Benzi Ronen believes that when it comes to getting more consumers to buy directly from local farmers, technology and an optimized consumer experience are key. He has a good sense for both as CEO of Farmigo, a three-year-old company that provides online software for farms to manage their CSA subscriptions, and as of last week, runs an online farmers market.
With an $8 million Series B cash infusion from Sherbrooke Capital, RSF Social Finance and Benchmark Capital, Farmigo aims to create more locavores by bringing the farmers market experience to the computer screens of those who can’t make it to the weekend markets. It’s based on the CSA model, but with Peapod-like choice and flexibility that CSA subscriptions can’t offer.
For instance, whereas the CSA model works by signing up shareholders who pay a subscription rate based on a set amount of food they receive, the Farmigo model gives people the flexibility to order as much or as little as they want each week.
This could avoid the waste that’s common among CSA subscribers who just can’t figure out how to use up those 20 limes and three bunches of kale in one week, and hopefully improve the CSA customer retention rate, currently at 50 percent, Ronen says.
“The CSA model is optimized for the farm,” he said in an interview. “Food communities are optimized for the member experience.”
Not that Farmigo dismisses the needs of the farm. In fact, to make this more flexible model profitable for farms, Farmigo caters only to “food communities,” or self-organized groups of at least 30 people who commit to receiving freshly harvested deliveries weekly at their workplaces, schools, community centers, and the like.
Farmigo’s food community concept is entirely dependent on what the company calls “champions,” or highly motivated individuals who seek out a relationship with Farmigo and mobilize groups within their respective workplace or community. Once a community is established, Farmigo sets it up with a customized website that features its local farms, and helps plan a launch party to generate excitement.
Food prices on the site are set by the farmers and are comparable to farmers market prices, with $6 for a dozen pasture-raised eggs, for example.
Farmers receive 80 percent of each sale, which is equal to the CSA model, but they also receive access to data on what to harvest per day, how much to charge, how to pack the truck, do the delivery, and other business intelligence – thanks to the company’s CSA management software, currently used by hundreds of farms across 25 states.
“If you talk to a farmer on how they set prices, they kind of lean over to their neighbors and find out what they’re charging,” explained Ronen, who, along with his cofounder, was a VP at enterprise software giant SAP. He said Farmigo uses data to help farmers formalize this process.
It’s easy to imagine such data also leveraged to upsell services to farmers and to make targeted recommendations to consumers, which Farmigo is starting to do.
It’s also rolling out a mobile app in February and service in Los Angeles, Seattle, Portland, Denver, Chicago and Philadelphia in the future.
For now, Farmigo is managing ten food communities — including Etsy and Kiva — currently active in San Francisco and Brooklyn.
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[Image courtesy of Farmigo]