7 Ag Tech Start-Ups to Watch in 2018
If you build it, he will come. While that message may have worked for Ray Kinsella in Field of Dreams, the advice can prove disastrous for a start-up.
“In many cases, ag tech starts with a technology searching for a problem rather than starting with a problem that needs a solution,” says Jonah Kolb, vice president and managing member, Moore & Warner Ag Group in Illinois. “When you’re working on a white board in a conference room, it’s easy to say that a farmer is going to love this, but it’s much harder to actually go out and do the market research.”
Nadilia Gomez agrees. “Customer focus drives innovation,” says the research scientist with DuPont Pioneer.
As a recent mentor to the start-ups in the Iowa AgriTech Accelerator, she encourages entrepreneurs to become deeply connected with their customers and ask themselves often how well they understand the challenges their customers face.
“When you talk to customers, are you listening – truly listening – to what they need? Customer focus is a key factor for success,” says Gomez.
Unlike Kinsella, entrepreneurs must fight the urge to plow up the cornfield and build a baseball field without first engaging the end user for vital feedback and guidance. “Instead, they must continually ask who they are building the solution for and whether they have enough information to back up their product theories and use cases,” says Kolb.
It also needs to be farmer-tested as early as possible. “Often-times, start-ups wait too long before they put their innovation into the hands of farmers. It needs to be tested while the company is still going through the ideation phase so it can understand some of the practical constraints around farming,” he says.
Similar to Terence Mann’s belief that visitors to the Field of Dreams “will pass over the money without even thinking about it,” some start-ups and venture capital communities also think that, no matter what, farmers should be willing to pay for more data.
“The reality is what will resonate with farmers is the actual value realized in the field, which translates to cash this season or next,” Kolb explains. “There is a limited amount of value that basic additional data brings, in part, because farmers wear a lot of different hats, and most operations are not staffed with an analytics department.”
According to industry statistics, 71% of new businesses go bust within 10 years. While the odds look bad for aspiring entrepreneurs, there is a growing trend to reduce that number by offering ag tech start-ups the support necessary to be successful.
“There are a particular set of challenges for developing and successfully launching new agricultural technologies into the marketplace,” says Kevin Kimle, Ag Startup Engine director, Ames, Iowa. “Growing key relationships, finding the right mentors at the right time, and finding the right capital at the right time are the main challenges. The Ag Startup Engine is building a platform for overcoming those challenges.”
Founded in 2016, the program delivers funding, mentorship, and support to entrepreneurs with promising early-stage ag tech businesses.
“It is developing a process unique to itself, to the Iowa State University Research Park, and to agriculture in the Midwest,” he explains. “Our aim is to provide a rich array of relationships, connections, ideas, and alternatives to portfolio businesses so that good choices are made in those key moments.”
To date, the program’s portfolio includes Smart Ag, Performance Livestock Analytics, Gross-Wen Technologies, Terva, and Nebullam.
Also launched in 2016, the Iowa AgriTech Accelerator is advancing innovation by connecting leading ag businesses and farm groups in the region to start-ups working with cutting-edge technology. Farrpro, WISRAN, Hintech Ag, Phenomics Labs, and Rabbit Tractors graduated from the 100-day program in October 2017 and each received $40,000 in seed funding.
“We hope the five start-ups have found great value in the accelerator and can take the knowledge they’ve gained from their mentors and from the experts they’ve worked with and apply it to their businesses going forward,” says Megan Vollstedt, Iowa AgriTech Accelerator executive director. “We look forward to seeing their products in the field, on the farm, and at the forefront of the ag tech revolution.”
The Pearse Lyons Accelerator combines Alltech’s leadership and expertise in agricultural and nutritional science with the tech ecosystem and start-up network of Dogpatch Labs. Launched in 2017, it received 183 applications from 38 countries across six continents in its first year. Of those, 10 were selected to travel to Dogpatch Labs in Dublin, Ireland, for a three-month, cohort-based program that offered workspace, mentoring, and investment possibilities.
“As a global industry leader, we are well positioned to open doors for the next generation of industry disruptors,” says Pearse Lyons, Alltech’s founder and president. “It is essential to empower the next generation of ag tech entrepreneurs who are pioneering for a sustainable future.”
ones to watch
There is a wealth of technological breakthroughs being made today in areas like robotics and drones, data collection and predictive analysis, disease prevention, and alternative farming methods. The following seven start-ups are among those innovators, and they’re also the ones that experts say are worth keeping an eye on in 2018 and beyond.
1. Performance Livestock analytics, Inc.
Founders: Dustin Balsley and Dane Kuper
Headquarters: Osage, Iowa
Background: Precision Beef and Cattle Krush combine cloud-based technology with on-farm information to bring big-data solutions to cattle producers.
“Our Performance Beef app maximizes production efficiencies,” says Dustin Balsley. “Our Cattle Krush app puts the key data already custom analyzed to the farmer’s unique situation into an easy-to-understand format on a smartphone or tablet.”
2. Smart Ag LLC
Founder: Colin Hurd
Headquarters: Ames, Iowa
Background: The Smart Ag platform enables a machine to run autonomously, and it includes four components. SmartHP is a simple plug-and-play kit to automate tractors. SmartNX is the hardware to connect a combine or any other machine to the cloud and any tractor with SmartHP. AutoCart is the interface used in the combine to control the grain cart tractor. AAVI Autonomous Farming is the overall farm, field, and machinery management platform.
“We focus on solving one simple problem: controlling a tractor,” says Hurd. “Smart Ag uses affordable technology already on the market to reliably and safely accomplish that.”
Funding: The company has raised $475,000 to date.
Founder: Federico Zuckermann
Headquarters: St. Louis, Missouri
Background: Aptimmune focuses solely on swine vaccines and the prevention of two major diseases: porcine reproductive and respiratory syndrome virus (PRRSV) and influenza.
“The autogenous, or inactivated, vaccines on the market today are administered intramuscularly,” says Steve Berger, development director for Aptimmune. “Our vaccine is administered intranasally because we believe the mucosal surfaces of the respiratory tract, which is where this virus actually infects and affects an animal, are the most important locations to develop an appropriate immune response. Our proprietary formulation stimulates the immune response in those surfaces to prevent spread of the virus and to shut down the disease.”
Funding: The company has raised $7.5 million to date.
Founder: Arsalan Lodhi
Headquarters: Sunnyvale, California
Background: WISRAN has developed a software-as-a-service platform to increase an operation’s efficiency. The start-up’s initial target is worker productivity and machinery logistics.
“If farmers can’t see where they’re losing money, they can’t do anything about it,” says Lodhi. “WISRAN is all about identifying logistics inefficiencies.”
Funding: The company has raised $200,000 to date.
Founders: Gary Wickham and David Moore
Headquarters: Dublin, Ireland
Background: MagGrow is a patented technology that uses permanent, rare Earth magnets as part of an integrated, proprietary system for droplet formation that yields superior drift reduction and spray coverage performance.
“Our customers are seeing two core benefits – 80% drift reduction and at least 30% to 40% improved coverage depending on the crop,” says Gary Wickham.
Funding: The company has raised over $10 million to date.
6. Indigo Ag
Founders: Geoffrey von Maltzahn, Noubar Afeyan, and David Perry
Headquarters: Boston, Massachusetts
Background: Indigo’s micro-biome-based seed treatment technology complements a plant’s natural processes to improve the health and development of the plant while increasing yield. The company is currently focusing on cotton, corn, rice, soybeans, and wheat.
“We are also tackling the challenges of environmental sustainability. Our product pipeline directed at water stress allows for higher yields without increased chemical or water use,” says Geoffrey von Maltzahn. “We are focusing on microbial products that address nitrogen limitation, which allows for less synthetic fertilizer to be applied.”
Funding: The company has raised over $400 million and is the top-funded ag tech start-up to date.
Founders: Al Eisaian, Greg Rose, Ara Nefian, and Naira Hovakimyan
Headquarters: San Jose, California and Champaign, Illinois
Background: IntelinAir’s proprietary technology, AgMRI, delivers actionable, in-season insights through real-time automated analysis of aerial imagery, which is validated by its expert agronomists.
“The strength of farmer know-how combined with frequent and powerful high-resolution imagery analytics is the future of agriculture,” says Al Eisaian. “AgMRI provides farmers the bird’s- and bug’s-eye views simultaneously to make critical decisions in a timely manner.”
Funding: The company has raised $6 million to date.
an eye on trends
Here are clear trends taking place in the ag tech space. Jonah Kolb, Moore & Warner Ag Group, shares his predictions on what we can expect to see in the coming years.
Industry Shakeout. “There are currently a lot of companies running at discrete technologies rather than focusing on holistic solutions,” says Kolb. “We’re going to see a shakeout within the ag tech sector and a clear delineation of winners and losers from a start-up and technology standpoint.”
Acquisitive Behavior by Industry Incumbents. “In the last half of 2017, DuPont Pioneer bought Granular. John Deere purchased Blue River Technology,” he says. “We’re going to continue to see industry incumbents adding to their existing technology portfolios by acquiring start-ups, because it’s a way for those companies to stay relevant. It’s also a way for them to bring innovation – that is sometimes hard to foster in-house – under their corporate umbrellas.”
While selling a start-up or a piece of technology to an incumbent agribusiness is a very logical and potentially attractive exit for an investment, Kolb says, “There really is value and strategic importance long term that some of these tools and knowledge – especially when we talk about big data – remain in the hands of independent companies that aren’t selling seed, chemicals, or equipment.”
As the ultimate end user, it may seem obvious that farmers should be involved in the development of ag tech. Yet, there has been a disconnect between farmers and the companies launching new innovations.
“Farmer feedback is critical to product development when moving from concept to commercial,” says Kevin Heikes, COO of IN10T. “We often see concepts that make sense, but when implemented across a wide range of farm operations, we learn about critical issues that limit adoption or success such as complexity, reliability, equipment requirements, use pattern, logistics, etc. Any one touchpoint will limit or halt adoption. However, early identification of the issue allows the innovator to address the concern by improving the technology and removing the pain point limiting adoption.”
Heikes, along with CEO Randy Barker, created IN10T to help close the adoption gap.
“At IN10T, we have created processes, analytics, and tools to better understand product performance and customer perceptions,” says Barker.
They know that farmer adoption depends on both performance and perception on each farm. That’s why they focus on large-scale field trials and the farmer who does the trial. They also know that scientific, high-quality data and specific farmer feedback unlock the path to successful adoption.
“In the beginning, our IN10T team reached out to our farmer network to share current projects,” explains Heikes. “Farmers began asking for an automated system where they could view and apply for projects. Based on farmer feedback, we developed FarmerTrials.com.”
The online tool allows farmers to register their email and receive alerts when trials are available in their areas. Farmers can then select which projects they want to apply for as trials are added.
Pay to Play
Both Heikes and Barker know that any given trial requires farmers to plan, execute, and manage multiple tasks over the season. Therefore, they believe farmers can and should be paid to execute valuable research on their farms.
“As we listened to farmers, we heard that payment is not about revenue generation; it’s more about valuable time invested in the innovation cycle,” says Barker.
Since farmers are continually trying new things, Barker and Heikes say, “The worst thing that can happen is that they get paid for a field trial. The best thing that could happen is that they rapidly grow their knowledge about their farm to drive profits and join a community of like-minded farmers!”
Projects vary in duration depending on what is being evaluated and the data being collected. In many cases, Heikes says a product or practice evaluation may take an entire season up to 12 months from planning to analytics.
“Some ag tech, such as software or hardware, may be a shorter cycle depending on the project design and objectives,” he explains. “The reality is that the crop cycle from planning through harvest happens only once a year. To fully understand the benefits of any technology, it has to be tracked over a whole season – and more likely multiple seasons – as well as to convince farmers to adopt it into their operations.”
More Start-ups to Watch