In an era of mass production, it can be difficult to trace exactly where food comes from and what’s been done to it since it left the farm. Many consumers have become concerned by pesticides, genetically modified organisms (GMOs), and other consequences of industrial agriculture. In response, the local food movement grows steadily.
Dave Ranallo is an Ohio native who grew up eating fresh fruits and vegetables from his grandparents’ garden. In 2012 he launched Azoti, a platform that helps buyers connect to local food sources. Based in Columbus, Azoti has worked with a network of small farms to supply fresh produce to schools, civic organizations, and major employers like OhioHealth.
Dave spoke with Techonomy about the ideas behind Azoti and the challenges of being an entrepreneur in Columbus.
What is the motivation behind Azoti?
What I see happening, at a macro level, is a need for more reliance on small farmers. I also see that food is going to become a higher priority for more people. And you can attack that from any angle, whether it’s just people being nervous about how food is being handled, GMOs, or all these other factors. It leads to us wanting to know who makes our food. Know your farmer; know your food producer. I think the Internet is perfect for decentralization and transparency, along with opening up new markets on a peer-to-peer basis. This model has been applied to many other industries and it’s not in this one yet. So that’s where we’re at.
What does Azoti do? Is it like a big version of community supported agriculture, in which local consumers commit to purchasing from a local farm or farms?
No. We are a multichannel e-commerce and supply chain platform. We also have prepaid farmers markets. That’s just having an employer, or any sponsor, ordering a farmers market. We’ll show up at your location and it’s ready to go. But it’s prepaid, so it’s not a true farmers market where all the risk is on the farmer, this one is actually absorbed more by the sponsor, employer, school, or whoever.
How does a pre-paid farmers market work?
Farmers, while appreciative of farmers markets, would much rather not do them. And we keep the small farmer, and also any food producer, at the forefront of our thought. So it’s just distributing the financial risk. An employer will determine how much money they want to spend on food. And then Azoti will show up. We’ll bring all the food; we’ll bring staff; and then we will sell the food at a discounted rate to the employees. Because remember, it’s prepaid, so this is going to be a benefit for the employees, and the employer will just determine what percent we discount, since not everybody can afford it. Generally a lot of the employees are call center people, second and third-shifters, low wage. Then there’s a big promotion, everyone comes out, they can tie it to other wellness events. It’s really pretty cool.
Then the employees buy this discounted produce, and we take the money they pay and give it to a food bank or to whatever charity the employer wants to give it to. Or the employer can take all the money to just offset the prepaid cost. So it’s an all-in-one, turnkey solution for the administrators. They get to decide what products they want to be sold at their site, and then we manage all the billing, and it’s just a really fun event.
How do you convince farmers to join your network?
What a farmer is always looking for is predictability and some level of consistency, because they have nothing. They don’t get subsidized crop insurance, there’s no mandates to buy any of their food. These are small farmers who are debt-laden, struggling with their families, and just trying to get the crop out of the ground.
So what we do is, we go into the market first. We go to these companies and we really represent the farmers. And we can say things that the farmer is too prideful or humble or both to say. Nobody wants to hear someone whine about the fact that it is so hard to hire labor in the rural markets, for example.
So I’ll close a deal with an employer or a school, or even a restaurant, and I’ll say, “Hey, we have these products and these price-points, can you give me an order every week?”
And then I go to the farmer with demand in hand. WIth real price-points, real quantities, and real requirements. So that gets their attention.
What’s it like to be an entrepreneur in Columbus?
Columbus is very solid. There are a lot of talented people. We’re great at execution. We get it done. It’s a little weak on the finance side, I think, but there’s a lot of good product ideas coming out.
It’s just difficult to raise money in Columbus for disruptive products. It’s the same thing pretty much anywhere in the Midwest, because a lot of the investors have never built products—much less disruptive products. And they wouldn’t really listen. But I’d explain to them this is a science experiment. But they want to see a fully mature business that just needs bridge financing or something like that.
Columbus is one of the only Midwest towns that is growing, population-wise. There are some good opportunities here.
Azoti is among the companies currently hosting fellows from Venture for America, whose annual City as a Startup conference will immediately follow this year’s Techonomy Detroit.