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The company SmartFarming was launched in 2015 when an idea of implementing innovations in the agricultural sector occurred to a few people, and the bulk of agrarians worked in the same old way. What stages of development the company passed, how much money was invested in its growth, and which agrarians are not afraid of introducing new technologies in their business, - the company’s founder and speaker of B2B Sales Elevate Blitz-2017, Artem Belenkov told us.
I worked in the stock market at the company VirTech. We managed our clients’ assets and portfolio risks. With a view to expanding the client base, we scheduled to work with agrarians. When I began familiarizing with the industry, I highlighted two features of agribusiness: a low level of technical support and the absence of motivation to change in view of high earnings. While we had up-to-date tools enabling us to trade faster on the stock exchange for a fleeting second, the agrarians used paper maps, and technology invasion into business was minimal.
The end of 2012, the beginning of 2013. I decided to start a new business and was looking for a “right” networking. The choice fell on the agrarian MBA of the Kyiv-Mohyla Business School. I achieved the systematic education and working contacts of agrarians. At this particular time, I began working on the formation of my company.
I took on the first projects by myself. I sold and distributed the product; I was an accountant and a lawyer all in one. After working on a few projects, I realized that I couldn’t work in this manner and employed the first members of my team – young students from universities.
Our first product was a software solution, we sold an instrument for the land classification and electronic data about crops, yields, etc. However, nobody needed only an instrument. Companies required "turnkey solutions".
So, we started working on a product for managing the land bank. Apart from the software, we added services of the vectorization of land plots and the binding of information on lease agreements.
Nevertheless, by no means, we touched our clients’ business processes or provided answers to the question “so what should be done in business to make it less risky and more efficient?”
We kept working on the implementation of projects on the land bank management. We set out to grasp what’s going on with the land assets of companies in actual life. We started to make fields measurements, match data with maps, registers, and contracts; we structured the data on the term of the lease, showed a client where he had problems with the documentation for the land. For performing this work, we could no longer do without partners, as it was quite hard to make fields measurements on our own. We hired people who went around the fields on cars. That was already a good product that helped agrarians.
In 2015, one of our clients asked us to make an analysis of how their work and give recommendations for optimization. We agreed. Another client asked us to analyze the effectiveness of the company’s business processes. We took on this and executed the order. That’s how with each project, our expertise was growing, and the product was developing. This approach assisted us to come up with such solutions that in reality make our clients’ businesses more systemic.
We ended up with an idea of making one inclusive product – from measurements and audit to specific recommendations for transformation. A theme of land assets became for us an anchor, as I always realized its prospects: because, firstly, the land market in Ukraine was challenging and, secondly, the niche was free. In addition to it, this area of work is highly marginal and allows us to invest in our development.
In our growth and in the launch of new products. Back in 2014, we had on board an expert from the Institute of Space Research who embarked on work on the topic of satellite monitoring of the condition of the crops. Our clients requested a soil analysis. At first, we worked through partners by delivering them all orders. Soon we gave it some thought what if we engaged in this direction ourselves.
It was kind of a transitional period; it resulted in our realization that we could conduct field measurements, do soil sampling and other things on our own. That’s how we began swallowing up those directions where our partners used to work. Then our story with drones took place.
Now we cooperate with FRENDT, FlyTechnology, MegaDrone, Forland, and others. These are the companies that strengthen us in specific fields - expertise, software or hardware products. We are the comprehensive integrator of business processes automation, precision farming system implementation, and unmanned technologies. We work with certain partners for certain projects.
There are many drone manufacturers: among them are Ukrainian MegaDrone, AeroDrone, ITEC, deViro, Ukrspecsystems.
These are companies that manufacture some Ukrainian solutions or, as a minimum, assemble them in Ukraine. Their solutions are used for monitoring crops, field measurements, and the use of Trichogramma. We also cooperate with FlyTechnology, the main distributor of DJI in Ukraine; we negotiate with foreign companies that manufacture drones.
Yes, but it serves more as an educational platform. We write a lot about this topic, support start-ups, and create catalogs; everything is done for the purpose of helping a customer understand a product and buy a device rather than a model that won’t help him with business at all.
Currently, our catalog has 120 types of drones, 40 sensors, and several software products. But the catalog will be updated. By the end of the year, it will include up to 200 drones, 50 cameras and sensors, dozens of software products, and many accessories.
I do not believe in selling drones over the Internet. This is not a mobile phone or a pizza delivery; these are devices that cost 40-500 thousand UAH. However, this portal is vital for getting information and comparing products.
The website contains a module for drones’ comparison by key parameters as well; accordingly, any interested person can pick up a drone depending on his tasks for the best price.
Over the past three months, we have invested more than $10 000. Even more time of our staff, including mine, was invested. Money was spent on the site itself and its content. We also plan to invest more than $20 000 in the next year.
This season we sold more than 200 drones, including standard Chinese quadrocopters DJI and agricultural airborne platforms. Someone needs to monitor a course of operations, someone collects the analytics about crops, someone just wants to measure the fields; tasks are different, and package contents of the drones respectively vary.
I invested everything that I had. When I was leaving the stock market, I had $150 000. So I invested this money in my company. Then I reinvested all the money that the company was earning. Until 2016, I hadn’t withdrawn any money from the company’s turnover at all. I paid myself the same salary as to my employees. Annually, we invested from $50 000 to $100 000.
But the situation should drastically change now, as the investor enters our business.
We cannot disclose the details yet. What I can tell is that this is a local player who, in addition to his main businesses, possesses an agrarian one.
In the company’s enlargement and transformation of the business structure, in the work on our products and the development of projects related to bigdata. How exactly this project will look like, I cannot say but I can note that we have ambitious plans. We intent on attracting for the project a big producer of seeds and one of the Ukrainian agroholdings as well.
We have already started changing our business model. We will create a management company; the entire back office will be transferred to it. There will be Marketing and PR, legal and accounting departments, HR, and client management division. This company will manage a range of other companies that will develop, implement and sell our products. Each business direction will have its own company.
In the first place, this is the work with the land bank. We have the service for agrochemical analysis of soils, analysis of soil density and electrical conductivity, field measurement, monitoring of crops condition, application of Trichogramma, development of a project for the precision agriculture introduction, implementation of parallel driving, increase of efficiency of application of plant protection products, and different means of agricultural machinery re-equipment.
Prices are completely different; everything depends on the set goals. We have package solutions. A usual field measurement is 15 UAH per hectare. Monitoring of crops with drones is 15 UAH per hectare. Selection and agrochemical analysis of soil is $5. Audit of the land bank is up to $3 per hectare. The complex cartography monitoring in the course of a season costs $10 per hectare.
We also realize projects for clients; for instance, the re-equipment of machinery for precision farming. Such type of a project for the company with up to 3 thousand hectares can cost from 100 thousand UAH to 3 million UAH. Everything depends on the equipment.
When we just started, surely, we worked with small companies and dreamed of getting into the league of a big business. Now we work with MHP, IMC, Kernel, HarvEast, UkrLandFarming, AgroProsperis – they are a big well-known fish.
20 percent of our portfolio is a large business. Another 40 percent falls under a medium business, and as many again belong to projects for a small business. If we talk about the land bank, then 50 percent is a large business and the rest are medium and small companies.
But as for now, we are shifting focus to small businesses.
They are easier to work with. I meet with an owner, explain what he receives at the end of the process, we discuss a project agenda, negotiate a price, and a contract is closed. Then it is easy for us to work with the company: we teach one person to work with our products.
There is another fine point of working with small companies. There are many of them in the regions, and they have a strong community. For example, one company starts introducing new technologies and has returns from this investment. His neighboring farmer observes this and wants to innovate his technologies too. Certainly, I exaggerate but, in general, this is a common practice in the regions.
They are more complicated. You have to win tenders and go through bureaucratic procedures. Usually, this is a very time-consuming and long process. Additionally, they have different competition; you compete not with a product but for money in the whole. There are budgets, and different market players are trying to get the access to them.
If we talk about unalloyed competition between similar companies, then it’s virtually absent. The market is tiny but it has a huge potential. There are several companies on the market today – a few companies are big players; the rest is selective initiatives, start-ups, etc.
No, they usually do everything within their company. The peculiarity of our business lies in the fact that we do a unique project for each agrarian. There are no identical businesses - land banks, machinery, or processes. Agricultural companies are not interested in improving someone else’s business.
However, there is another specific here - the high level of our farmers' learning ability. 4 years ago it was possible to sell some solutions to many companies only with the help of a good presentation. Today, they themselves start implementing new technologies.
Yes, with the project on bigdata but not with our current products. European, American, and even Asian markets are more developed, and their agrarians have their own history and historical ties with local companies, so the costs of entering their markets are too high.
We used to work in Russia, and we still have a lot of offers from Russians but due to political and social concerns, we do not want to have business there. Kazakhstan is much more interesting.
You can adopt the best Artem’s practices at the conference, where he will talk about the evolution of the Value Proposition: the sale of innovations on the primitive market.
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