Editor's note: This article is part of Inc.'s 2015 Best Industries report.
Jesse Vollmar is not your typical tech entrepreneur.
The 26-year-old Michigan native grew up working in the fields of his family's fifth-generation farm, growing traditional row crops such as corn and wheat. In high school, Vollmar taught himself how to build custom software for the Web, a hobby he later turned into a business by forming an IT consulting company.
After graduating from college in 2011, Vollmar discovered a problem plaguing virtually every farmer he knew.
"All these farmers around us were talking about how the software they used was no good," he says. "It just became really obvious that there was this widening gap between what tech was capable of doing and what farms were taking advantage of."
In 2012, Vollmar wound down his consulting business and launched Ann Arbor, Michigan-based FarmLogs, a data science company that builds farm management software. The company's mission is simple: help farmers make their fields more profitable.
Because it's current industry standard for farm machinery to come with built-in sensors that track everything from precipitation to soil composition, FarmLogs does not have to make hardware. Instead, the company builds software that aggregates crop-field data and analyzes it.
"We can do a lot of at-the-field analysis through remote sensing without having to deploy physical sensors," Vollmar says.
While farmers traditionally plant the same amount of seeds and put the same amount of water and fertilizer on entire plots of land, there is enormous variability within crop fields.
"There are a ton of different types of soil inside that field that can make nutrients available in different ways to the plant," Vollmar says. "What we can do is measure that, understand that variability, and then help people divert resources into the right areas to maximize the profitability."
The official name of what FarmLogs is helping farmers do is "precision agriculture." Increasingly, farmers are turning to software to help increase their profitability. Precision agriculture revenue has risen an estimated 5.3 percent per year during the past five years, to $1.5 billion in 2014. And that growth is expected to continue at 6.6 percent a year for the next four years, according to research firm IBISWorld.
The venture capital community has also helped put a shine on agriculture, as Silicon Valley only recently identified the opportunity to bring significant innovation to the industry. Here's a look at what it takes to launch in agriculture and how FarmLogs firmly established itself as a frontrunner.
Digging up funding.
FarmLogs received early backing from tech accelerator Y Combinator, but shortly after arriving in Mountain View, California, Vollmar came face to face with venture capitalists' lack of enthusiasm for agricultural technology.
"Investors in Silicon Valley didn't want anything to do with AgTech at the time," Vollmar says. "In 2012, we were the ugly duckling."
During the past two years, however, VC firms have woken up to the fact that the agricultural industry is a giant market ripe for a technological revolution. In the U.S., farmers grow more than $135 billion worth of row crops every year.
"Agriculture is large enough and inefficient enough that there is opportunity for people to come in and improve it," says Todd Dagres, co-founder of San Francisco-based venture capital firm Spark Capital. "People have seen that for a while, but I don't think investors necessarily appreciated it."
In January 2014, roughly 5 percent of the row-crop farms in the U.S. were using FarmLogs' software. That month, the company raised $4 million of Series A funding from firms including Drive Capital, Huron River Ventures, and Hyde Park Venture Partners.
Six months later, FarmLogs' market share had grown to 15 percent of U.S. row-crop farms. In January 2015, the company raised an additional $10 million in VC funding, bringing on new investors including SV Angel and Sam Altman, president of Y Combinator. Today, more than 50,000 U.S. farms across all 50 states use FarmLogs' software, according to the company.
While FarmLogs reports that it has $12 billion in "crops under management," the company has yet to generate revenue, as its proprietary software is still free. This spring, however, the company will to switch to a freemium model, offering a new set of paid services built on top of the data it has analyzed during the past three years.
"We're going to be able to do some real-time assessment and monitoring of crop health, and we'll charge a per-acre fee for that," Vollmar says.
Making the leap to a freemium model is never a sure thing, but Vollmar is convinced of FarmLogs' ability to convert farmers to paying customers.
"We have an easy to use, high-quality, grower-aligned offering," he says. "That gives us the confidence we need to operate, knowing we will be able to build strong partnerships with farmers that allow both sides to be profitable."
The OS for farms.
Despite FarmLogs' growing position in its market, the business has a major competitor: Climate Corp., the weather data-mining company acquired by agricultural biotech giant Monsanto for $930 million in 2013. And given investors' increasing interest in this sector, it's only a matter of time before still more competitors emerge.
As Lance Donny, chief executive of farm data company OnFarm Systems, told Inc. last June, "Monsanto's acquisition [of Climate Corp.] opened investors' eyes about the value of data in agriculture. AgTech is like the next Facebook. It's the a-ha moment when you realize that data in agriculture is worth so much."
Three months after being purchased by Monsanto, Climate Corp. made an acquisition of its own, buying agricultural hardware and software company Solum. The transaction produced a new startup in the AgTech space when Solum's software division spun off from the company and rebranded as Granular Inc.
Despite the rise of agricultural tech startups, Vollmar views Climate Corp. as FarmLogs' only competitor, and says he's not concerned about other companies piling into the industry. Climate Corp.'s product combines free software that analyzes weather data and paid insurance plans to help farms manage risk.
Rajiv Khosla, professor of precision agriculture at Colorado State University, agrees that FarmLogs has a strong position in the largely unpenetrated AgTech sector.
"FarmLogs is the classic example of a company that's translating data that already exists in the public domain to help farmers make better decisions," he says. "Do we need more outfits to enable that? Yes, because the agricultural space is huge."
Vollmar says that FarmLogs benefits from the growth of companies in related sectors, such as startups using the latest technology to monitor the health of farms.
"There are a bunch of businesses being created that are launching new satellites that image the earth every single day, and you can gain a lot of intelligence about the performance of fields and crops and help optimize crop production."
So what is Vollmar's outlook for FarmLogs' growth in 2015 and beyond?
"We have an opportunity to build what becomes the operating system for the farm of the future."