell us about the iterations you went through to get to the final product or business model.
The original idea was to create a customer relationship management system to better serve Golden Sunland’s farmer partners. A primary objective was to produce a holistic scorecard for each of the farmers, to help them understand their performance from the productivity, economic and environmental perspectives. This scorecard system will then enhance the traceability of our rice product in the market.
The hiatus from being on the ground allowed us to take a step back and rethink the real potential of this level of engagement. Our farmer partners’ circumstances are not unique, in fact, most smallholder farmers operate in similar conditions and face the same challenges of poverty and climate change.
During the co-creation phase with Trendlines, they push really hard for us to not just build a financially viable business model, but one that is also scalable and impactful. Better access to capital would allow farmers to invest in enhancing their productivity and adopting sustainable practices. The capital is available out there, but the serviceable market is limited by a lack of understanding of the smallholder agriculture market. The final product is a mix of agritech and fintech, an intermediary that helps lenders lend with confidence and provide farmers with a clear incentive to move towards sustainable agriculture.
What is the biggest obstacle you faced in getting AgriG8 to market, and how did you overcome it?
One of the defining obstacles was getting AgriG8 established in the first place. My co-founders and I each had our own tough choices to make at that point in time. At the end of the day, what AgriG8 stands for and our audacious goal to change the world became the key deciding factor. We are confident that we have a viable, maybe even groundbreaking, business model that can propel the entire smallholder farming system and global system onto a more sustainable path.
Presently, we have like-minded partners on board, but we don’t want to just preach to the choir. The key challenge is reaching out to those who are apathetic about the shortcomings of the existing food system. It is a lot like climate change narratives; you can’t be too aggressive or too casual about it. Effective communication is the key and we’re still working on it.
Another challenge is farming onboarding, this is where our hands-on experience with farmers really makes a difference. We embrace a farmer-centric approach in our solution design instead of making them adapt to technologies.
What are your goals for AgriG8 for the next 12 months?
We just started our first pilot on the ground and have engaged partners to expand to the second and third country within this year. Behind the scenes, developmental work is happening fast and furious. On the commercial front, we are looking to raise funds for our seed round from like-minded investors. From a thought leadership perspective, we want to raise awareness to help the financial sector better understand this untapped market of smallholder farmers and have open conversations about the impact of embracing or missing these opportunities.