Green Labs, a Seoul-based agritech startup, has secured $38.4 million (50 billion won) in debt financing from existing investors BRV Capital Management and Skylake Incuvest. The new funding comes just a month after the startup laid off around 70% of its workforce, or 350 people, in February as part of a restructuring,
Green Labs CEO Sanghoon Shin said in an interview with TechCrunch that it now has a headcount of 150 people, adding that the company’s selling, general and administrative expenses (SG&A) had been reduced by about 80% compared to year-end 2022.
The startup has built smart farming software and hardware for farmers to digitize the entire agriculture value chain, from crop to distribution. Shin told me the company’s “Farm Morning” app aggregates farm data, then artificial intelligence gives insights into crop lifecycle and also provides a network through which farmers can connect and share insights.
Indeed, 900,000 farmers currently use the app in South Korea, and that figure has tripled in the past 12 months since its launch in 2021, Shin said. It also operates B2B marketplace Sinsun Market, and it has the ambition to be a LinkedIn for farmers, Shin added.
Green Labs, which raked in $140 million in a Series C in January 2022, ran out of money as it overstretched its expansion, TechCrunch reported last month. This time, Shin walked me through what happened to the company and how it plans to revive. The major cause was its new service, accounts receivable factoring, also known as invoice discounting. Green Labs purchases agriculture products from farmers and sells them to buyers/B2B partners with outstanding invoices. In other words, the startup pays farmers and buyers early and receives money from them late. It has thousands of B2B partners, according to Shin.
The problem arose when South Korea’s bond market froze in the second half of last year due to the default of the theme park Legoland. Financial firms began to suspend factoring financing of accounts receivables as market uncertainties grew.
Green Labs was borrowing money for cash liquidity with credit sales as collateral, but its lender, Lotte Card, suspended the factoring financing late last year, and the startup had to repay massive loans all at once. Green Labs had to go through with restructuring and layoffs.
Shin said the company generated sales of approximately $77 million in 2021 and more than $230 million in 2022.
The new money will go toward advancing the farm morning app and expanding its business in South Korea and Japan, Shin said. Green Labs already has 300,000 users in Japan after launching there in the fall of last year. When asked about its invoice discounting service, Shin said Green Labs will continue to act as a middleman for farmers and buyers, but will manage the business in a more conservative manner.
Its global peers include Dehaart and Farmers Business Network.
After the last funding, the company’s two investors, BRV Capital Management and Skylake, became the largest shareholder of Green Labs, while other investors, including SK Square and Shin, own the rest.