The Story Behind Our Investment In Agricool
It was a cold day in the winter 2015. Pierre-Eric Leibovici and I were not in the fanciest district of Paris, the sky looked like a grey monolite and our hands were cold. We were heading to an old, refurbished, industrial container. And yet we were very excited.
It wasn’t the first time we met with Guillaume, the co-founder of Agricool, but it was the first time we’d see the backstage, and meet the rest of the team. We thought we were about to eat freshly harvested strawberries, in winter (it wasn’t the case eventually since the harvest wasn’t ready, but we quickly forgot). What a lovely day!
Initiated by Guillaume Fourdinier and Gonzague Gru in 2015, Agricool is a company specialized in growing fruits and vegetables in urban areas, by transforming containers into the perfect close-loop farming systems, the cooltainers.
Pierre-Eric remembers this discussion well. He remembers even more, the conviction and the drive of the founders. Guillaume and Gonzague are both sons of farmers and did the same vocational baccalaureate in farm management, after their business school, just to have the option of taking over their family business. They then worked together in sales, offering software packages for drugstore owners. They wanted to sharpen their sales skills,which they knew they would need. Because it wasn’t just a matter of friendship that would help them succeed in founding a company together. They knew each other for a long time and they both had an idea in their head that would not leave them. It was not a question of wanting to become an entrepreneur. It was a mission. A mission based on a frustration they had when they left their rural environment to study.
“This shared experience was very harsh on us. Where we lived we had access to incredible fruits and vegetables. Once we arrived in bigger cities, we had no choice but eating lousy products.” They further told us “it’s when we experienced this issue first hand that we realized how big the problem was. The taste of these fruits & vegetables were only the symptom of a greater evil that we knew. The entire value chain is broken in agriculture.”
For Pierre-Eric their drive was obvious: “it was not just a question of tackling an opportunity to get rich and make a nice company. They were on a crusade.”
He adds “It’s rare to see this level of engagement and sincerity. It was not a question of being good storytellers. They were the perfect embodiment of their mission. They had it under their skin. It was like an endless itch they could not stop scratching.” They spent 18 months together on the roads to improve their sales skills. But before everything else, they thought about their future company from every angle, crafting and recrafting the story, the model and the plan.
Their mission was simple: “Agricool will offer healthy & locally-produced fruits and vegetables to citizen dwellers around the world, without increasing the average price of today’s products.” They added “The number of intermediaries between the producer and the consumer is too high and the overall quality is really poor because the value chain has been designed to fit the requirement of the supply chain.” Yes, you read correctly. The supply chain.
Fruits and vegetables travel on average 1500 km before being consumed. Just as an example, 75% of the strawberries consumed in France come from Morocco and Spain. You can guess the demand for solidity on the transportation industry, in order to provide consumers the products that will be mature at a precise window after the harvest (being attractive enough when in retail, without rotting). This is the root of all the shortcomings and faults in this industry as it is now.
“It was incredibly ambitious. They didn’t want to fix a specific segment, they wanted to fix the whole value chain. They were betting that they could handle this infinite list of challenges, from the production to the distribution. They were very confident that they could do it”, remembers Pierre-Eric. He adds: “They were onto many macro-trends: the competition for arable lands, the disintermediation and re-empowerment of producers & makers, the demographic pressure, the rise of urbanization, the rising demand for healthier and tastier food. It was very exciting, but it the meantime it was so risky!” They had to design a production system within a totally new set of constraints, fight misperceptions (eg: healthy == organic label), build a brand new business model for the industry, market their product properly, tailor the right distribution, expand across the world…
He adds: “Their plan had always been convincing. It was very well designed. They knew by choosing the very modular system of containers, instead of building giant vertical farms close to cities, they could not only roll out faster across the world and be relevant even in smaller cities, but they could also solve the funding problem much more elegantly. Uber needs and uses lots of money to grow but it has no trouble financing the cars. The enormous amount of cash required to finance all the vehicles in service is split into numerous players, all with their on smaller PNL. Each driver is a business owner in its own, with its own easy to understand, easy to modelize business plan. For the financial partner, it decreases the amount of capital requirement to lend and spreads the risk locally between all the parties.”
Agricool is just like Uber in that sense, they have cooltivators taking care of their cooltainers, and they would be able to build their own small business, and finance their tools of production. Capitalism as we like it: efficient, fair, empowering.
“They also knew how to tackle the issue of space. Growing fruits and vegetables in cooltainers would lead to a big increase of productivity. Taking just the example of strawberries, they can multiply the productivity per square meter by 120 (4x more harvest since they are not constrained by the summer season, 3X more linear space because of verticalization, 10X more density on a linear basis because they can control the parameters).”
“And when you produce nearby the city, you can stop selecting the crops for matters of logistics, you can select them for better qualities such as… nutrients and taste.”
“The scalability of the model was outstanding. Coupled with the ambition of the team, it was everything we love at daphni: something bold that could change the world for the better while managing to be super profitable”.
For Guillaume and Gonzague, it was really important to have the right unit economics. Not only did they have to do so because they wanted to build a big, sustainable business and attract cooltivators across the planet, but it was also very important because they didn’t want to build a luxury product. “We want everyone to be able to eat healthy, tasteful fruits and vegetables. There is always the temptation of increasing the margin when you make a better product, available even when you have no competition, especially since Agricool is season agnostic. But that’s not the reason why we do it. We don’t want to just target the wealthy and make their life a little better. We want to change what everybody is eating,” says Guillaume.
A trust relation from day 1
It is not a coincidence that both Pierre-Eric and Guillaume are describing the nature of their relationship in the very same way. The alignment and trust was complete from day 1. Guillaume remembers that at that time he had received many propositions. “However, it was very symptomatic that most of the investors we were talking to were trying to mitigate the risk by downsizing the round and insisting on having several co-investors involved. daphni was saying the opposite: when you have a big mission, and very complex challenges to tackle, you need the right means and the right conditions. If you raise too little, it will just be a waste of money and time for everyone, you will never be able to do what you want. If you multiply the number of perspectives around the table, it will be very difficult to take risks and make the required bets for disruption.”
Pierre-Eric remembers that “it was obvious that they were aligned in terms of level of ambition. And there was 100% trust on both sides. . As we were sending our offer, there was somebody who was about to join the company as COO. We didn’t feel it was the right fit and shared our feeling directly with Guillaume, who was first quite enthusiastic about the candidate. In a matter of a week, Guillaume announced to us that he stopped the collaboration with this candidate and thanked us for bringing it so genuinely to the table, without forcing anything or making any conditions, just by sharing how we felt. For Guillaume, it prevented Agricool to waste precious time, money and energy. After that, we all knew the partnership would be very healthy and productive.
Guillaume adds: “When we asked for feedback from seasoned entrepreneurs and advisors about selecting VCs, some people told us that the best thing to do was to just look for ‘VCs that are not harmful’. Others reminded us that dapnhi had just launched and that we barely knew Pierre-Eric & Willy. But many also said that we needed to pay a great deal of attention to small signals, to alignements and values.”
“Basically, I realized we needed to approach it exactly as we would if we were hiring a key person in the company, keeping in mind that once they onboard, it’s even more difficult, if possible, to make them leave. We had the conviction, listening to all the testimonies that VCs could have a very big impact on the company, by the harm they could do or by the value they could bring” Guillaume continues.
“To me, it was eventually very simple. I knew that if I couldn’t be fully transparent and have trust in them, I would not been able to extract any value out of them, and it would be very hazardous in the long run, since there would be blocks each time a difficult situation arise. If you don’t trust someone, the communication cannot work and you start building up of debt that will eventually explode. I knew we’d already have enough things to manage” he further explains.
For Pierre-Eric, “Guillaume is a great founder and leader. He is doing what’s necessary: mixing the right level of rationality and emotions, having a very clear picture of the future while realizing all the short-term challenges. He has the vision and he is the driving force of the project.”
Without surprise, the relationship is still working very well. Guillaume describes to me how they communicate: “We’ve made a slack channel, a whatsapp group, and call each other a lot. There is nothing I hide. Everyone is always ready to help find the right solution since everyone has the complete picture. I don’t see how a problem could arise in this relationship. Our board meetings are super productive. We focus on output, and we talk about matter. We take it one big milestone to another.”
He adds: “I rely on every board member’s’ strengths and consider them as real business partners. Pierre-Eric is providing me lots of support and perspective. He is also helping us connect with very high level people and recruit top talents. And he is really good at all of that. It’s exactly as if he was working in the company.”
Pierre-Eric appreciates how thoughtful Guillaume is in providing the right level of information, very consistently. “He also prepares the board very well to make sure we don’t spend time on unproductive reports but really speaks about the strategic challenges.” The relationship is win-win.
He explains that “As a VC, it’s very rare not to have some episodes where you have less emotional excitement about a company. It has never happened with Agricool. I love thinking of what they do, how I could be useful, who could be useful to them. It gives me a lot of energy. And Guillaume helped me be even more demanding in terms of culture and hiring process. He also showed me that we all set ourselves limits that are in themselves limiting. We should never be afraid of being more ambitious than we think.”
Ontrack to conquer the world & make it a better place
The journey is far from being over for Agricool. Of course, in such a complex environment nothing is simple and there will always be some surprises. “Many challenges have been solved, but there are new ones occurring continuously,” says Guillaume. And the closer they are to succeed their mission, the higher the ambition. “We know we can be global very fast. There is no reason we couldn’t become the standard model of production across the world. So we need to find how to industrialize what we do at an unprecedented scope and scale.”
The biggest hassle for Guillaume is managing to go at the right pace by onboarding the right quality of people, sufficiently fast. “When you take into account all the delays for hiring world class talents, it’s a nightmare. It’s never easy to find the perfect candidates, to make sure it’s a perfect fit (not only in terms of skills and vision but also in terms of culture and values), and to convince them. And then, you have the legal work notice, then the 2–3 weeks of onboarding period. Couldn’t there be a faster track, especially by shortening the legal notice?”
But as they look at where they are right now, it’s hard not to be satisfied. Customers are rediscovering how strawberries should taste. The distribution and key partners are super excited by the opportunity. The containers have already increased their yield by 50x in just 2 years. All the lights are green.
“If you take one of the biggest container ships (it can have 18k containers on its deck), and transform them all into cooltainers, it would represent €2b of potential turnover for Agricool!. Isn’t it amazing?”, asks me Pierre-Eric.
To Guillaume, the question is not if the tipping point will happen. “The explosion will happen. We have the productivity, the harvesting, the fruits. We reached the marginal production we always dreamed of. Everything is ready. We can go everywhere in the world very fast. We have solved so many problems, found so many specific designs, built such a singular asset. It’s incredible to think of everything we’ve done. All the planning, the testing, the effort we’ve put into the company. Soon, I will just have to press the button to launch the spaceship. I have the button in sight, almost within my reach. It’s so exciting.”
And when you reflect on the impact this company can have, it’s not mundane. In his own words “I’m so fed up to always use the word without. Without pesticides, without unnecessary pollution, without waste, without additives, without preservatives… It’s crazy to consider you are making the products 100 times better by just removing all the crap”.
“The only resistance we have are about people hesitating about the environmental imprint: some people just picture old containers at the end. But they don’t realize how much arable lands we can free, how many chemicals we can avoid putting into the lands and water sources, how effective our energy consumption and use of inputs are, how much CO2 is saved by removing all the transportation. Food production is representing something like 1/3 of the carbon imprint! We even created our own lights to make sure it was optimal, for the plants and the planet.”
Agricool’s equation is very simple: pleasure + health + low ecological footprint. And to make sure to offer it at scale, for everyone. “Many of the solutions to our current excesses in agriculture are only small patches. They offer solution for the wealthy. It does matter to build sustainable, scalable, affordable solutions. Being mainstream is not a mere question of market size. Being the closest with the consumers, partnering with independent, local producers and landlords, this is real for good. This is so.. cool!”
We couldn’t agree more.
If you do too, there are three things you can do to support the company: (1) introduce them to world class talents in sales (looking for their head of sales, with xp as key account manager in the retail industry) & operations (looking for their head of operations, in charge of cooltainers mass production, deployment, managing the supply from the production to the distribution channels) .
(2) testing their product by… tasting them and sharing your experience with friends (the feedback is pretty consistent…)
(3) sharing this article ;)
Oh, and one more thing.
A small, but nonetheless important, lesson learned by Guillaume, that we felt could be interesting for many entrepreneurs:
“I realized I systematically underestimated my intuition. Maybe by humility, or by a lack of experience. You often hear CEOs (and investors) state some kind of golden rules to always follow, such as “you should never hire a COO”, “VCs are useless”, “you should always raise more than you need.” this has already led me to be too cautious, or not to trust my intuitions. I made some mistakes by having self doubt, but when I really managed to make big progress or manage to do the unexpected with my team, it was almost always by listening to my inner voice.
It’s especially hard when you are with people that know better than you, that have more experience. And this is a situation that you need to be in quite often. You are tempted to discount your own opinion and follow the experts, or follow the consensus. But in fact you need to really listen to everyone and take everything into consideration. Their knowledge, their conviction but also yours. When you lead, it’s your call.
When data and intuition don’t say the same thing, it does not mean that data is right! For instance, all the pundits will tell you that strawberries need to be packaged into a transparent box, so clients can see them. But I really wanted a recyclable product and I really enjoyed the look-and-feel of the cardboard we are using now. Even though everyone advised me the opposite, I went for it. Maybe it will not be the best solution eventually. But for now on it is much more adapted to who we are.
In the end, the question is always to find the right solution to a specific situation. Very few people have all the information, that’s also why this is the responsibility of the CEOs. They have more info, more perspective about the business and its challenge. Our role is to find the unique solution to the unique problem, while considering all the knowledge collected & the possible alternatives.”
