The blockchain protocol powering resilient and inclusive supply chains: Why we invested in Topl
We need to radically rethink the flow of value, power and resilience within supply chains. The future that Mercy Corps Ventures is betting on is one where farmers have the agency and dignity to build their businesses, manage climate disruption, and equitably access markets. We believe that this is both hugely impactful and a major commercial opportunity for all value chain participants.
The resilience of a company’s supply chain will be a critical factor in their success or failure over the coming two decades. Trends in regulation, corporate investment, consumer behavior and capital markets are showing early positive signs of converging to power and incentivise this transition.
As we build out a constellation of investments aimed at ushering in farmer-inclusive, climate adaptive supply chains, we recognize the need for resilient data infrastructure. Although the digitization of supply chains is rapidly expanding, data is often sparse, fragmented, siloed or invalid. Existing solutions rarely reach the first mile farmers and are often extractive in nature (e.g. for the benefit of the downstream company).
Sitting at the confluence of our Climate Adaptation and Financial Resilience investment theses, we believe that Topl and its underlying blockchain can play a key role in linking smallholder farmers with value-add service providers (like weather information, insurers, lenders, input providers, logistics) that collectively empower farmers. Designed for the last mile and supply chain management alike, Topl’s blockchain infrastructure allows for transparency, digital identity, payment rails, and other applications that strengthen the entire system. We see a tremendous opportunity for Topl’s protocol to spur innovation in financial products and payment terms for farmers, who have thus far been underserved in the wider fintech boom. This is beyond just traceability — it is creating the new architecture for information and value to flow up and down supply chains.
Finally, as regulators and consumers alike demand fair wages for farmers, we envision Topl empowering companies and organizations to build brand equity and market share by demonstrating new ways they extend value to their farmers. Governments (UK, US and Germany to name a few recent headlines) and consumers are pushing back against greenwashing; by 2030, we believe that verified supply chain data will be a requirement for mainstream brands.
While we approach Topl from the impact lens of agriculture, the protocol is already at work in the extractives industry, carbon credit tokenization, COVID-19 text kits tracking, and a host of other segments.
Market Need
Modern agricultural supply chains are becoming increasingly complex, having to connect disjointed entities across different geographies, policies and cultures, whilst consumers are increasingly demanding better visibility and ethical practices. Currently, Agrifood companies seeking to embed sustainable practices and comply with quickly changing regulations have adopted certification schemes (e.g., UTZ and Fair Trade).
However, these are extremely costly for both the company and the farmers and cooperatives that are required to bear the brunt of certification validation burden, and still lacks impact level data to see if farmers’ lives have meaningfully improved. This also doesn’t overcome the myriad challenges that come from siloed and fragmented data between different actors in the supply chain, which results in issues of trust, accountability, and information symmetry. For example, in tracking cacao from tree to bar, a chocolate company very rarely has full visibility of data from the first-mile supplier, let alone specific information (e.g., price paid, sustainability practices, etc.) that would allow it to gain commercial advantage or reduce downside risk.
The Topl Solution
Topl has created a lightweight, full-stack blockchain, that aims to revolutionize how businesses engage with, prove, market and monetize sustainable practices. Their blockchain is fast, works on a feature phone, and is public and permissionless — a key differentiator to other traditional (central database) traceability solutions. The Topl blockchain streamlines exchange of data on funds, goods, and certification claims all into one transaction. In fragmented supply chains where real-time intelligence is imperative for managing costs, quality or other factors, Topl allows all actors to reliably validate and cross-validate data. By providing a visible ledger of transactions relating to asset ownership, product condition, and location, Topl facilitates the traceability of produced goods, and the identity of the parties involved.
Farmers and other workers at origin can increase their leverage and prices paid to them for their production. Individuals will be able to transform their verifiable production history and practices into the ability to access value-add services (finance, advisory), and new markets, etc.
Traders and brands along supply chains can reduce the cost of certification and audit processes while simultaneously increasing the reliability and transparency of such certifications. This in turn should lead to value-creation for other supply chain actors.
For investors and capital markets, Topl is working to usher in impact as an asset class and drive capital toward companies with transparent / public and verifiable impact (ESG practices).
Ultimately, Topl can decrease supply chain risk, wastage and spoilage, increasing brand equity, and provide access to value-added services and other life enhancing opportunities for smallholder farmers.
“Topl believes that economic and social goals can be complementary instead of competitive, that profit should drive impact — and vice versa. By building a technology that enables purpose-driven businesses to maximize their profit and their impact, Topl fully embraces our motto: ‘You change the world. We prove it.’”
Kim Raath, Founder and CEO — Topl
Investment Rationale
A fundamental transformation is needed to meet the aspirations of an inclusive, efficient, sustainable, nutritious and healthy food system. The food and agriculture sector is the single largest employer in the world, despite a majority of its workers living in poverty. Nearly one-third of global food production is wasted, yet according to the FOA, up to 800 million people are chronically undernourished. In addition, food systems are responsible for 25% of global greenhouse-gas emissions, while climate change in turn threatens up to 25% of crop yields. And a rising global population — expected to reach almost 10 billion by 2050 — exacerbates our already strained food systems. Topl provides a right-fit, thoughtfully-designed foundation by which companies can address many of today’s pressing food systems issues. While the impact is indirect, this is the critical infrastructure that is needed to create supply chains where farmers can thrive, and has the potential to be a crucial enabler for companies that are committed to sustainability, be it out of self-interest, compliance or as core to their model.
Find out more about Topl.
