Investing in Tractor Zoom
Posted on December 15, 2022 at 10:56 AM by Ashley Hunt
Even before today’s volatile markets, economic uncertainty, and supply chain issues, farmers and ag workers had trouble finding and valuing farm equipment like tractors, combines, and other machinery. With no credible, transparent valuation models for farm equipment, buyers were taking major risks in purchasing farm machinery. With machinery costing up to $500,000 a piece, even a valuation off by five or ten percent is a significant chunk of money.
Simultaneously, supply for new machinery simply couldn’t meet the demand. Today, manufacturers across a number of sectors cannot meet demand, and as a result, used machinery and equipment have become more ubiquitous.
After first-hand frustration in finding equipment, and attending roughly 1,000 auctions in just four years, Kyle McMahon met with other ag workers and industry leaders, discovering that problems finding, valuing, and purchasing machinery were present across the board for farmers and ag stakeholders.
Thus, Tractor Zoom was founded to solve this problem.
Tractor Zoom’s platform today advertises more than $10 billion worth of farm equipment, leveraging that data to help ag leaders and stakeholders better understand and determine value. Built around the philosophy of listening to the customer and solving their problems, the company has grown significantly since its founding in 2017. Having added nearly 1,500 equipment suppliers to the platform and grown its user base by 400 percent, Tractor Zoom now has data on more than $20 billion equipment sales and transactions -- a number that is 14 times higher than that of 2020.
At Next Level we believe in backing strong founders and teams,” said Liz Keehner, Senior Associate at Next Level Ventures. “Tractor Zoom’s Founder and CEO, Kyle McMahon, and the team he has built are a great representation of this. Kyle’s vision of bringing transparent data to the ag equipment market makes him the right leader to solve a huge problem and he has put together a highly talented team to execute on that vision.”
While Tractor Zoom may not be the first company ever to value farm machinery, the transparency and data tracking the platform features actual comparable sales versus algorithms that can’t keep up with changing markets. This provides a valuable differentiator. Additionally, today, less than one percent of ag equipment is financed online, providing Tractor Zoom a massive opportunity to leverage their platform’s $11 billion of equipment listings.
And the market opportunity is far-reaching. With agriculture equipment transactions totaling in excess of $30 billion annually, farm machinery is often one of the largest assets on a farmer’s balance sheet. Reliable valuations equal real money, especially in volatile markets, and without a reliable way to value the equipment, an incorrect valuation can be a massive hit.
“Competitively, no one is leveraging this ag equipment data in the way that Tractor Zoom is,” added Keehner. “While other companies compile data on the listing price of companies, Tractor Zoom can capture data on the final sales price which gives them a significant competitive advantage in the marketplace.”
Democratizing this data creates a disruption in the marketplace which gives Tractor Zoom the ability to go out and capture the large market opportunity – all three of these components work in harmony, making Tractor Zoom an exciting investment for Next Levels Ventures.