Most Ag Marketplaces Fail—Here’s Why Grao Direto Didn’t
Building a successful digital marketplace in agriculture is like trying to grow soybeans in the Sahara—possible, just look at Mato Grosso—but incredibly difficult.
The vast majority of AgTech marketplaces fail before they ever gain traction. The reason? They start at the wrong end of the problem.
I’ve seen it happen many times. Founders and investors get captivated by the allure of an efficient and liquid digital marketplace, dreaming of an “Amazon for Ag.” But what they miss is that marketplaces don’t succeed because of their technology; they succeed because of their networks. And networks are notoriously difficult to build.
I first met Alexandre Borges, Grao Direto’s founder, back when I worked at CME Group, the world’s largest agricultural marketplace. One of my pet projects at the time was studying physical Ag marketplaces, mainly because of their strategic connection to derivative marketplaces like the CBOT.
I knew back then that Alexandre was different from the hundreds of other marketplace founders I had talked with over the years as he didn’t immediately want to show me his platform. In fact, he didn’t have one.
He wasn’t focused on software—he was focused on people and building a community. He was out in the field, talking to grain traders, understanding their pain points, and solving real-world problems.
One of his early breakthroughs was helping trading companies such as ADM streamline difficult tasks like digitally signed contracts and dynamic pricing during origination.
This wasn’t an obvious path to building a grain marketplace, but it gave him an inside look at how these companies operated, building trust and relationships that would later be key to scaling Grao Direto.
It was no surprise that ADM and other trading companies later became investors in Grao Direto—they recognized the value of a team that could understand industry pain points and develop practical solutions, rather than just pushing software.
This careful execution has also helped Grao Direto reach an inflection point, and today, with a fresh $15 million Series B round, they have emerged as the clear winner in Brazil’s physical grain marketplace space.
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The Hardest Business Model in the World
Even when you start on the right foot, building a marketplace is one of the hardest business models to pull off.
In the early stages, a marketplace has little to no inherent value. Its true power only emerges at scale—when there’s a deep liquidity pool, tight bid-ask spreads, and enough volume that buyers and sellers can execute trades instantly. Until that critical mass is reached, a marketplace is little more than a fancy interface with no real utility.
At CME, I saw firsthand how challenging it was to transition markets from open outcry trading to digital platforms. Even when the technology was ready—and despite CME owning the market—traders resisted the shift. Change, especially in traditional industries like agriculture, is rarely welcomed.
To move trading volumes from the pit to the electronic market, CME had to identify a specific pain point and find a small but ambitious group of traders willing to experiment with electronic trading tools.
The traditional system relied on orders being physically carried into the pit on paper by "runners." This process was slow, prone to errors, and carried significant risks. A single misread or misplaced order could lead to major losses, and at the end of each day, all data still had to be entered into the trading system manually—a tedious and error-prone task.
The solution was the "eRunner", a handheld device designed to digitize the order process, eliminating errors and delays. This small but crucial innovation streamlined the workflow and made trading more efficient. However, technology alone wasn’t enough—it needed adoption.
The first to embrace the eRunner were young traders eager to gain an edge. They quickly saw the advantages—faster execution, fewer mistakes, and a significant competitive advantage over those still reliant on paper-based trading.
As these early adopters thrived, others took notice. Over time, more traders followed, and the old system became obsolete. Once paper-based orders were replaced with digital transactions, the eRunner naturally evolved into a fully functional electronic trading platform.
Traders loved the efficiency—it allowed them to trade multiple markets simultaneously, unlocking new arbitrage opportunities. Eventually, the market migrated entirely to electronic trading.
This approach mirrors how Grao Direto cracked the physical grain marketplace conundrum in Brazil.
Instead of launching a massive, disruptive technology platform from day one, they identified a beachhead—a specific, underserved problem that they could solve exceptionally well. Taking a page from Geoffrey Moore’s "Crossing the Chasm", they built trust, embedded themselves within the industry, and scaled from there.
So How Did It Happen?
In her excellent article "Just Say No (to Marketplaces)", Janette Barnard lays out a strong case for why digital marketplaces in U.S. agriculture have repeatedly failed. The U.S. grain market is highly consolidated, dominated by a few massive trading firms that have long-standing relationships with large-scale farmers.
Because of this, the barriers to entry for an independent marketplace are nearly insurmountable. Trading companies already know all the farmers they need to do business with, making a digital platform redundant. Farmers, on the other hand, typically have on-farm storage, allowing them to sell when market conditions are favorable rather than being forced to offload grain immediately after harvest.
Their primary challenge is timing their sales, which is why price discovery tools—like CME futures—tend to be more valuable than a spot-trading marketplace. With the ABCD giants (ADM, Bunge, Cargill, and Dreyfus) controlling most of the grain origination, any new marketplace struggles to achieve the liquidity necessary to be viable.
Now, contrast that with Brazil, where the grain market operates in a vastly different environment.
Unlike in the U.S., Brazil's agricultural landscape is far more fragmented, particularly in frontier regions.
Thousands of new farmers have entered the industry over the past decade, and trading firms don’t automatically know everyone, creating a clear opportunity for a marketplace to connect buyers and sellers.
Even in non-frontier regions, where farmers and traders are well-acquainted, both sides still gained from using a digital platform, which streamlined processes in a country where simplicity is rare.
Additionally, most Brazilian farmers lack on-farm storage, meaning they need to sell their crops right after harvest, usually to pay off debt. Their biggest challenge isn’t timing their sales, but securing the best price at the moment they have to sell. This creates a natural demand for a digital platform that can efficiently match them with buyers.
Beyond market fragmentation and the immediate need to sell, Brazil’s agricultural cycle also lends itself more naturally to a marketplace model.
Unlike in the U.S., where grain sales are concentrated in a single season, Brazil’s farmers produce multiple crops per year, leading to a higher frequency of transactions—an essential ingredient for marketplace liquidity.
The competitive landscape among trading companies has also changed dramatically. Over the past decade, many new players have entered the Brazilian market, eroding the dominance of the ABCD traders.
With no single company controlling the flow of grain, the market was ripe for a neutral, digital marketplace to emerge.
Additionally, Brazil’s trading environment is filled with logistical challenges—long transportation distances, a reliance on trucks instead of rail, currency fluctuations, basis risk, and port congestion. The sheer complexity of moving grain through the supply chain creates inefficiencies, and inefficiencies create opportunities for digital solutions.
By recognizing these fundamental differences, Grao Direto was able to build a marketplace that would have struggled to gain traction in the U.S. but was exactly what Brazil needed. The company didn’t just copy-paste a failed model from another market; it built something uniquely suited to the realities of Brazilian agriculture.
The Future of Grao Direto: Unlocking the Full Potential of Digital Agriculture
With strong market tailwinds and growing liquidity, Grao Direto has positioned itself as the dominant digital marketplace for physical grain trading in Brazil. But this is just the beginning.
While many marketplace startups look toward international expansion after reaching scale, the real opportunity for Grao Direto remains right at home. Brazil’s grain market is vast, fragmented, and still in the early stages of digital transformation. There is far more to be done beyond simply facilitating transactions.
A truly digital grain marketplace doesn’t just make buying and selling easier—it changes the way farmers operate. By providing a transparent, efficient, and liquid market, Grao Direto is giving farmers the ability to make better commercial decisions.
With better pricing insights and improved access to buyers, farmers can optimize sales strategies, increase margins, and reinvest profits into adopting new technologies.
This creates a flywheel effect, where digital adoption in one area of the farm leads to improvements across the entire operation. With access to real-time market data and digital trading tools, farmers can track and post production data more effectively, integrate financial planning with sales, and take better hedging positions to protect against price volatility.
A well-functioning, transparent physical grain market also has broader implications for Brazil’s financial landscape.
Today, Brazilian farmers often rely on the CBOT to hedge grain prices, despite major differences between U.S. and Brazilian market conditions, not to mention a different currency and growing season.
A robust local marketplace like Grao Direto creates the foundation for a domestic derivatives market that is more closely aligned with Brazil’s specific pricing dynamics, logistics, and risk factors.
Beyond trading, the platform can also become an essential channel for financial services—offering credit, payments, and even input financing solutions tailored to the needs of farmers.
Just as the eRunner at CME evolved from a simple electronic order entry tool into a fully functional digital trading market, Grao Direto’s marketplace has the potential to evolve into a comprehensive digital platform for everything farm-related.
The future of agriculture in Brazil will be increasingly digital, and Grao Direto is building the infrastructure to power that transformation.
Thanks for reading and don’t forget to leave your comments below!
KFG 🚀
Kieran Finbar Gartlan is an Irish native with over 30 years of experience living and working in Brazil. He is Managing Partner at The Yield Lab Latam, a leading venture capital firm investing in Agrifood and Climate Tech startups. All views, opinions, and commentary expressed are strictly his own.