Investing in Agritech: "Happy Farmer" from a Student

Contents:

• How virtual carrot farms turned into investment assets
• How the CloudFarm platform works: How it works
• The project's relevance for the agricultural sector
• CloudFarm revenue models: How the platform will generate profit
• Risks for investors and farmers in agricultural projects
• Expert opinions on CloudFarm: prospects and challenges

How virtual carrot farms turned into investment assets

In the spring of 2020, an innovative idea proposed by student Artemy Shadrin emerged at the Financial University. He was inspired by popular browser-based farming games, where players develop their own farms and grow various crops. These games, which appeared back in the 2000s, remain relevant today, attracting millions of users around the world. Artemy wondered: "What if virtual cells where carrots and cabbage grow become real assets for investment?" This idea opens up new horizons in the field of gamification and financial technologies, allowing to combine the passion for games with the opportunities of real investment.

Shadrin initially considered his idea difficult to implement. He believed that collective investments in small and medium-sized agricultural enterprises could face legal restrictions. However, after analyzing the federal law "On Attracting Investments Using Investment Platforms," ​​adopted in 2020, he saw that there were no legal barriers. This inspired the creation of CloudFarm—a unique application that offers investors the opportunity to manage their investment portfolio in a gamified format. CloudFarm not only simplifies the investing process but also makes it more engaging and accessible to a wider audience.

How the CloudFarm Platform Works: How It Works

CloudFarm is an innovative platform that connects farmers and investors in the agricultural sector. To participate in the project, farmers must undergo a registration process, which includes a financial and legal assessment. This verification helps the platform reduce risks for investors, thereby ensuring greater transparency and security of the project. CloudFarm strives to create a sustainable ecosystem where farmers can receive the necessary investments for development, and investors can feel confident in the reliability of their investments.

After successfully completing the verification process and signing all the necessary documents, the farmer can create and publish their investment project. This project becomes available to all registered users of the platform, significantly expanding the possibilities for attracting investment. This approach not only facilitates the financing of agricultural initiatives but also helps build a community of investors interested in supporting the sustainable development of agribusiness.

Investors interested in investing go through a simple registration process on the platform and open an investment account. After that, they can begin investing immediately. The platform provides access to current farmer projects, allowing investors to familiarize themselves with key details of each project, such as loan terms, term, amount, and expected return. To simplify the decision-making process, CloudFarm has implemented a rating system that evaluates farmers based on their previous experience and other important indicators. This helps investors select the most promising projects and minimize risks.

Each investment project has a strictly defined funding deadline. If the required amount is raised within this time, the funds will be transferred to the farmer. If the goal is not reached, all funds raised will be returned to the investors. The minimum investment for participation in the project is only 1,000 rubles, making investments accessible to a wide audience and allowing anyone to participate in supporting agriculture. Investing in agricultural projects provides an opportunity not only to gain potential profit but also to contribute to the development of sustainable agriculture.

The platform offers a unique gamified approach to investment portfolio management. Users can track the growth of their investments as virtual plants on their smartphone screen. For example, if an investor invested in tomatoes, the screen will display a field where their tomatoes are visually "growing." This gamification element makes the investing process more engaging and visual, which promotes a better understanding of market dynamics and increases interest in managing one's finances.

Project Relevance for the Agricultural Sector

According to the 2016 All-Russian Agricultural Census, there were approximately 200,000 agricultural enterprises in Russia. In 2021, Rosstat conducted a microcensus, which included 41,900 organizations, 144,900 peasant farms and individual entrepreneurs, as well as 82,600 non-profit partnerships and 16.5 million private farms. All of these entities represent significant potential for users of the innovative CloudFarm platform, which offers modern solutions for optimizing agricultural production and resource management. The CloudFarm platform can significantly improve the efficiency of the agricultural sector by providing access to advanced technologies and analytical tools, making it attractive to various agricultural market participants.

Farmers have the opportunity to receive government subsidies; however, according to a report by Business Ombudsman Boris Titov, only 8% of them took advantage of this support in 2020. A 2019 Deloitte study found that 46% of agricultural companies sought alternative sources of financing, highlighting the urgency of implementing innovative solutions in the agricultural sector. This demonstrates the need to improve access to financial resources and support farmers to stimulate their growth and development.

Artemy Shadrin, an expert in agronomy, emphasizes that the Russian agricultural market, although in its infancy, has significant potential. This is confirmed by initiatives from both the government and large agricultural holdings, which are actively implementing modern technologies and automated systems to improve production efficiency. These conditions create a favorable environment for agritech startups, including CloudFarm, which can make a significant contribution to the modernization and development of the agricultural sector.

According to forecasts by Anastasia Kurbatova, CEO of the crowdfunding platform OneStart.ru, the market size of digital technologies in Russian agriculture could grow to 1.8 trillion rubles by 2026. This figure demonstrates growing interest in digital solutions and their integration into the agricultural sector. The introduction of innovative technologies in agriculture opens up new opportunities for improving production efficiency, streamlining processes, and increasing yields. Given digitalization trends, farmers are increasingly turning to modern tools, which contributes to the development of the industry and improves its competitiveness.

Currently, there are no projects similar to CloudFarm in Russia. The developers are confident that their unique format will provide a competitive advantage and allow them to carve out a niche in a growing market. CloudFarm is initially focused on collaborating with experienced and progressive farmers, which will help attract the attention of other industry participants in the future. This approach will not only ensure high-quality services but also create a community where the exchange of experience and knowledge will become the foundation for the further development of the agricultural sector.

CloudFarm Revenue Models: How the Platform Will Generate Profit

Modern crowdfunding platforms in Russia claim that profitability can reach 20-35% per year. However, Artemy Shadrin, founder of CloudFarm, believes these figures are exaggerated. He predicts his project will generate returns of 7-13%, which is in line with favorable deposit rates and the average yield of the S&P 500 index. This approach allows investors to more realistically assess risks and opportunities, as well as develop long-term investment strategies.

CloudFarm is a moderate-risk platform. According to the financial model, expected annual expenses will be approximately 6 million rubles. The project plans to become profitable in its fifth year. Initially, CloudFarm will operate as a low-margin business with a small commission. Future plans include expanding the range of services, including consulting and direct delivery of vegetables such as carrots and cabbage for investors. This strategic development will increase profitability and attract new clients in a growing market.

CloudFarm became a finalist in a startup competition organized by the Financial University and received targeted funding of 300,000 rubles. These funds will be used for in-depth market analysis and the implementation of initial investment deals. Participation in the competition not only confirms the company's potential but also opens up new opportunities for growth and development in the field of investment technologies.

Risks for Investors and Farmers in Agricultural Projects

Investing in agricultural projects such as CloudFarm is associated with various risks. One of the most significant is the possibility of failure to fulfill the investment plan, which could result in insufficient funds raised. To mitigate this risk, the platform administration must ensure the availability of interested investors and high-quality farming projects. To this end, it is planned to implement a transparent rating system based on the success of projects. Farmers with a high rating will be able to count on more favorable conditions for investment, which will increase investor confidence and improve the overall dynamics of the agricultural sector.

At the moment, the project CloudFarm is in the development stage, and Artemy Shadrin, its founder, plans to launch the website application by the end of 2021. In preparation for the launch, an active marketing campaign will be conducted to attract the first investors. Artemy, together with his classmate Elena Chirkova, is diligently working on the project, consulting with experts from the venture sector. The team is actively seeking agronomists, risk analysts, lawyers, backend developers, and designers to ensure CloudFarm's continued development and successful market launch. Artemy Shadrin discusses CloudFarm's possible entry into the international market. He emphasizes that the Russian market carries certain risks, including reputational ones. Shadrin emphasizes that maintaining his reputation is more important to him than risking financial investments. Entering the international arena is viewed as a strategically important step for the further development of the business.

Experts' Opinions on CloudFarm: Prospects and Challenges

CloudFarm is an innovative crowdfunding platform that is attracting the interest of investment experts. However, as Kirill Komarov, Head of Investment Advisory at Tinkoff Investments, notes, the developers face a number of serious challenges. Key among these are the complex borrower scoring process and the need to ensure high returns for investors, which should exceed 10-15% per annum. This creates certain risks for both the platform and the investment participants.

Kirill Komarov emphasizes that the use of gamification in the project may mislead investors, creating a false sense of security. He notes that direct investments in agriculture are a complex and risky way to make a profit, especially in the highly competitive Russian agricultural market, where large holdings predominate. Investors should consider these risks and carefully analyze opportunities before investing in the agricultural sector.

Anna Slobodenyuk, investment manager at TilTech Capital, notes that crowdfunding is becoming an attractive option for companies unable to obtain financing from traditional banks or private investors. Despite careful project selection, the risk of default remains high. She emphasizes that CloudFarm developers may be underestimating the challenges associated with engaging with small investors. This underscores the importance of sound investment management and careful risk analysis in crowdfunding.

However, not all experts share this pessimistic view. Kirill Kosminsky, executive director of the Association of Investment Platform Operators, asserts that the idea of ​​creating a unified service for farmers has significant potential. He notes that gamification can significantly increase user engagement. However, investors must consider the risks associated with climate change and the technologies used in agribusiness.

Andrey Zyuzin, Managing Partner of the Fuel for Growth fund, emphasizes the growing interest in gamification across various sectors. However, he also draws attention to the lack of information for potential investors, particularly regarding share ownership. The need for transparent and accessible information is becoming critical for successful investing in gamification-related projects. This will attract more investors and support the further development of this promising field.

Armen Minasyan, Partner at Potok.Holding, notes that CloudFarm stands out among more than 40 companies in the crowdlending space in Russia. Most of these companies are simply copying the ideas of more experienced players. He emphasizes that crowdlending carries certain risks for investors, but farmers also need accessible loans. Minasyan adds that gamification and investor involvement in the business can be an effective solution to overcome these problems. CloudFarm strives to offer innovative approaches that will ensure the security and attractiveness of investments in the agricultural sector.