Agren Follows the Pivot into Software with a Quest for Equity Capital

"The next advancement in agricultural conservation is through software," Tom Buman, CEO and Founder of Agren, declared. Agren has been a BIZ client since 2010. "Software levels the playing field, dramatically shortens design time, makes it cost effective and will eventually make it appealing to the private sector," Buman said.

Farm-raised in Northwest Iowa, Buman's love of agriculture was equaled only by his devotion to the environment. "We were instilled with a love of the land as young children" Buman said of himself and his six siblings. "My father always believed in conservation, long before that was particularly fashionable."

So it should come as no surprise that following a degree in Agronomy from Iowa State University, Buman found a career in conservation working for the then Soil Conservation Service, later known as the Natural Resources Conservation Services. It was rewarding and it married his passions, but with the completion of his MBA from ISU in 1996, a restlessness overcame him and the entrepreneurial urge descended upon him. "I wanted to do the same type of work I had been doing for the government," he recalled, "but I wanted to speed it up. I was never all that happy with the slow pace of conservation implementation."  

Agren CEO Commits to Conservation

Thus Agren was born. Agren is a private consulting firm whose name reflected its founders commitment to both agriculture and the environment. Soon joined by brother, Stan, and another partner, the business achieved success working primarily for the commercial sector on project-based and grant-funded contracts.  

"Our mission was always to get conservation on the ground faster," Buman recalled and when high quality topographical data became available Buman saw a means to expedite conservation project design. Almost simultaneously, the NRCS offered grant funding to develop conservation tools utilizing this data, and Agren found itself moving to the cutting edge of conservation. In rapid succession, four tools were developed that would automate the design of conservation projects, reducing traditional planning time from months to minutes.

Suddenly this traditional consulting firm found that it had pivoted into the provider of software as a service, and the principals were drifting outside familiar territory with a certain level of angst. "The reality is that we always thought of ourselves as a consulting business, and we really didn't expect to get into the software business," Buman explained. When NRCS declined Agren's offer of the software, they went looking for advice, and found the BIZ which assisted Agren in the pivot, developing a business plan and a pricing model leading to a product launch in late 2010.

The software as a service portion of their business took off quickly and was soon licensed in 59 Iowa soil conservation districts. "We really thought we had the tiger by the tail and that we had arrived. We were going to go to the National Natural Resource Conservation Service and they would write us a contract and we would be in business nationwide in a matter of months," Buman remembered.

The Long Road to Success

After nearly two years of phone calls, meetings and conversations with NRCS, Congressman, Senators, and the USDA, they secured a contract with NRCS. The protracted process would ultimately prove not only disappointing for extending their reach to only four counties across the nation, but also unprofitable as the final contract required investments in additional security not allowed for in the proposal pricing. Still, they felt obliged to accept the contract, and the lesson learned.

It had become apparent to Agren and the BIZ that the funding needed to extend the vision of the Buman brothers would require the pursuit of investment capital, and again Agren was in unfamiliar territory. "Everybody tells you how long it will take, and how discouraging it can be, and how intense it will be, but somehow you don't believe it until you've been through it," Buman observed.

Agren felt that it would need to raise $500,000-$750,000 to keep the software technologically current, develop a marketing approach outside of Iowa, and to continue to develop more tools. So with the leadership of Mike Colwell, Buman embarked on a journey that he would describe as both exhilarating and disappointing.

Beginning in July of 2012 with a meeting with Brian Jones of Iowa Corn Opportunities, a fund established by the Iowa Corn Growers Association, Buman was encouraged by the interest. What would follow however would be a series of pitches over six months, most followed by words of encouragement and praise for the innovative nature of the product, but alas, no offers of investment. Eventually however, Ag Ventures Alliance, a business development organization for value-added agricultural ventures, out of Mason City joined Iowa Corn Opportunities to invest a combined $250,000. "For both of these organizations, investment is as much about advancing agriculture as it is ROI," Buman said of their success with these prospects.

With that investment, Agren was in a position to approach the Iowa Economic Development Authority for assistance through their Propel Program, a seed capital co-investment program designed to accelerate private investment in Iowa ventures. The program requires a matching investment and then offers a loan which can be used to both continue product refinement and grow the business. With that successful pursuit, Agren had met the threshold of viability for their capital fundraising.

"You have to fight tooth and nail to get that first investment, but then once someone has done the due diligence and lent their support, the next people are a lot easier to get," Buman remembered of the advice given to him by Colwell and JD Geneser of LWBJ Financial. "That proved to be true for us, it really is about perseverance," he said explaining that additional investors have now stepped forward allowing them to extend their "next steps" into additional software development.

With the additional investment, development of further technologies now in the visioning stage will allow Agren is to move towards a holistic approach to farmland planning and conservation and to advance the cause of both the agricultural and environmental interests that they count among their consulting clientele. Moreover as the current and future technologies become commercially viable Agren is poised to market their products beyond the traditionally conservation minded government agencies and into the private sector where the advances they have wrought will make conservation planning commercially viable and lead to a greater application of the techniques that preserve one of our greatest natural resources; the soil.

Square One DSM, an initiative of the Greater Des Moines Partnership, is formerly known as Business Innovation Zone (BIZ).