Kellee James, Mercaris, Woman Entrepreneur

Kellee JamesKellee sent me an email with her deck attached and it sparked my interest.  She had only a few investors, some big players, and my first question to her was, "how did you find me"?  She just laughed.  What sparked my interest is what she has built.  Mercaris is market data service and online tracking program for organic food and non-GMO commodities.   The organic food market is expanding rapidly and the information available to buyers, sellers and farmers is minimal.  Data allows every piece of the pie to make informed decisions about their business.  The organic food market is about $31 billion dollars today and it is only getting bigger. 

Kellee grew up as an Army brat.  Although she was born at Ft Bragg she moved about seven times over the course of her life.  The longest stint was in Texas where she went from 7-10th grade.  She moved to Kentucky next to finish high school.  Her father started in the infantry and then the Army paid him to go to medical school so he returned as an Army doctor.  Now he is the private world practicing as an orthopedic surgeon.  Her mother is originally from the Bahamas and grew up in the Bronx.  All that moving is not easy for the other half to have a career so Kellees Mom provided the back end support for the family.  

Kellee stayed in Kentucky and went to University of Kentucky.  She chose that school because they have an excellent horse riding program.  Kellee had it in her head that she was going to be the first African American horse rider to make it to the Olympics.  That was always the plan.  She had been riding from a young age.  She told her parents she was going to bag college and launch her riding career but that was given a big nix and so UK is where she went and majored in Spanish. 

When Kellee graduated she landed the dream job of working with a world reknown horse trainer.  Eight weeks into the job she was riding a clients horse when the horse flipped and she broke her back.  That was the beginning of the end of her riding career.  She had surgery, six months of rehab and then tried to get back on the horse.  She landed her next job in the Netherlands where many of the top horse trainers reside.  It did not take Kellee long to realize she would never get back to the level she was at before the accident.  it was time for plan B but there never was a plan B.

She went home which at this point was in North Carolina.  She applied to graduate school and taught riding lessons while trying to figure out the next step.  She was accepted into a three year program at American University where you get your MBA and a Masters in International Development.  Her first experience abroad was her sophomore years spending a semester in Spain and some time in Argentina.  She spoke Spanish fluently.  In North Carolina there were a lot of Spanish speaking migrant workers.  There were a variety of outreach programs down there but she did not know how to run an organization.  Kellee thought the dual degree could be useful in building economic development.

The summer after her first year she went to Honduras to work for the Inter American Foundation.  It was 2001/2002 when the coffee prices were plumeting.  She witnessed farmers pull their kids out of schools because they could not afford them.  The solution was to get the farmers into specialty coffees which were booming so they were not at the mercy of international low end markets.  It was her first foray into the commodity market.  She went back the next time to Brazil, learned Portugese and learned about sugar commodities. 

She got really into these marketplaces.  Kellee came back and wrote her thesis on how to use commodity markets to achieve environmental goals.  She interviewed Richard Sander in Chicago who was starting the Chicago Climate Exchange.  He was providing data to a brand new market letting people trade carbon credits.  They were creating market incentives for people to reduce the carbon footprint.  He told her that they should stay in touch.  Kellee said she kept in touch so much he finaly said come and work for me when you graduate.

It was 2005 when she graduated and went to work for the CCX.  During the five years she was there the CCX got into other environmental derivatives.  It was an amazing experience because it was not only interesting but there was a start-up culture to what she was doing. She did everything from writing rules and analyzing data.  Kellee left for a one year sabbatical because she had started working on the Obama campaign and when he was elected she was appointed to be a White House Fellow.  She said it was an amazing experience that if anyone who is in their late 20's can afford to take off and be a fellow for one year at the White House they should.  She consulted for the Secretary of Agriculture. 

During the year Kellee figured she would watch the Senate pass a huge climate exchange law but in the end it fizzled out in legislation.  Her fellowship was extended three months because she was working on the deep horizon oil spill.  She assumed after the fellowship was over she would return to CCX but they were acquired.  They had raised $70m at the onset and then sold for $600m six years later only having 16 employees.  She had some options and made a nice check that gave her the freedom to take some time to think about what was next.

Back in graduate school Kellee had written a paper on why can't we have a futures market for organic commodities.  She spent the next year essentially with that question guiding her.  It was 2011.  She started off going to a few strategics to pay her for look at the organic marketplace as a research consultant.  JP Morgan was one of the companies interested and paid her to do this.  After a year she presented the report which had a fair amount of research.  The answer is that there is a gaping hole on imports, exports, farmland, or costs of the organic market.  People and companies are using organic products but one example of market inefficiencies is that it is difficult to even get insurance for organic crops because there is no data available except old USDA reports. 

Kellee went back to the people behind CCX and asked if they would be interested in this area.  They told her that a $31B market is peanuts to them but there is a real business here to be developed.  People would pay money to have the right data.  So she launched Mercaris.

Whole Foods is her first data subscriber.  They buy tons of organic products to make their own products and need the data.  They are concerned that the supply won't even keep up with the demand.  Mercaris will have different price points based on the data needed for each customer.  Each user gets charged on how they use the data.  Farmers are going to use it one way and Fortune 500 food companies will use it another.   

Smart business that is filling a void in a system that is on a trajectory upward.  In full disclosure, I will be a full fledged investor in Mercaris this week.