Indonesian agritech firm rakes in $2.5m in seed money to support middlemen

PasarMikro, an Indonesia-based company that facilitates upstream agricultural trade, has raised US$2.5 million in seed funding. The round was backed by Trihill Capital, Resolution Ventures, and Genting Ventures.

Also participating in the round was 1982 Ventures, which led the startup’s pre-seed round in January.

The two year-old company, which provides a platform for traders and farmers to carry out transactions, will use the fresh capital to roll out new products. This includes a marketplace function for sellers and buyers, PasarMikro’s founders tell Tech in Asia.

PasarMikro founders (from left) CEO Dien Wong, COO Edo Djayaputra, and CFO Hugo Verwayen / Photo credit: PasarMikro

However, they say their company’s priority is to continue to grow the usage of its main product offering. The founders believe it occupies a unique position in the market, given its focus on serving middlemen – also called traders – in Indonesia’s agriculture ecosystem.

Enabling middlemen

In a crowded market where many agritech startups try to push out middlemen in the supply chain, PasarMikro has gone against the grain by supporting and empowering these traders.

In Indonesia, almost all agricultural produce flows through middlemen. They buy and aggregate goods from small farmers before selling them to the next party in the supply chain.

Middlemen are commonly regarded as margin-grabbing “parasites”, but PasarMikro’s founders – Dien Wong (CEO) and Edo Djayaputra (COO) and Hugo Verwayen (CFO) – see them in a different light. They think that Indonesia’s agriculture traders play a crucial role in the community as they often personally know farmers and support them financially.

Additionally, middlemen are part of a well-established system in the country, making them almost impossible to replace. That’s why instead of driving them out, PasarMikro has chosen to leverage their knowledge, network, and expertise.

“Given its vast land area, multicultural population, and unevenly developed infrastructure, Indonesia is a complex market. In such a market, distributing smallholder-produced agriculture commodities from rural areas to urban areas requires a lot of resources, including effort, wisdom, relationship, time, and capital. The traders’ contribution has always been pivotal to the supply chain,” says Valerianus Ian Sulaiman, vice president of investments at Trihill Capital.

The PasarMikro team in conversation with a trader / Photo credit: PasarMikro

PasarMikro’s platform enables transactions between farmers and traders, which are traditionally characterized by uncertainty and delayed payments. The company aims to tackle this pain point by making on-time payments to farmers for traders, and then allowing traders to pay for the bought goods in three, seven or 14 days.

This entry point, PasarMikro says, has created stickiness on its platform.

Marketplace in the works