Contxto – Luxelare—a Mexican agtech/insurtech startup—exceeded by 428 percent the minimum goal established by the crowdfunding platform through which it raised MX$7.5 million (~US$338,300).
In this way, after two rounds of investment, the company has managed to raise MX$11.1 million of funding in less than a year; that’s just over half a million dollars.
This will surely have to do with the fact that the startup has continued to exceed expectations since its creation.
A few months before this last round of crowdfunding, Luxelare exceeded its annual projections by 60 percent in 2019. This allowed it to create an offering with a 3x return on investment.
Now, with its new capital in its pocket, the agtech will invest in infrastructure, marketing, and the development of its technology. Its purpose is to stay laser-focused on improving the profitability of agriculture.
Luxelare was co-founded in 2015 by Julio Antonio López and Manuel Richter and it claims to be the only platform in Latin America that allows farmers of any size to access digital services and satellite technology. These tools then allow them to improve profitability and avoid those pesky acts of God.
Crowdfunding vs VC investment
More than 180 investors joined forces to fund this second investment round through an equity crowdfunding platform.
Before Luxelare’s first foray into financing, the company had supported itself through its own resources. But, this bootstrapping did not provide for the exponential growth that the agtech required.
It is perhaps interesting to ask why the Founders opted for an often frowned upon crowdfunding model instead of reaching out to more “traditional” venture capital (VC) funds.
In this regard, Manuel Richter—CFO and co-Founder Luxelare—, responded:
They were pleasantly surprised when their first round turned out to be a success. “We not only raised the capital; we also found new clients and strategic partners… I think that this shared achievement is a very good sign for the Mexican entrepreneurial ecosystem.”
This second round may now be proof that this was not beginner’s luck, and the success doubtless will sow the seeds of alternative ways to raise capital in many minds. Especially during an era of pandemic shortage.
Today, Luxelare has a valuation of MX$85 million (US$3.84 million) and is projecting to achieve a compound annual growth of 91.2 percent.
Have VCs lost a golden investment by neglecting this option for their portfolio? I suppose this is the addictive attraction of the “venture” in “venture capital”: It hurts to lose money but it no doubt hurts more to lose an opportunity.