On background:
Southern Iowa farmer Kyle McMahon started Tractor Zoom to address his own frustrations with finding and valuing farm equipment like tractors, combines and other machinery. After attending roughly 1,000 auctions over a four-year period to find equipment, he decided to build a more efficient marketplace for farmers like himself.
- The company raised $3 million in 2020.
- It has added over 1,450 equipment suppliers to its platform since that time and grown its user base by 400%.
- Tractor Zoom now has data on more than $20 billion in equipment sale transactions; the company says this is a 14x increase from 2020.
How it works:
Tractor Zoom’s online marketplace aims to simplify the equipment-procurement process for farmers. To do this, the cloud-based system leverages real-time equipment price and valuation data from vendors and auctioneers around the US.
- The overarching goal is to provide more reliable, transparent data for farm credit associations, farm service agencies, banks, equipment dealerships, auctioneers, and farmers.
- Auctioneers and dealers can sign on to the platform and list equipment offerings.
- Currently, 600 auctioneers and 1,900 dealer locations market their inventory on the Tractor Zoom website.
- Farmers can browse, filter, and compare dealer and auction listings all major types of farm equipment from their phone or computer.
Why it matters:
When McMahon founded Tractor Zoom in 2017, there were no reliable, transparent valuation models for farm equipment, he tells AFN. “Farm equipment can be $100,000 or could be $500,000 a pop. If you’re off by 10%, that’s real money.”
The same holds true today. McMahon also says there’s a real need for a service like Tractor Zoom given the volatility of today’s markets.
“Commodity prices swing very quickly, and that has a direct impact on the pricing of equipment,” says McMahon. “Farm equipment is up 38% in terms of value over the last 18 months. Understanding those swings the market is pivotal for farmers and the suppliers like banks and equipment dealers.”
This is especially true right now with inflation, war, and supply chain issues causing considerable uncertainty.
“Right now, manufacturers cannot turn on the spigot fast enough to manufacture tractors and combines based on the market demand’s high commodity prices. That’s put a huge emphasis on used equipment,” he says.
Farmers can enter the exact make and model of what they are looking for, and find auctions where they might be able to do a purchase. McMahon says this model offers farmers more competitive pricing and a more choice when it comes to equipment.
Tractor Zoom also facilitates equipment financing, though it is not itself a lending institution. It has a financing pre-approval process where farmers can find loan interest rates and terms from different lenders, and select the best option for their needs.
McMahon says that while Tractor Zoom may not be the first company ever to value farm machinery, its differentiator is the ability to bring data transparency and “actual comparable sales versus algorithms that don’t keep up with the market and don’t have enough data points to create an average.”
What’s next:
McMahon says this latest funding round will go towards “continued product development with a heavy emphasis on data science” and building out that side of the business. “We have a lot of data now from all these comparable sales, and our customers are demanding better usage out of that data.”
- The goal is to have a streamlined transaction process that farmers can have from a mobile device and, in under two minutes, find the equipment, understand the pricing, and then ultimately obtain financing all online all in one solution,” he says.
- For now, Tractor Zoom will continue to focus on the North American agriculture market.
- “We need to continue to build trust in the heavy equipment business and stay focused on agriculture before we look at other markets long term,” says McMahon.
