Why Distraction Is the Most Overlooked Issue for Agtech Companies Struggling with Global Expansion
Editor’s note: In a recent issue of Upstream Ag Professional, agribusiness analyst Shane Thomas discusses why so many agtech companies struggle with international scaling. Here’s a summary of that article:
Agtech companies face many challenges when expanding internationally, highlighted by the risk of premature expansion. These insights were recently shared by Patrick Honcoop, adding that distraction is a critical yet often overlooked issue. Diverting focus to a new market strains leadership teams, increases operational complexity, and detracts from achieving market penetration in the home geography. Such distraction can also drive up burn rates, potentially destabilizing the business.
Expansion should stem from strength, not desperation. Companies lacking significant traction in their home market are unlikely to succeed internationally. Challenges include adapting to new market demands, cultural differences, language barriers, and the need for localized product development, all of which dilute focus on core operations. Additionally, international expansion can undermine the density needed for network effects, which are crucial for some agtech business models.
North American agtech companies are cited as particularly susceptible to premature expansion. AgVend is a positive example of restraint. Despite international demand, AgVend remains focused on North America, where they have captured about 28% of retail market share. Their “Running the Damn Ball” strategy emphasizes consolidating their foundation and leveraging network effects within their home market. Each new customer in North America strengthens their product ecosystem, creating a solid base for eventual, deliberate international growth.
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In contrast, Greeneye Technology’s expansion to Australia may suggest a move that reflects desperation or lack of discipline. The complexities of adapting to different crops, weeds, and time zones can drain resources without guaranteeing success. While I understand the pressure from investors to expand, premature expansion risks undermining the company’s core operations.
While international expansion is a natural progression for successful agtech companies, it should only occur from a position of strength. For most, focusing on home market growth and achieving meaningful penetration is a more sustainable strategy than chasing new geographies prematurely.
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