The startup mixing hedge fund experience and agricultural know-how to revolutionise commodity trading
Australian startup Yarta represents three investment opportunities in one, which is not surprising given the founder’s unique skillset and his vision to modernise the trading of commodities and livestock.
Les Finemore’s family are beef cattle farmers near Wagga Wagga in the New South Wales Riverina, and he seemed destined to carve out his own career in agriculture as an agronomist, but another career beckoned.
“I came off the farm in Wagga and was working as a research scientist, but at the same time I was doing a Master of Finance,” said Les.
The young scientist had already worked as a junior trader with a large US commodities company when an opportunity came to join Australian hedge fund giant Merricks Capital.
“What they liked about my background is that I had an intimate knowledge of production,” said Les.
“I’ve never met anyone who’s had an agronomy background, a finance background, and a trading background. It’s unique – and valuable. On top of that I now have experience in machine learning, coding, and quantitative trading.”
But it was the next step which was perhaps the boldest – setting up his own hedge fund.
“I co-founded Imbue Capital and we traded water markets in Australia using big data, climate data and machine learning to predict the market and we did very well,” he said.
“So, in late 2018 we took the fund from Australia to Texas, and we ran quite a big hedge fund there.”
Les Finemore is now trying to straddle two continents - setting up in Mexico City - in order to tackle the North American and Australian markets with a new venture, Yarta.
“What I’m trying to do with Yarta is take everything I’ve learned in the past 10 years, particularly on the trading, quantitative and machine learning side and bring it into a platform that doesn’t exist anywhere else,” he said.
- Learn more about Yarta’s investment opportunity via growAG. here. Expressions of interest close Sunday, 30 October 2022.
Yarta Block: a new marketplace for commodities trading
Yarta Block is an online marketplace which allows anonymous trader-to-trader negotiation of commodities.
“This is a one-stop shop for physical commodity trading,” said Les.
“Globally, roughly 20 to 30 trillion dollars’ worth of transactions happen in the physical agriculture commodity space and OTC (over the counter) space and the process has barely changed in 30 years.
“In the US it’s done by phone and fax, or even if it’s WhatsApp or Skype, it involves a broker doing a lot of heavy lifting.
“After they complete a trade the details and payment terms then have to be manually entered into an accounting system, often multiple times. It’s a painful and inefficient process.
“The Yarta Block marketplace allows negotiations in real time between approved traders through encrypted chat. Following the completion of a trade broker notes are automatically sent.
Yarta Block was developed in consultation with traders and allows each party to the negotiations to remain anonymous until the deal is done.
“It was inspired by equity dark pools which were a way for big hedge funds in the equity markets to do really big volumes of share trading without anyone knowing who it was until the next day,” Les said.
“It’s a very different approach but this is based on feedback from traders.”
Yarta Block is currently undergoing beta testing in Australia and will soon be released to trade grains. Release in the US is expected later this year, with the potential to scale internationally and into other commodities.
“So, our idea is to pilot the technology in Australia, and then take it into North America and really take on the world,” said Les.
A second product is under development, in conjunction with several major cattle and hog processors in North America, to streamline the logistics around moving livestock.
“The way these businesses currently track everything from pickup at one farm to delivery at another, including communication with everyone in between, like the trucking company or the veterinary company, is by email,” Les said.
“There can be 20 people copied in on one email chain, so it is heavily inefficient and again speaks to the analogue nature of ag.
“The platform we are building digitises those logistics – and for an industry which many have not focussed on.”
Robo-advisor democratises big data
The third product under development was inspired by Les’ career working at, and managing, hedge funds, where research, analysis and data are critical.
“The commodity world is becoming increasingly financialised and complex so to trade these markets you need an edge,” said Les.
“We are taking our expertise, drawing in huge amounts of data such as satellite imaging, vessel data, cash markets, macroeconomic effects – roughly 15 different thematics - and making sense of it with machine learning to create a robo-advisor for optimal commodity trading.
“This is basically an outsourced research team for the farmer or trader to see the wider picture so they can make objective, data-backed decisions. This sort of capability has traditionally only been available to the very elite hedge funds.
“I want to change the conversation around risk and how a farmer approaches selling their commodities and we know with the kind of technology we’ve built we can elevate that discussion with powerful, yet easy-to-understand, actionable insights.”
A three-of-a-kind investment opportunity
Yarta has launched an investment round for more than $2 million USD from strategic angel investors and venture capital investors to support the scaling of the three products.
“The market is changing, and we are creating a world class ecosystem to trade, finance and hedge grains and livestock on the Yarta platforms,” Les said.
“It is built to have incredible optionality and we are interested in speaking to industry participants who are seeking a digital platform that is simple and secure.”
Learn more about Yarta’s investment opportunity via growAG. here. Expressions of interest close Sunday, 30 October 2022.
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