Advancing Eco Agriculture is raising funds through preferred equity at a valuation of $36.3 million. This valuation is reasonable, given the company’s strong growth and profitability. With an annual revenue of $18.7 million and a revenue-to-valuation multiple of 1.95x, Advancing Eco Agriculture is priced fairly for a commodity and agriculture service company. The company’s revenue has grown by 35% annually, indicating a healthy and sustainable business model. Investors can hope that the company’s technological development will increase its valuation faster than its revenue growth rate in the future.

By investing through preferred equity, investors will get priority over common stockholders if the company exits or gets liquidated. Therefore, investors in this round have a higher chance of seeing a return in the case of a liquidation or an exit than common stock shareholders.

Advancing Eco Agriculture (AEA) operates within the burgeoning regenerative agriculture market. Regenerative agriculture, a farming method that prioritizes soil health, biodiversity, and ecosystem services, is gaining traction as a sustainable alternative to conventional farming practices, which often rely on synthetic inputs. This market is rapidly expanding, bolstered by increasing recognition of its value and potential in mitigating climate change, promoting soil health, and enhancing food security. 

Notably, the U.S. Department of Agriculture has launched initiatives promoting and investing in regenerative agriculture, further driving its adoption.

Moreover, technological advancements, such as seed blending, are playing a significant role in its expansion. These technologies enable farmers to create custom cover crop blends, crucial to improving soil health, fixing nitrogen, increasing soil organic matter, and suppressing weeds. Consequently, the North American regenerative agriculture market, valued at $3.11 billion, is projected to grow at a CAGR of 14% – a fast rate that should benefit AEA.

Advancing Eco Agriculture (AEA) is a growth-stage company with unusual traction for an equity crowdfunding deal. In 2021, the company generated $18.7 million in revenue, indicating its success in the market. AEA experienced consistent revenue growth, with a 30% increase in annual revenue between 2021 and 2022. The company’s revenue mainly comes from product sales, but $1 million comes from its laboratory testing services. Most importantly, AEA is profitable and has a net profit margin of 8.3%, resulting in a net profit of $1.5 million. The company aims to reach a 20% net profit margin by achieving higher economies of scale. The company’s financial statements lower the investment risk for investors.

AEA has built a solid customer base, with over 10,000 growers relying on the company’s expertise and resources to enhance their crops’ productivity, profitability, and resilience. The company’s solutions have gained trust and recognition in North and South America and Europe. AEA’s founder, John Kempf, released close to 100 podcasts. The founder’s content generates most of the company’s leads and incentivizes farmers to use regenerative farming techniques. This allows AEA to find clients at low costs.

AEA also concluded strategic partnerships to help its farmers and indirectly grow its sales The company has collaborated with notable brands such as Citizens of Humanity, Kiss the Ground, and Steward, expanding its sales and promoting the spread of regenerative agriculture. For instance, the partnership with Citizens of Humanity, a jeans company, ensures that cotton growers who use AEA products can exclusively sell their cotton to the brand, providing them with a fair price and incentivizing the adoption of regenerative agriculture practices.AEA may end 2023 with similar revenues as in 2022. But the company is doing better than the overall farming industry. The top three agricultural companies are financially struggling this year: Bayer and ADM saw their revenues decline in the second quarter of 2023. Cargill reported a drop of 43% in its net income since its previous fiscal year. Overall, AEA’s stable revenue appears to be overperforming the market leaders.

Advancing Eco Agriculture (AEA)’s four lines of business offer a complete solution to farmers using regenerative agriculture techniques. The company’s line of natural fertilizers and included consulting services for its clients help farmers find the right natural solutions to increase and sustain their harvests. 

The products include natural rock-based phosphate, which helps plants use water; kelp, which enhances photosynthesis and growth; or microbes, which help regulate nutrient availability, sequester carbon, and degrade pollutants. AEA is expanding its manufacturing plant to significantly increase its influence from 4 million to 20 million acres. 

The products include a lineup of biological and nutrition products that help improve plant health and productivity. Biological products increase the ability of the soil to provide nutrients for crops throughout the season and decrease the dependence on synthetic fertilizers. Foliar fertility products ensure crops can reach their optimum health and productivity by mitigating deficiencies that often occur in conventional systems.

The company’s consulting services help growers implement customized crop programs that combine AEA’s nutritional supplements and biological inoculants with regenerative farming practices. AEA also invested in Croptix earlier this year and hopes to integrate its technology into its consulting services. Croptix’s technology can detect plants’ health in the field in real time. It helps optimize yield, reduce costs, and reduce crop diseases.

The company also provides knowledge to farmers through its founder’s podcast, webinars, and crops. John Kempf’s regenerative agriculture helps farmers transition to regenerative agriculture and brings new clients to AEA. Finally, AEA offers sets of near real-time plant nutrition analyses to farmers by partnering with a lab priced at $100 per set. These analyses help AEA consultants provide precise insights to farmers and understand whether they are using the right nutrients and quantities for their plant growth. AEA provides recommendations based on the results and analyzes around 10,000 sets annually. Thanks to this database, the company intends to use machine learning to improve this process. While still at the ideation stage, this technology could increase the company’s capacity to attract farmers, strengthen its authority in the space, and ultimately grow its revenues and valuation.

However, it is important to consider the market’s competitive landscape with competitors like Vayda or Terramera. Vayda is a small company that focuses on helping farmers transition to regenerative agriculture through consulting services but does not manufacture its own sets of nutrients. Terramera offers two biopesticides and a soil analysis service. Therefore, these companies target different and more precise angles of regenerative agriculture and don’t directly compete with AEA. None of these companies bring the unique combination of four different business lines like Advancing Eco Agriculture does.

Despite the competitive landscape in farming and agriculture, AEA is a trusted partner for growers seeking regenerative agriculture solutions. Its diversified approach and commitment to helping farmers improve their harvests sustainably stabilize the company in a shaken market, allowing it to prepare for developing manufacturing capacity and products.

Advancing Eco Agriculture was founded by Chief Vision Officer John Kempf. Kempf is a passionate expert in regenerative agriculture. Kempf worked for E&M Produce between 1997 and 2006, managing aspects of crop production, planting, irrigation, fertigation, pesticide, and fertilizer applications. As an Amish farmer, Kempf is dedicated to organic and natural farming. Kempf hosts the most listened podcast on regenerative agriculture. He founded AEA to empower farmers by providing them with the resources and expertise to enhance their crops’ productivity, profitability, and resilience. 

Kempf was the company’s CEO for 10 years before appointing Jason Hobson. Hobson has experience as a farm manager and has been with AEA since 2010. He leads the company’s strategic development.

Paul Bergman joined the team in 2018 as the Executive Chairman. Bergman holds an MBA from the Wharton School and worked at the intersection of global business and agriculture for two decades. Bergman held leadership positions and managed teams at Aqua Capital, where he focused on growing Ferliáqua, the leading South American fertilizer company.

Under Hubson and Bergman, AEA grew at 30% each year, good progress for a company mostly selling fertilizers. Advancing Eco Agriculture has a team of 75 individuals contributing to the company’s growth and success.

Advancing Eco Agriculture (AEA) faces several risks as it looks to expand its regenerative agriculture solutions.

The company faces some competition in the regenerative agriculture space. While AEA is offering “must-have” products and solutions, its competition offers various services that also promise to help farmers. This competition may challenge Advancing Eco Agriculture regarding market share and customer acquisition. Additionally, the transition to regenerative agriculture may be slow – and AEA must put efforts into educating farmers to encentivize them to change their farming methods.

The company also faces a technological risk. Its AI-powered solution, aiming to help founders through its database, is only at the ideation stage. The company still has to hire an internal or external technological team and build the project from its existing data and algorithms that are the foundation of the ultimate AI solution. As with any new technological solution, the product could fail to be successfully developed, not find market demand, or not generate enough additional revenues to justify the investment. The company’s diversified business model mitigates this technological risk, which is normal for any new product. While the product development failure would lower investors’ returns on their investment, it wouldn’t much hinder AEA’s product sales growth.

Advancing Eco Agriculture’s (AEA) diversified business model allows it to launch the development of an artificial intelligence-based product while limiting technological risks. AEA has established itself as a trusted partner for over 10,000 growers. The company’s scalable solutions have proven effective in increasing crop productivity, profitability, and resilience.

One key differentiator for AEA is its commitment to a whole-systems approach, which sets it apart from competitors in regenerative agriculture. By providing organic fertilizers, free consulting services, content, and an AI-powered data platform, AEA supports farmers in identifying nutrient deficiencies and imbalances, optimizing their harvests, and making data-driven decisions. This integrated approach demonstrates AEA’s dedication to the success of its customers.

The company’s strong financial performance is a testament to its successful business model. With $18.7 million in annual revenue and a growth rate of 30%, AEA has demonstrated its ability to generate consistent and meaningful returns. Furthermore, AEA’s profitability, with a net income of $1.5 million in 2022, highlights the company’s strong financial management and operational efficiency.

AEA is raising at a valuation of $36.3 million, a fair valuation given its current services and growth trajectory. AEA has attracted venture capital investors like Tree Trunk Light LLC and Philly Ventures. AEA has a lot of potential thanks to its fast-growing market and experienced and passionate leadership team.

In conclusion, Advancing Eco Agriculture’s comprehensive approach, strong financial performance, and commitment to empowering farmers position the company for continued growth and success in the regenerative agriculture industry. With an expanding addressable market and a proven track record, AEA is well-positioned to capitalize on the increasing demand for sustainable agricultural solutions.

While Advancing Eco Agriculture (AEA) operates in the promising field of regenerative agriculture, it faces a competitive landscape with several competitors like Vayda, Terramera Inc., or Agreed.

In addition, for investors to get a minimum of a 10x return on their investment, assuming a similar revenue multiple and capital structure, AEA will have to achieve a revenue of around $200 million, which can take time if the company only sells fertilizers and consulting services. While the consulting services are a high-margin revenue stream for the company, they are difficult to scale. Therefore, AEA must successfully develop its AI-powered data analytics platform for investors to get outsized returns. This is a risky bet for a non-tech company. Therefore, this investment involves risks related to growth potential and technological development.

Advancing Eco Agriculture (AEA) is a regenerative agriculture company that provides solutions and expertise to farmers to make crops more resilient, productive, and profitable. The company sells regenerative agriculture organically approved plant nutrients and offers inclusive consulting services to its clients. AEA also plans to build an AI-powered data platform thanks to its existing large database to help farmers identify nutrient deficiencies and imbalances and obtain automated recommendations to increase their crop quality and yields and crop quality.

AEA operates in a competitive market with low entry barriers. Indeed, selling fertilizers can be easily achieved. But the company managed to gain a strong advantage over its competition: farmers’ trust. AEA’s product diversification strategy differentiates it from its competition and makes it a trusted partner for farmers during their transition period, and beyond. Its newest product, still at the ideation stage, could help the company differentiate further from its competition but involves risks as it will be the first technological product of the company.

The company has grown its business through a whole-systems approach to revitalizing soil and plant health. More than 10,000 growers trust it, active in North and South America and parts of Europe. AEA has a new manufacturing plant in Colorado that will significantly expand its influence from 4 million to 20 million acres. The company is profitable and has posted an annual revenue growth of 30%.

AEA’s founder, John Kempf, and his executive team are passionate and have decades of experience in the industry. Kempf’s leading regenerative agriculture podcast provides knowledge to farmers while being an efficient marketing channel and bringing customers to the company. The company operates in the global regenerative agriculture market, which is set to grow at an annual rate of 14%. Given the growing global interest in regenerative agriculture as a sustainable alternative to conventional farming practices, AEA has a high market potential.

Disclaimer: AEA was not involved in the production of the report. Investors should visit the Wefunder page and read the disclosure on the company’s Form C for further communication.