Persistence Data Mining

Early Stage

There's a Problem Beneath Our Feet: Soilytics is the Answer

Analytics

Raised to Date: Raised: $63,565

Aggregate Commitments $

Platform

Wefunder

Start Date

06/14/2021

Close Date

11/01/2021

Min. Goal

$50,000

Max. Goal

$1,070,000

Min. Investment

$100

Security Type

Convertible Note

Funding Type

RegCF

Series

Seed

Valuation Cap

$15,000,000

Discount Rate

20%

Rolling Commitments $

Status

Active

Reporting Date

09/18/2021

Days Remaining

44

% of Min. Goal

127%

% of Max. Goal

6%

Likelihood of Max
unlikely
Avg. Daily Raise

$662

Momentum
cold
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Location

La Jolla, California

Industry

Farming & Agriculture

Tech Sector

AgriTech

Distribution Model

B2B

Margin

Medium

Capital Intensity

High

Business Type

Growth

Persistence Data Mining, with a valuation cap of $15 million, is raising crowdfunding on Wefunder. The business uses technology and soilytics to help growers increase sustainable practices and restore the climate. The accurate, automated, and cost-efficient soil testing solution increases crop yields, reduces input costs, and improves soil fertility. Brian Zamudio founded Persistence Data Mining in 2012. The proceeds of the current crowdfunding round, with a minimum goal of $50,000 and a maximum goal of $1,070,000, will be used for sensor equipment, software development, consulting, marketing, and G&A expenses. Persistence Data Mining has partnered with John Deere, Mahindra, USDA, and the UN and is already producing revenue.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$81,961

$125,792

COGS

$24,802

$28,859

Tax

$3,188

$2,208

 

 

Net Income

$-94,416

$-9,109

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$22,227

$10,152

Accounts Receivable

$0

$0

Total Assets

$93,861

$71,256

Short-Term Debt

$326,723

$260,609

Long-Term Debt

$19,861

$33,954

Total Liabilities

$346,584

$294,563

Financials as of: 06/14/2021
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Analyst Report

Synopsis

Soil quality is the foundation of the food supply. The natural process of mineral transfer — from soil to plant to animal back to the soil — is at times disrupted by artificial agricultural processes. These disruptions result in lower soil health and less abundant yields. Practices like monocropping — growing the same kinds of crops in the same locations year after year — deplete soil nutrients and can result in erosion and other harmful effects. Optimizing soil health can be a challenge when agricultural practices and changing environments leave soil barren. 

Persistence Data Mining is working with farmers and prominent partners to increase soil nutrition and profitability while providing ecological benefits. Persistence’s “Soilytics” analyzes soil samples on-location using hyperspectral sensors to ensure the most accurate readings. The company’s soil solution can reportedly increase crop yields by 13% while reducing costs by 15%. Using Persistence’s solution keeps farmers from employing environmentally harmful chemicals, and healthier soils absorb carbon emissions from fossil fuels. To that end, Persistence has partnered with the United Nations Development Program as it heals the world one soil analysis at a time.

Persistence Data Mining’s current Wefunder raise has been rated a Neutral Deal by the KingsCrowd investment team.

Price

Persistence Data Mining is raising funds through a convertible note at a valuation $15 million (early bird investors can get in at a $12 million valuation). The company’s declining revenue figures do not provide justification for such a high price. However, a $15 million valuation is reasonable when compared to other startups currently seeing funding online. The company has also set favorable investment terms on its convertible note. Investors in this round will receive a 20% discount rate for their shares to convert to stock in a future raise and a 6% interest rate in the meantime. It is primarily these favorable terms that drive Persistence Data Mining’s strong price score.

Market

The global size of the agriculture market is around $10 trillion as of 2021. Farming using scientific analysis and the Internet of Things — called  “precision farming” — is a decidedly smaller share. The US precision farming software market was sized at $881.7 million in 2020 and is expected to grow at a healthy CAGR of 13.1% through 2028. Persistence Data Mining is targeting a small and niche market due to the novelty and slow adoption of precision farming. The company will benefit from a lack of competitors, but it may also find its growth limited by the market’s modest size. Persistence Data Mining’s market score is below average due to these factors.

Team

Persistence Data Mining founder and CEO Brian Zamudio is a serial entrepreneur whose past specialties are in traditional resource mining. He served as the vice president for Prospect Uranium for almost six years, which operated uranium deposits in North Dakota. Since 2003, he has served on the board for Tonogold Resources Inc., a junior mining company in Nevada and Mexico that seeks to confirm further presence of gold and silver in land it owns. Though he doesn’t boast prior experience with actual farming, he does have some level of expertise in geology and the power of modern tech. He started Persistence Data Mining in 2012 and has steadily developed it since.

President Penelope Nagel has been with Persistence since 2014. She has an MBA from the University of Phoenix and brings the credibility of a ninth-generation farmer to the leadership team. She worked in loss mitigation for HSBC Asset Management, a global investment management company based in the UK. Following her time with HSBC, she moved into the startup game as the vice president of FOF services, providing capital funding for Mexican businesses. Her work at FOF continued for some time after her start with Persistence and likely provides avenues to expand Persistence’s business to Mexican agriculture as the business grows.

The team covers further ground with the lower leadership. Managing Director and CFO Henry Bonner holds an MBA in finance from NYU Stern School of Business and a JD from the University of Connecticut School of Law. After practicing law for several years (he founded Bonner & Associates), he joined Persistence near its founding in 2012. However, he also retains his law practice and has taken on a role as senior advisor for Lance Capital. COO PJ Palmer has an MBA in marketing and finance from Northwestern University. He has served in several product management and finance roles — including senior manager at eBay from 1998 to 2002. Persistence has also filled out CTO and R&D roles with experienced hands for an eight-member team. 

Founder Brian Zamudio’s experience with mining and geology gives him ample expertise for the soil analytics that Persistence is offering. Zamudio is further bolstered by the strong combination of finance, technology, and business development skills his team brings to the company. Thus, Persistence Data Mining scores quite strongly in the team metric.

Differentiators

When it comes to setting itself apart from competitors, Persistence holds the advantage of being a first-mover in a niche space. Many farmers use soil testing labs to ascertain the health of their farmland. Companies like Spectrum Analytic and AgroLab offer various testing services that measure a variety of soil characteristics once a sample has been sent to them. Persistence Data Mining is using an entirely different approach. The company’s hyperspectral technology scans soil on-site. Those scans are then uploaded and analyzed to determine the soil’s composition. A major advantage to Persistence’s method is that results are available the same day the scans are taken. Traditional soil testing involves shipping a sample to a lab, waiting two to five business days for the sample to be tested, and then waiting a few more days for the results to be mailed back. With Persistence’s system, tests that took around two weeks can be done in one day. 

Persistence Data Mining has not yet secured any patents for its technology, though it does have patent applications pending. As a first-mover in its sector, Persistence will need to shore up its defensibility as direct competitors begin to arise. Even without patents, though, Persistence is already quite distinct from other soil analytic companies on the market. Its near perfect differentiators score reflects this strength.

Performance

Persistence’s story is one of moderate and slow-rolling success. On the purely numerical side, the business took in $81,961 in revenue last year, which was down from $125,792 the year before. The company claims that the economic downturn due to COVID-19 was a factor in this decreasing revenue because some farmers refused to consider the use of new technology. It also holds nearly $350,000 in debt, with more than $325,000 of that in short-term liabilities.

Despite an unfortunate financial report, Persistence Data Mining has garnered some prestigious partnerships. Development partners include agricultural manufacturing giant John Deere, Public Ivy school UC Davis, the US Geological Survey, US Department of Agriculture, and the UN Development Programme. It has also secured a partnership with Malvern Panalytical, for the use of Malvern’s ASD LabSpec system. In addition, Persistence has received just over $700,000 in prior fundraising. 

All in all, Persistence has maintained a healthy financial status over a long R&D cycle. It scores above average for the performance metric as a result.

Risks

The overall risk profile for Persistence Data Mining is relatively low. Timing is one area of concern for the company. Persistence has already taken years to develop its unique hyperspectral soil analysis system, and it will require even more time to scale sales and distribution. The company will need money over that time period, so there is also some financial risk. Persistence has maintained decent financial health thus far, but declining revenue and the need for growth could change that pattern. If revenue does not substantially increase in the coming years, Persistence will likely struggle. The high valuation set for this round also adds risk for investors, as it may be difficult for Persistence Data Mining to reach the ambitious price it has set for itself.

Bearish Outlook

Persistence Data Mining enjoys the advantage of operating mostly unchallenged in the precision farming space. Much of that advantage is due to its extremely niche market, which naturally limits the potential for competition. Given that revenue decreased year-over-year, it’s clear that the company is still facing operational and sales hurdles. This round’s high valuation also does little to offset risk for investors. With the need for increased sales and distribution likely to be Persistence’s biggest challenge in the short-term, the lack of marketing and sales expertise on the team is concerning. The question that Persistence will have to answer is now that it has developed its high tech soil analysis system, can it scale efficiently and quickly enough to capture a majority of the precision farming market?

Bullish Outlook

Though there are some concerns with this deal, there’s plenty to like about Persistence Data Mining’s current position. Persistence has spent years developing a unique product that is much more efficient than the current market standard. The precision farming market is positioned to expand as farmers seek cost-effective ways to produce more with less, and Persistence is in a good place to capitalize on that growth. It’s also impressive that Persistence hasn’t accumulated significant debt in its near-decade of research and development. If the company continues to operate with high capital efficiency as sales begin to come in, Persistence could achieve profitability sooner rather than later.

Executive Summary

Persistence Data Mining is employing the power of modern scanning technology to bolster soil health for agricultural purposes. Its hyperspectral sensors provide cheap and rapid “soilytics,” which can be used to optimize use of seeds, fertilizer, water, and power. In its nine years of operation, Persistence has partnered with a number of prominent organizations, including John Deere and the UN Development Programme. In addition, it has emerged as a first mover in a market likely to expand in the coming decades. However, that market is remarkably narrow, and a year-over-year revenue decline casts doubt on the company’s ability to emerge as the dominant player in this space. An overvaluation also reduces this deal’s appeal. Still, the product has proven effective, and the environmental impact of improving soil health is a strong selling point. Therefore, Persistence Data Mining is a Neutral Deal.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Benjamin Potts.

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