Meet the Entrepreneur: Liisa Smits, Ignitia
At FINCA Ventures, we look for entrepreneurs leveraging market-based solutions to create large-scale, lasting social impact. In this series, “Meet the Entrepreneur,” we’ll be taking you into the minds of the intrepid leaders at our portfolio companies who boldly venture into markets in need of positive disruption.
Smallholder farmers across sub-Saharan Africa overwhelmingly rely on seasonal rainfalls for crop irrigation. However, dependence on knowing the weather to make key decisions (i.e., when to plant, fertilize, harvest, hire, etc.) threatens the future of agriculture as rainfall patterns shift due to climate change. How are rural smallholders to secure the information they need for decision making given this context? In this interview, we spoke with Liisa Smits, co-founder and CEO of Ignitia, to explore how this agritech start-up can return weather certainty to farmers in the tropics. Ignitia provides the most accurate, hyper-local tropical weather forecasts to smallholders via SMS to reduce risk and loss for better harvests.
You have a background in atmospheric physics and meteorology. When did you first realize there was a business opportunity to improve upon tropical weather forecasting?
Liisa: It began when I was a visiting scientist at the University of Washington in Seattle working with satellites over the polar regions, where satellite data is spotty. One day, I was a frustrated because we could not find another satellite to calibrate against. I considered how much easier it would have been to access high-quality satellite data near the equator. In that moment, it occurred to me that, despite the abundance of geostationary satellites positioned along the tropics, it was still difficult to get reliable weather forecasts near the equator. That sparked a thought to look into this. The University of Washington happens to have one of the biggest atmospheric science departments on Earth, so it was easy to gather information.
Why does traditional weather modeling fail to deliver accurate forecasts in the tropics, and how did Ignitia manage to crack the code?
Liisa: The physics in the atmosphere happen on a totally different scale in the tropics compared with mid-latitudes, such as Europe or the U.S. This means that in a place like the U.S. you would see high pressures and low pressures and fronts coming. These weather phenomena have a scale of thousands of kilometers. In the tropics, you can go from clear blue skies to a heavy downpour in 20-minutes with no visible warning because the scale is just a few kilometers. In order to simulate physics on these scales, it becomes more important to use different equations. So, we started by understanding how a tropical atmosphere works, including the day-to-day weather, and how we may simulate it. Once you can simulate it, you can predict it. As climate change continues, our model is built to adapt itself each day we make a forecast. It recognizes different patterns that come along and takes those into account.
The tropics span the middle band of the globe. Why did your team choose West Africa to begin its operations?
Liisa: About 40 percent of the world’s population lives in the tropics. We looked for a country that was democratic, stable and shared economic growth with its people. During our search, Ghana stood out. Also, climate change is predicted to be the worst in the West Africa region, with up to 70 percent less days available for agricultural activities. So, for these reasons, we chose to start out in Ghana.
How did you go from an insight around unreliable weather forecasts in the tropics to focusing on a product designed to work for small-scale farmers?
Liisa: Two things led to this decision. First, we looked at who was most affected by not having reliable weather forecasts. Second, we considered what was going to move the needle on GDP. Because agriculture work is so dependent on rain and because tropical country economies heavily rely on agriculture, both aspects pointed toward working with small-scale farmers.
Your core product is an SMS-based weather subscription intended for rural, smallholder farmers. How did your team consciously design a product for this customer segment?
Liisa: We understood that farmers would need to receive weather forecasts digitally and the only way to send this was through feature phones. Communicating effectively with illiterate farmers was a significant barrier to overcome. Our inclination was to do what others had done, assuming this had been solved. However, we quickly concluded this was not the case. No one had figured out a good, scalable way of communicating with small-scale farmers with traditional and digital literacy problems. So, we began rapid prototyping methods. For example, we tried text messages with symbols using a character encoding standard called ASCII. We thought this was brilliant because it allowed us to put pictures into text messages. However, when we showed it to farmers, they thought some of the images looked more like a poisonous spider than the sun. This made us realize that reference points for intuition may instead be something that we learned in school. With great persistence, it was on the 121st trial that we found the formula to use for our text message forecast communications.
What insights did you glean from the 121st trial?
Liisa: There were a few insights from this. First, even though most of a village may be illiterate, there was always somebody who could read and write. Second, most of the local languages — at least in Ghana — were only spoken, not written, so delivering text messages by local language was not a big hit. Instead, we used English and focused on just a few keywords. The farmers would recognize keywords like “rain” and “dry.” Third, the placement of the keywords in the text message was important. If the keyword was in the first sentence, the farmers understood it would rain that day. If the keyword was in the second sentence, they knew it would be dry tomorrow. Because we tried to make something that was intuitive, we decided to only use seven keywords. Over the course of a 180-day season, the farmers learn all seven keywords in the text messages.
What made you go to such lengths to refine the messaging?
Liisa: We had a vision of making something that was highly scalable. Our revenue model was built on micro-charges, so we knew we had to reach a lot of farmers to make this self-sustaining. This vision of creating something highly-scalable drove us to test so many things. What was understandable in one village might not be in another, so we tried to do something that was cross-cultural, and that people could relate to, understand and learn from. We knew it would be impossible for us to come down with boots on the ground in every village and teach farmers what these messages said, so it had to work without prior training.
What other products is Ignitia bringing to market to satisfy unmet needs and reach new customers?
Liisa: One new product that we’ve implemented this year, called Ojo, is geared toward agricultural input suppliers. They can buy Ignitia’s weather forecasting service and bundle it with their input product and, in doing so, gain a competitive advantage. For example, a small-scale farmer buying seeds from a seed supplier would get forecasts for the season with each seed purchase. This increases the chances of success for planting the seed at the right time, which increases the chances of success for the product itself — the seed. The input providers would get a new, desktop product while farmers would continue to use the SMS-based forecasting service. The desktop approach would give additional insights to the input providers on their businesses: end customer analysis, where products are distributed, etc. A second new product in the works, currently called Storm Tracker, is a short-term alert to notify customers of approaching storms. It’s a warning service enabling people to take decisions on their business, with a broader audience than just agriculture — those working in markets or even those in offices wanting to get home ahead of bad weather.
How do you think about and quantify impact for products built around weather forecasting?
Liisa: Every business must have an impact to show value. From a development perspective, this means having key statistics to track socioeconomic changes from using our products. In our case, the most important measurements are farmer yield and income. We want to quantify that farmers have more “dollars” on the table than they did before they started using our product. We approach these measures from different perspectives — not only farmer testimonials, but also, for example, counting the number of bags of produce in a village. We can do this using a drone to compare yields in one village using Ignitia’s services versus another village that does not.
Ignitia serves over 1 million customers. What have been key strategies to reaching this milestone, and what is needed to reach the next million and beyond?
Liisa: The key strategy has been to provide an amazing product that is intuitive and that farmers can learn from, understand and act upon. Moving forward, we need to become known internationally, not only by the farmers in the countries where we work, but also by other actors in agriculture to form the partnerships that will help us scale. Key partners include anyone working in the food value chain, such as input providers or project implementors — they all have something to win from higher yields.
One of the keys to Ignitia’s rapid scaling has been mobile network operator (MNO) infrastructure. How do you partner with MNOs and what would you say to other tech-oriented social entrepreneurs looking go down this path?
Liisa: We partner with MNOs through a revenue share agreement. The MNO does the delivery, sign-up and charging for the service. We provide the content. Both parties are responsible for marketing to customers, so in our case, the farmers. Such partnerships take a very long time to secure and, to be honest, are often not favorable to the entrepreneurs. You must be very certain about your business model to be sure an MNO partnership is something you want to pursue. What made it take extra-long for us to secure is that we needed to know the farmers’ precise locations. Since the farmers have feature phones, we don’t receive a GPS signal, but we need to know their location to provide hyper-local weather forecasts. For those thinking that landing the first MNO partner will make follow-on partnerships easier, it doesn’t — each subsequent MNO partnership is like starting all over again.
Ignitia has benefitted from various types of capital to scale its business. What has been the strategic role of blended finance in your company’s growth?
Liisa: Research grants were needed in the beginning as were trying to innovate around something that wasn’t available before we could start commercial activities. Then, development grants helped us in the testing phase as we began rapidly prototyping different approaches to reaching farmers. If we didn’t have those sources of funding available to us, we would not have been able to scale as quickly later. Eventually, equity became important because it gave us the muscles to continue the scaling pattern and to replicate our business in new countries.
Imagine it’s five years from now and Ignitia is making international headlines. What would that headline be and why is this important to you?
Liisa: “Ignitia has impacted 50 million farmers to higher yields.” This would mean that we’ve come to a point where we’ve reached a significant amount of the world’s small-scale farmers that need weather forecasts to risk-mitigate their operations. By risk-mitigating each step in the farming cycle, the result is always seen in yields at year-end. It would also mean the farmers understand how to use the product, which has been our focus until now.
What are some of the barriers Ignitia faces in achieving the vision in that headline?
Liisa: To reach that level, we would need to scale operations to other continents. This would be a significant barrier as it presents a totally new operational environment. Of course, there are costs that come alongside this, so funding becomes a barrier. Additionally, we need to show how we’ve been able to attract partners across the food value chain, primarily organizations that are interested in risk-reduction in agriculture: input providers, financial institutions, etc.
Why were you excited to have FINCA Ventures come on-board as an investor?
Liisa: FINCA has shown to have a fantastic model for reaching out to people in need of finance. It also has a track record of working with agriculture actors to the benefit of small-scale farmers. When you ask a farmer what their problems are every Monday and every Friday, first they mention finance, then weather forecasts and, finally, access to markets. With FINCA, we’ve gotten a partner that can help us solve multiple problems.