Unlocking New Markets With Animal Data — Our Investment in Breedr
Who would’ve thought just 20 years ago that investing in livestock technology would almost be considered contrarian today. Or at least you’d be tempted to think it’s contrarian if you base your vision of the future of proteins on VC/Tech Twitter. At 3Ventures we don’t think that the only possible future is one where all the meat we consume comes from bioreactors. Nor do we think that the only way to save the planet is to go plant-based. Our money is on an array of realistic solutions with substantial positive impact that allow the ag sector to respond to the increasing need for nutritious food. Breedr fits squarely within this thinking.
The first thing you have to understand about the livestock market is that to this day, there are very little ways of knowing if an animal is performing well or not. You can know its husbandry, the farm on which it’s been raised but the only real way you can make a decision these days is by, well, looking at it. This is the equivalent of buying a car without test driving it or having its service history. No one in their right mind would do it, yet this is how billions of dollars’ worth of animals change hands every year.
In many parts of ag, data is incredibly fragmented or sometimes doesn’t even exist. This means suboptimal decisions, based on imperfect information. Now imagine a world where the health of each animal (weight gains, medication, feed efficiency, etc) is tracked from its birth to the day of its culling. Why is this proposition so powerful? Well, for a whole bunch of reasons.
Trading
The first one is that all of a sudden, all animals come with their “service history”. So you can see exactly which animals are performing, no need to eye down a few heifers trying to guess if one of them has had multiple lung problems. You know what you buy, always. Likewise, if as a farmer you’re doing a terrific job at systematically raring top quality animals, you’ll most probably get more money for them. Data creates transparency in transactions.
Supply Chain
Packers/abattoirs and processors are not looking for the largest, fattest animals. What matters most to them is the consistency of the finishing of animals they buy and the predictability of supply. By using Breedr, instead of having to manually call dozens and dozens of farmers every week to try and guess what’s coming through the pipe, they can now have the information at their fingertip. Even better, the AI within Breedr predicts when an animal is going to be ready. This is life changing for processors and retailers down the line.
Methane Emission Reductions
Methane emissions from cows specifically (which, fun fact, mainly come from burps rather than farts or manure) grow substantially when the animal becomes an adult. Knowing exactly when an animal is ready to be processed prevents farmers from feeding an animal too long. This lower costs for farmers but also and crucially, cuts emissions. Looking at concrete numbers, we’re talking about a big difference: an estimated 28% less emissions per cow tracked by Breedr. In the combat versus climate change, this is a big difference.
Reporting
The amount of reporting asked from farmers by various stakeholders — government agencies, retailers and other supply chain actors, various labels, etc. — is growing year after year. But more reporting means less time working on the farm. Any tools capturing data in a way that easily fits in the farmers’ normal workflow and making it easily transportable is a godsend.
New applications
There are tons of additional applications for this data, like genetics and animal health improvement, insurance and others. All of these are huge markets in their own right, with large players keen to get access to Breedr’s data.
The chief application for this treasure trove of data however, the one that got us on the edge of our seats and so excited to lead Breedr’s last round, is the lending part of the business model. It is called Breedr Cashflow. The idea behind it is relatively simple: cows are actually very valuable assets. That being said, they are expensive to buy and feed, plus they take a while to get to a stage where they can be sold for processing.
For farmers, this means that cashflows are locked for up to 2+ years. The unique innovation Breedr brings to the sector is the ability to release some of this equity earlier. Prior to Breedr, without data transparency on each animal, lending was only possible at herd level, and most of the times with guarantees on the farm. Breedr solves this issue entirely. Animals can now be financed individually. They are also individually tracked to ensure they perform according to plan. And here comes the cherry on the cake: unlike most other assets being commonly financed, animals actually appreciate over time. So the portfolio’s LTV naturally decreases over time, magic! This is going to be a game changer for farmers looking to scale their activities, like for example the organic, grassfed and beef on dairy players in the US.
This leads us to our last point regarding how the future is looking like for the meat industry. If you actually take the time to look at trends within the industry, you realise quickly that some parts are growing at rapid rates. Why? Because a vast majority of people in the ever growing flexitarian consumer group don’t actually want to give meat up completely. They’ve certainly cut back but what they now want when they buy meat is a quality product with labels they can trust and even trace back to the farm. Read less industrial-looking farming and more pasture-fed animals, whose origins and health can be tracked. This makes Breedr uniquely suited to become the dominant player in these growing parts of the market.
We’re so proud to support the team in its quest to transform the livestock industry globally. If you have any questions please let us know — happy to chat!
