Ag Tech Startups Show Explosive Growth In The Billions
The latest tech startup boom today is not coming from California--it’s closer to home. And it involves an industry that’s ancient.
Investment in food and agriculture technology startups reached into the billions in 2015, a huge jump from previous years. What’s going on? Peggy Lowe of Harvest Public Media reports that Big Ag has found Big Data.
The Western Farm Show is a long way from Silicon Valley. But here in a huge arena, set in what used to be the Kansas City Stockyards, the high-tech future of agriculture is for sale. The centerpiece at this booth is a yellow and white drone – its plastic wings span four feet across.
“It’s got a GPS, so it knows where it’s at, underneath here you’ll see an autopilot, it’s an onboard computer,” Casey Adams says.
Adams is one of the owners of “Fly Ag Tech,” a brand-new company based in Kansas City. But he’s not selling the drone. What the company is selling is what is driving the ag tech industry today: data.
“If you’ve got a stressed plant somewhere, it could be a bunch of different things: too much water, too little water, you need fertilizers, pesticides, whatever," Adams says. "If you don’t know where that problem is and you don’t know what’s causing it it’s because you don’t have the right information. So all of these things are just tools to diagnose the problem.”
Fly Ag Tech gathers that information by an infrared camera built into the drone, gets an agronomist to analyze it, then offers a prescription for the farmer for better yields. It’s making what’s called “precision agriculture” – yes, that’s really a thing – even more precise. And that’s a big part of the ag tech boom.
“We had a segment in our report called 'The Sky’s the Limit for Drones and Robotics,'” says Louisa Burwood-Taylor of AgFunder, an online investment platform for investors.
AgFunder released a report in February that showed investment in food and agriculture technology startups reached $4.6 billion – yes, that’s with a B – in 2015.
Farmers today already rely on advanced machines, like high-tech combines. This is a new revolution. More Silicon Valley-style, dependent on data and software.
“There’s an increasing realization that the world is limited and in many cases declining natural resources at our disposal," Burwood-Taylor says. "So I think investors and entrepreneurs are starting to really wake up to that fact that a huge amount of innovation is needed if we’re going to feed a growing population.”
One of those innovators is Ron LeMay, a managing director at Open Air Equity Partners, a private venture capital firm headed in Kansas City. Open Air has just one ag client in its portfolio – an analytics tech company now headed by LeMay called “Farm Link.”
“We’re on track from an ag tech perspective to develop the capabilities to give people insights into how to farm more precisely, farm more productively," LeMay says. "Develop better products, if you’re agribusiness. Do better grain pricing, risk management.”
Asked for his reaction to the many companies and investors jumping into ag tech.
“My reaction is basically hooray. The country needs a lot of funds going into ag tech,” LeMay says.
Others in the industry I spoke to called it a chaotic landscape. Small startups are popping up all over, big companies like Monsanto and Syngenta are getting in, and even tech companies are entering the fray. Last year Google’s venture-capital arm dumped $15 million into a network that crunches data on seeds and soil.
“An analogy is the 'Wild Wild West,'" Scott Jackman says. "Everybody’s reaching into it right now and trying to figure out how to help producers out.”
Back at the Western Farm Show, Jackman smiles as he describes the industry. He’s Casey Adams’ partner in Fly Ag Tech. They’re at this show to meet farmers who’d be interested in their business. But they’re also looking for investors – investors with big pockets who might just be lured into betting on the future of farming.