You have to begin somewhere. So when Jayce Hafner and Sami Tellatin bonded as Stanford MBA classmates over their shared belief that helping U.S. farms run more efficiently would be good for farmers, good for the country, and a great business, they decided to start with grants.
For her part, Hafner grew up on a cattle ranch in Virginia and knew firsthand that applying for grants — even to improve the sustainable farming practices of her family’s farm — was a confusing and time-intensive process. As for Tellatin, she studied biological engineering as an undergrad and spent three years with the USDA, researching the impacts of cover crops on ecosystems and farm economics. She knew, too, that farmers might make better choices if grants were more available to them.
Enter FarmRaise, a now 12-person, two-year-old, San Diego, Ca.-based company that has made considerable progress since the two joined forces with another cofounder, Albert Abedi, who they met through the accelerator program of Pear VC, the Palo Alto-based firm.
According to Hafner, the company already has nearly 10,000 farms on the platform thanks to word of mouth, a dash of search-engine magic, and, importantly, partnerships it has struck with agriculture giants like Cargill and Corteva (spun out of DuPont in 2018) that have carbon emission reduction goals to meet and have begun directing farmers to FarmRaise for help with grants tied to low-carbon farming.
FarmRaise’s platform — which asks for granular farm insights, then structures the data in a way that allows FarmRaise to quickly apply for a wide variety of grant programs on its customers’ behalf – also has enough momentum that investors are now in the mix. (The team just landed $7.2 million in seed funding led by Susa Ventures, which was joined by Cendana Capital, Ulu Ventures, Pear, Better Tomorrow Ventures, Incite Ventures, and Financial Ventures Studio, among others.)
Still, as with so many startups, Hafner says grants — both federal and private — are just the starting point for the very broad financial services company that FarmRaise intends to become. Imagine, suggests Hafner, that once a farm has provided much of its data to the company, that FarmRaise can help it secure loans, secure equipment at bulk prices, lower its operating expenses, and help with both the farm’s banking and tax planning.
Many of these services will be provided through third parties, she says, with FarmRaise collecting finders’ fees. FarmRaise isn’t looking to reinvent the wheel. But there’s also no reason that farmers shouldn’t have a “full-stack” resource to which to turn, she adds.
Grants are “our wedge,” she says. “They are not the end of the story.”
In the meantime, FarmRaise is focused on hiring more employees, lining up more grants, and making sure its customers are happy with the services it’s already providing and for which it charges a monthly subscription, along with 10% of the value of the grants it secures.
It’ll will take some time to understand FarmRaise’s success rate, given that some grants have wait times of six to 12 months. But it’s a big opportunity unto itself, suggests Hafner, including because USDA funding has “been growing like crazy,” she says.
She points to the Trump administration, which distributed “tens of billions of dollars” in funding to support farmers who struggled with Covid-related supply-chain disruptions.
The Biden administration also has FarmRaise feeling encouraged, she adds, “We’re seeing this keen focus on growing the size of the pie for conservation funding and it likely doubling in the years to come.” It only makes sense, she suggests. “Not only does [sustainable farming] increase farm profitability but it also sequesters carbon and can help to address climate change. They are just many, many, many benefits that come with it.”
Above, pictured left to right: FarmRaise cofounders Jayce Hafner (CEO), Albert Abedi (who is the company’s head of product), and COO Sami Tellatin.
Without a clear ask, your pitch deck is useless
You’ve brushed off your Keynote skills, you’re giddy that you’re finally going to be able to start paying yourself a living wage, and you are excited to start pitching your startup’s next round of funding to your investors. It’s heady times, for sure, but hit the other pedal there for a moment, friend — you may be forgetting something.
After working with hundreds of founders on raising money — including the fantastically popular Pitch Deck Teardown series here on TechCrunch+ — there’s one slide that almost every founder gets woefully wrong. The slide is often referred to as The Ask. Or, as one investor friend calls it, the “what is my $10 million going to buy me”? slide.
The Ask is a sensitive topic to a lot of inexperienced entrepreneurs, which makes sense. Trying to right-size a funding round can be a little overwhelming, and there are a thousand different ways of building a startup. If you were successful in raising $8 million, you can do things one way. If you raised $12 million, you could perhaps launch more features of your product a little faster, or experiment more, or go after an additional market earlier. You know that. Your senior staff knows that. Your investors know that. But regardless, you need a Plan A.
What do those key metrics need to look like in order to raise not this round of funding, but your next one?
What do you need to do?
A lot of founders will tell you that they are trying to raise enough money to survive for the next 18 months. That’s probably true, but that will be true regardless of how much money you raise. A better approach is to think about what you need to accomplish to raise your next round of funding, and then work backward from there. This is probably a combination of metrics and milestones.
Metrics are the measurable parts of your business that grow and evolve over time. One of the best metrics you have is revenue, but there could be many others: the number of sales, average order value (AOV), monthly or annual recurring revenue (MRR or ARR, respectively), customer acquisition cost (CAC), customer lifetime value (LTV), daily and monthly active users (DAU and MAU), retention rate (usually expressed by its inverse, churn rate) and much more. What do those key metrics need to look like in order to raise not this round of funding, but your next one?
Milestones are also measurable parts of the business, but instead of tracking them over time, they tend to be binary: You’ve either hit a milestone or you haven’t. For startups, this could be key hires; finding the perfect, experienced CFO that can help take your company public is one major milestone a lot of companies at some point need to hit. Product launches (coming out of beta), launches in particular markets (launching only in California) and localization (launching your app in Spanish and French, for example) are also important milestones. Financial milestones are also common; the first time you make a single dollar from any customer is a huge shift in the business. When a customer, on average, starts to make you more money than it costs you to acquire them is another. For earlier-stage companies, completing a customer validation phase by talking to, say, 100 potential customers is a milestone.
When you’re raising money, you will be mapping out a set of milestones that you need to hit in order to validate your company. In addition, you’ll set a number of trigger points for metrics — hitting $1 million ARR, having 5,000 daily active users or finding a combination of customer acquisition channels that means you can acquire customers at a reasonable blended CAC, for example.
So let’s examine how to put together a great “ask” slide by ascertaining what it takes to determine how much you need to raise, how to create a specific set of goals and how to bring it all together in a coherent whole.
Tech doesn’t get more full circle than this
Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.
Tech innovation is a cycle, especially in the main character-driven world of early-stage venture capital and copycat nature of startups.
The latest proof? Y Combinator this week announced Launch YC, a platform where people can sort accelerator startups by industry, batch and launch date to discover new products. The famed accelerator, which has seeded the likes of Instacart, Coinbase, OpenSea and Dropbox, invites users to vote for newly launched startups “to help them climb up the leaderboard, try out product demos and learn about the founding team,” it said in a blog post.
If it sounds familiar, it’s because — in my perspective — Y Combinator is taking a not-so-subtle swipe at Product Hunt, a nearly decade-old platform that is synonymous with new startup launches and feature announcements.
Y Combinator doesn’t necessarily agree with this characterization: The accelerator’s head of communications, Lindsay Amos, told me over email that “we encourage YC founders to launch on many platforms — from the YC Directory to Product Hunt to Hacker News to Launch YC — in order to reach customers, investors and candidates.”
The overlap isn’t isolated. As Y Combinator makes a Product Hunt, Product Hunt is making an Andreessen Horowitz. Meanwhile, a16z is making its own Y Combinator. Not to mention Product Hunt has investment capital from a16z and formerly went through the Y Combinator accelerator.
The strategy is more than a tongue twister, it’s a signal on what institutions think is important to offer these days (and why they’re starting to borrow more than sugar, or deal flow, from their neighbors).
For my full take, read my TechCrunch+ column, “YC makes a Product Hunt, Product Hunt makes an a16z, a16z makes a YC.”
In the rest of this newsletter, we’ll talk about Coalition, Backstage Capital and Africa’s temperature-fluctuating summer. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter or subscribing to my blog.
Deal of the week
Coalition! Built by a quartet of women operators in venture, Coalition is a fund meets network that is trying to get more diverse decision-makers onto cap tables. The two-pronged approach of fund and network helps Coalition cover multiple fronts: Founders can turn to the firm for capital or the network for advice at no further dilution. Aspiring investors and advisers can turn to the firm to begin building out their portfolio, and LPs can put money into an operation that is committed to broadening diversity on cap tables, known to have economic benefits.
Here’s why it’s important: Coalition co-founder Ashley Mayer, the former VP of communications for Glossier, explained a little about the building philosophy behind the new company.
Mayer explained that she and her three co-founders saw the value of taking a “portfolio approach” to careers, basically going deep on their respective operator roles while also angel investing and eventually scout investing. Three of them previously worked in venture but left it because they missed the experience of operating. Now, they’re trying to scale a way for people to keep their day jobs and build beyond it. Coalition co-founder and Cityblock Health founder Toyin Ajayi said that “as one of few women of color leading a venture-backed company, I feel a deep obligation to hold the door open for others.”
When do layoffs matter? Trick question — always
This week on Equity, we spoke about Backstage Capital laying off a majority of its staff, weeks after pausing any investments in new startups. The workforce reduction, which impacted nine of Backstage Capital’s 12-person staff, was due to a lack of capital from limited partners, per fund founder Arlan Hamilton.
Here’s why it’s important: Backstage Capital has invested in over 200 startups built by historically overlooked entrepreneurs, while Hamllton herself has invested in more than two dozen venture capital funds. Despite having impact, no single firm can be immune from the difficulties of venture (or growing in an environment full of macroeconomic and cultural hurdles). Below is an excerpt of my story.
Without more support, it becomes difficult to close shop on new investments, bring more assets under management and bring more follow-on investments, Hamilton said.
“Somebody asked me, ‘why don’t you have more under management?’” she said during the podcast. “You gotta ask these LPs, you gotta ask these family offices, you gotta ask these people who ask me, ‘how can I be helpful,’ and I say ‘invest in our fund,’ and I never hear from them again.”
Africa charts its own course
TC’s Dominic-Madori Davis and Tage Kene-Okafor wrote a story about how the downturn is playing out in Africa, essentially answering why we should all be tuning into the continent’s activity this summer.
Here’s why it matters: Africa’s venture capital totals weren’t too shabby in the first quarter, but investors think that it may just be a reporting delay. If most of the deals were finalized before high interest rates, the war and inflation, experts say, we may see an economic downturn soon start affecting developing markets. The story doesn’t stop there; I’d read more to see what Tiger Global tells us and how August is shaping up to be a key month of movement.
Across the week
Seen on TechCrunch
Seen on TechCrunch+
Until next time,
Google will start erasing location data for abortion clinic visits
In the aftermath of the Supreme Court’s decision to strip federal abortion rights in the U.S., many people are questioning how the apps they use every day might suddenly be turned against them.
As concerns mount over the endless well of data that tech companies built an entire industry around, Google is taking at least one step to mitigate some potential harm related to location tracking.
The company announced Friday in a blog post that it would remove location history data about some “particularly personal” places from a Google account shortly after someone visits. Locations that will have their data deleted include “medical facilities like counseling centers, domestic violence shelters, abortion clinics, fertility centers, addiction treatment facilities, weight loss clinics, cosmetic surgery clinics, and others,” according to the blog.
Google also noted that Fitbit users who use the device’s companion software as a period tracker currently must delete those entries one by one, but an easier way to “delete multiple logs at once” is on the way.
The change to location history will go into effect in the next few weeks, emptying one potential bucket of data that law enforcement could demand from the company. Google notes that its location history feature is off by default for people who use its services, but if you’re not sure about that, it’s always worth double-checking what personal information you’re actively sharing with tech’s data brokers — particularly now.
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