Japan’s Farmnote, developer of wearables and SaaS for dairy cows, raises $3.5M

Shinya Kobayashi, CEO of Farmnote announces its fundraising at Farmnote Summit Annex 2018
Image credit: Masaru Ikeda

See the original story in Japanese.

Hokkaido-based Farmnote, developing the cloud-based herd management system under the same name, has raised 400 million yen (about $3.5 million). The investors for this round include Real Tech Fund, Hokuyo Bank, FFG Venture Business Partners (VC; Venture Capital affiliated by Fukuoka Bank), Kagoshima Bank, DG Incubation, D2 Garage, Leave a Nest, Fumiaki Koizumi (CEO / COO of Mercari), Shintaro Naganuma (founder of BAKE) and Kotaro Chiba. Chiba takes part in this round continuing on from the seed round. With this fundraising, Farmnote has reached 1.7 billion yen ($15 million).

Incorporated in November 2013, Farmnote has been developing sensor devices and cloud-based systems focused on streamlining dairy and livestock farming operations since June 2014, leveraging a grant from the Japanese Ministry of Economy, Trade and Industry, called the Supporting Industry initiative. The company won the top prize at Zenkoku Startup Day (literally meaning “All-Japan Startup Day”) held in Hokkaido in September 2014 despite the fact that it had been only a few months since they started working on the project. Subsequently in December, it also won the third prize of LaunchPad of Infinity Venture Summit 2014 Fall held in Kyoto.

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Farmnote marked its fifth anniversary on November 28th since its foundation. Three years have passed since its service launch, the number of user farmers is 2,700 and contracted cattle is 270,000. The total number of raising cattle in Japan is about 3.9 million and 6% of them are linked with Farmnote. After the launch of the wearable device for cattle named Farmnote Color in August of 2016, the scale of the firm has nearly doubled in terms of both sales amount and employee number. The company has commenced overseas endeavors in collaboration with Sumitomo and Kanematsu tradinghouses. It is currently test marketing in the U.S., New Zealand and Australia.

With this fundraising, Farmnote is going to focus especially on customer success. The firm was born out from one of in-house projects of the Hokkaido-based web integrator SKYARC which is managed by Kobayashi and had been focused on solution provision for automation / labor-saving / productivity improvement of dairy farming using IT, rather than farmers’ customer success.

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Kobayashi explains the reason for the pivoting:

We will shift the basis of our business. We had been focused on IT but will act for all kinds of livestock under the theme of ‘Animal Lifecare.’ Improving livestock amenity through evolution of all people involved in this field will lead to satisfaction of farmers. To do so, our current service line-up is not enough as the gap (similar to the “last mile” conundrum) between farmers and technologies must be bridged.

Farmnote strengthens its research and development structure with the support of Real Tech Fund and Leave a Nest. The firm has a veterinary-focused research unit called Farmnote Lab and will increase the number of clinical veterinarians from four to ten. In addition, to accumulate know-how of herd and dairy farming, the firm plans to establish its own cattle farm. As invested from local bank-affiliated VCs based in Hokkaido and Kyushu areas, the firm will cooperate with them to encourage ICT introduction and agriculture business base enhancement in these areas.

Translated by Taijiro Takeda
Edited by “Tex” Pomeroy