Agriculture is in Australia’s DNA
We have a huge opportunity in front of us to become world leaders in greener, more efficient, more advanced farming. But although we have an edge on other developed nations, we're still trying to feed the world on 100-year old food supply chains.
The average age of a grower in Australia is around 65 years old and resistance to relinquishing old ways is high. But Optomni founder Murad Mekhtiev believes that the tech just has to get out of the way to be readily adopted. He recently met with a grower in Orange, NSW who proudly said: “I'm a technophobe.” But when pressed, he counted off a series of AgTech apps that he was already using.
The grower didn't see it as “technology” because it was in the background. And this is exactly what Murad believes is the key: focusing on making tech an enabler, getting it working quietly and efficiently, and implementing it smoothly, rather than marketing it to generational farmers as some kind of disruptive revolution.
Ripe for disruption
Feeding growing populations across changing climates has become unsustainably complex.
45% of fruits and vegetables grown worldwide are never eaten. Half of this waste happens not in households neglecting their fruit bowls, but in supply chains before the produce even hits the supermarket shelves.
On a mission to reduce this waste by 25%, and unlock value and margin capture for farmers and growers while they're at it, Optomni is the latest venture to partner with Skalata.
Inspired by founder Murad Mekhtiev’s passion to reinvigorate this time-honoured industry, especially as it crests the point of crisis, we're extremely excited about what the future holds for this small but mighty South Australian startup.
Meet the venture
In a nutshell, Optomni’s wholesale trading and optimisation platform addresses the biggest loss leader in the perishables sector: perishability.
OmniOrder® matches supply with demand; finds new market opportunities for growers; streamlines inventory management, fulfilment, and ordering processes; and reduces waste through AI demand prediction and supply matching, which lets demand from different types of customers with their own product specifications be connected to supply at that specification.
What we really like about the founding team is that they've done it before.
Optomni comes to us with an impressive body of combined experience. Founder Murad designed the market trading platform used by one of Australia's largest growers. Co-founder and CTO Abdelrahman Elborey was the technical lead for AI ordering software used by Australia's largest food distributor.
Co-founder Sabina says:
“On a personal note, I’ve always tried to be conscious of where our food is coming from. But from a professional point of view, we knew some of the largest companies in wholesale food distribution were investing in AI to optimise their supply chains. But within the fresh produce industry, there was none of that being done”.
The founders’ deep industry knowledge is further compounded by advisor Daniel Hoffman, a second-generation grower and agronomist and former winner of the Corteva Grower Of The Year.
“I've been in the fresh produce industry my whole life, and I've seen a lot of growers and wholesalers shoot themselves in the foot by trying to play supply and demand without having the right information. Getting it right can create huge returns, but getting it wrong leads to lost orders, poor prices for everyone and waste.”
The potential unlocked value of margin capture for Optomni is nearly $2 billion for the Australian market alone. The fruit and veg wholesale market is valued at $14 billion, and is growing at a rate of 2.5% a year.
The key to unlocking that value is not producing more, but wasting less.
“In Australia, total waste is on par with other Western countries at about 45%. But 20% of that waste happens in the supply chain. If you do a parallel to the car industry, that would be every fifth car coming off the production line going directly to the junkyard.”
Using their edge-giving expertise, Optomni aims to reduce supply chain losses by 25%, saving half a million tonnes of wasted food at an estimated value of $400 million.
Murad: “We knew already there was a high degree of waste and a huge amount of loss, and realised pretty quickly that it was a supply and demand issue. The supply chain was inflexible in handling demand based on quality. The solution needed to combine elements of a core software system that manages business processes, as well as a marketplace, powered by AI-driven demand forecasting and supply optimisation. We knew how to build that. So it was just a question of: ‘how do we apply that to this particular industry?’”
Meet the model
Optomni’s business model has two pillars: transaction and SaaS.
It's built specifically for perishable food supply chains to reduce losses, and it operates in a “pink ocean”.
Red ocean markets, where demand is proven but the market is saturated with competition, are represented in the fresh produce sector by products like POS systems, traditional inventory management systems, and packhouse systems.
The blue oceans - brave new worlds of innovation where there may not be proven demand, but where founders can identify untapped pools of potential custom - manifest in the sector as click and collect ordering (demanding a big behavioural change), B2B marketplaces (very high data requirements mean it’s difficult to get the network effects), and supply chain optimisation (huge value potential, but still a poorly understood offering).
Optomni’s positioning strategy aims for the middle waters. It can provide immediate value to a single customer without that heavy data requirement, while offering better prices, margin capture, and significantly reduced losses.
In terms of customer outreach, Optomni understands the nature of the industry, the value of face-to-face contact, and the power of the “bush telegraph”.
The founders have been able to reach multiple growers through field days, conferences and events, and industry networking. Presenting to larger groups rather than targeting one-on-one meets has helped to keep customer acquisition costs low.
It's also consumer-side averse. Many solutions are focused on reducing or eliminating “ugly” produce, which Optomni doesn't believe is scalable (or, thanks to changing consumer sentiment, necessary).
Seeds of success
It's through these efforts Optomni has been able to secure early traction, signing up a group of SA and QLD based growers as early adopters of its platform.
And with 15,000 Australian growers and 1,500 wholesalers with a total farmgate value of $14 billion, the pipeline is so far only representing around 3% of Optomni’s total addressable market.
We are extremely excited to work with Optomni, and help them develop a scalable business model, pursue national expansion, and grow the team to help deliver era-defining agtech.
“In the agriculture industry, it’s very difficult to ‘just launch’ an MVP in 40 days and bootstrap your way through to Series A. We knew we needed to raise an initial round to shore up a proper commercial launch, and find the right strategic investor to help us execute on that really well.”
“Our goal isn’t to start generating tons of revenue tomorrow – it’s to get that really fast feedback cycle so we can make iterations quickly and improve our product.”