> KELLEE JAMES FOUNDER AND CEO OF MERCARIS Hard Row to Hoe, but Pioneering Firm for Organic FinTech Connections is Flourishing
Photo by Todd Rosenberg Photography
Organic agriculture is a win for consumers and the planet, but many dedicated farmers have struggled to reap financial rewards off their efforts. Cue Kellee James, founder and CEO of Mercaris, a company that blurs the lines between agriculture, finance and tech. The company’s aim is to fix the misconnect between consumer demand for organic products and the need for a data-backed marketplace for the supply chain. James launched Mercaris in 2013 with cofounder and CTO Chris Duesing. The company provides a digital trading platform and market data services for certified agricultural commodities. James served as an Obama White House Fellow, advising the US administration on environmental markets. “For 10 years, I've worked at the intersection of environmental performance and markets,” she said in an interview with Comcast, “and so I decided to take on the challenge of getting this information out there.” Mercaris was added to Comcast’s portfolio of minority-led start-ups — the Ventures’ Catalyst Fund — in October 2013. “We make it possible for everyone in the supply chain, from farmers to food manufacturers, to track prices, volumes and other statistics for organic corn, or non-GMO soybeans,” James says. “We also allow buyers and sellers of raw commodities to meet and trade online.” 48
Trading in certified agricultural commodities helps put a price on the benefits of organic practices. US farmers considering going organic must first undergo a three-year transition period — with no application of prohibited substances to the land. Initial certification costs vary depending on the certifying agent and farm location, size, and complexity. The exercise can cost anything from a few hundred dollars to several thousand, and annual recertification is required. Once certified, a farm must adhere to chemical-free, labour-intensive land management. Harvest yields may tend to be smaller when compared to conventional farming methods, but they’re often more profitable. “With the recent challenges in agriculture, people are looking for ways to change or diversify their operations. While many of the benefits of organic farming are known, we need more hard data, particularly on the financial side.” In partnership with the Croatan Institute, Mercaris tracks the value of organic farmland and supports initiatives to revitalise rural areas as an economic development strategy. According to the Organic Trade Association, participating communities have shown an increase in median household income and a 1.35 percent drop in poverty rates. Research supports claims that organic farming can tackle climate change by boosting the carbon sequestration capacity of the soil. CFI.co | Capital Finance International
Mercaris operates on a dual-revenue business model, as a data service and an auction site. Membership on the trading platform is free, but buyers and sellers are charged a small percentage of sales. The company gives its registered farming clients complimentary access to market data to support informed decision-making. “Before Mercaris, there was virtually no way to track granular market data like regional variations in organic grain prices, or forward prices in a way that was rigorous, consistent and available to anyone,” James explained. Within 10 months, Mercaris went from concept to company, and by late 2018, it had attracted $4.9m in venture capital funding. As a femaleand minority-led company, that didn’t come easy. “Some of our male colleagues don’t get asked about revenue — they can be aspirational,” she said. “When we pitch, we have to prove the numbers.” Mercaris was launched with an environmental mission in mind, and James has sought likeminded investors. “Agriculture has a particular vulnerability to climate change. We want investors to be looking at businesses (and) products that are going to amend or mitigate the next crisis.” Mercaris fosters environmental sustainability and market transparency. “Agriculture is changing,” James says. “We are helping people be part of that change.”