Food and agri-tech investors from around the globe gathered in Toronto in May to discuss how their companies look for and invest in new start-ups.
While many of the speakers – the majority being career marketers and corporate venture capitalists – focused on the consumer-market potential of food products and technologies designed to support them, some considered on-farm practicality as the most important investment driver.
Ensuring new products work at the farm level is critical for making business ventures profitable for both investors and clients, says a spokesperson from AgLaunch, a Tennessee-based investment company focused on growing agricultural start-ups. More specifically, that means successfully engaging networks of farmers prior to and during the development of a new agricultural product or technology – as opposed to in final test trials alone.
Out of 4 keynote speakers and 2 panel sessions, Pete Nelson was perhaps 1 of 2 individuals to argue farmer expertise and peer-based learning are “fundamental” to the tech-development process from beginning to end. Indeed, his company maintains a large and diverse network of farmers to do just that. “Everything starts with the farmer,” says Mr Nelson. “There’s a high rate of companies that should be successful, but they’re not. The [tech-innovation] system isn’t set-up to work in the ag-sector.”
Mr Nelson elaborates by noting people involved in technology and product development have, generally speaking, “a poor understanding of agricultural systems.” He highlighted a misalignment between corporate drivers and farmer needs, where products can’t be utilised as envisioned because they don’t understand the industry at the ground level.
As a case study, Mr Nelson cites Case IH’s driverless tractors. “It’s essentially a really big tractor without a cab on it. You’re not going to be getting benefits on soil compaction, greater mobility or things other farmers are concerned about,” he says. “It shows you, if you’re thinking about automation, you’re just going to be fundamentally thinking about that differently than if [you] had a farmer hat on.”
The trick, he says, is not to attract the 7% of early-adopter farmers to your idea, but to reach the other 93% who are much more entrenched in current methods. For that, peer-to-peer networks are the only answer. An example of how successful a product can be if farmers are consulted directly is what Mr Nelson called “an irrigation recommendation solution for row crops” developed by an Argentinian company called Kilimo. The company, he says, spent an exorbitant amount of time meeting with farmers from across the South American country before offering their first product – an investigative process made possible by outside investment, of course, but one Nelson argues was critically important nonetheless.
“They are currently close to 10% of irrigated acreage in Argentina and we are helping them expand into the US,” said Mr Nelson in a later email. “This includes a strong role with our farmer network […] as well as analysis of ease of use and ability to incorporate the system into US farming practices.”
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The overarching goals of Mr Nelson’s company are divided into 2 categories: to improve efficiencies for existing commodity farms, and support start-ups focused on increasing farm product value and diversity. The latter can take the form of commercialising novel crops, or with dual urban and rural agricultural strategies. “We view agri-tech as a means to an end. The end game is a diversified, robust farm economy that farmers have options, new markets, new crops,” says Mr Nelson.
From the perspective of a Canadian farm kid, the fact that Mr Nelson reiterated this perspective to a room of (what appeared to be) less-farm-focused corporate investors was refreshing.