Venture Capital Takes Risk in Ag Technology So Farmers Don’t Have To
Farmers are inundated with new technology, writes Radicle’s Neal Gutterson at CropLife.
For decades, salespeople lined up at the farm gate offering new plant trait technology, machinery innovations and inputs. Like any savvy business owner, farmers are keen to evaluate what technology works for them. But today, those evaluations go beyond plot trials and personal experience.
As technology like artificial intelligence is applied to everything from facial recognition in cattle to literally drive efficiency improvements with autonomous tractors, truly evaluating new technology has become even more complex.
After spending my career driving and assessing innovation at leading agribusinesses and ag tech start-ups, I believe this is where venture capital firms have an important role to play.
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Before any early-stage company is funded, VCs – who are often comprised of former industry executives, MBAs, scientists, and technologists – dig into every aspect of a start-up to evaluate risk and scalability. This process also removes much of the risk farmers would take by testing unproven technology on their farms. By validating innovations, venture funds can collaborate with farmers to help those companies grow with less risk to the farmer.
Management consulting firm McKinsey & Company surveyed 5,500 farmers last year across Asia, Europe, North America and South America and found 39% of farmers surveyed globally are currently using or planning to use at least one ag tech innovation in the next two years. In North America and Europe, more than 60% are willing to try something new.
Yet another recent McKinsey report shows that most ag tech startup deals provided funding at the earliest stages but far fewer received late-stage money to keep going. A sign that these companies struggled to earn customers’ trust or scale their technology, leaving those customers who signed on in a pickle.
A VC’s purpose is literally to take risk to ultimately find the Tesla or Dropbox of agriculture.
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