Our investment in Octopusbot

Folklore is delighted to announce our 13th investment into an AI-native software startup, with our seed investment in Octopusbot.

Octopusbot is an AI forecasting solution for the global grain market, a painkiller for companies beholden to price and yield variability in the US$250B+ global grain market who strive to manage the mitigating conditions and the volatility inherent in agribusinesses.

The Octopusbot product supports those involved in the grain commodity supply chain (growing, buying, trading, food production, logistics and energy) and markets to make more accurate commercial and financial decisions by providing an accurate and timely forecasting platform for crop yields and price outputs across a huge array of crop commodities.

Whilst forecasting tools in many markets are not new, Octopusbot’s yield forecasting becomes increasingly accurate as crop harvests near, with accuracy improving from ~60% accuracy 5 to 9 months out, to between 90% - 98% accurate between 1 and 3 months from harvest.

The product provides a highly detailed and customisable solution overlaying variables including weather data, government data, buying demand, price forecasting, and public/private and farm-gate yields alongside macro (regional, national, continental, global) information. This unparalleled accuracy (in real time and back-tested) and granularity establishes the company’s moat, and is driven by more than 10,000 AI models operating continually across grain commodity types and in geographic locations. As a result, Octopusbot’s forecasting tools have excellent early product market fit.

Led by technical co-founders Rodrigo Cortes and Carolina Ferreira (pictured), Octopusbot has bootstrapped to date, and this investment represents its first outside capital.

The team

From the first time we met Carolina and Rodrigo, we knew they were onto something special. Our reaction to the team matched the market’s reception of their product, with a database of near 100 paying customers globally already secured. Both co-founders, Rodrigo and Carolina are diligent, prudent and attuned to specific customer needs and as data scientists and engineers, they are both highly technical.

The company was built leveraging founder skill and experience, and in reaction to co-founders solving a business problem for an underserved market. Carolina was inspired by her grandfather, a wheat farmer, where she saw the impact of grain unpredictability first hand, whilst also leveraging experience in cyber security and industrial engineering. Alongside Rodrigo, who co-founded the company with procurement and supply chain treasury experience, including from PepsiCo.

The opportunity

Grain prices around the world are driven by highly complex and multivariate weather, supply and demand factors. Businesses involved in global grain markets are beholden to yield and pricing – and need to make commercial decisions on the expectation of what these yields and prices will be months into the future.

The size of the addressable market is significant. The global grain industry’s reach is broad - directly impacting farmers, wholesalers, brokers and financial traders, food manufacturers, logistics companies, energy companies, and indirectly impacts livestock growers, plant and equipment manufacturers and governments. Accurately predicting the (highly variable) future prices of these core commodities is therefore of critical importance for these businesses, yet there has not been an equatable product in market to assist in making such accurate (90%+) and important commercial decisions.

As one example, the market for cereal, grain and pulses alone, a subset of the grains market, is valued at US$374 billion, and the broader market beyond these commodities in beans, corn and other commodities totalling more than US$1 trillion annually. Meaning a truly sustainable forecasting and alpha generating tool for participants and traders in the market offers near-unlimited upside and opportunity for material efficiencies in the global market. And it’s not just traders and grain buyers that benefit, as farmers can also use Octopusbot to determine whether the current market and forecasts present optimal windows for seeding crops where the end-state financial outcomes can often be binary at the time of harvest.

The future

With a developed product showing early signs of product market fit, this first round of funding is focused on accelerating growth globally and building out more market advantage in their modelling. Funds will be used to invest in GTM and marketing, to grow the team and expand reach specifically in the UK/Europe.

We’re excited to join at the start of Octopusbot’s journey and we look forward to supporting Carolina, Rodrigo and the rest of the team as they scale their vision.