How connecting with ag tech start-ups can shape the future of agriculture

The rise of ag tech in recent years has introduced a host of new possibilities in agriculture. It also poses unique challenges and opportunities. By enhancing and deepening interactions with start-ups, major ag companies are elevating technologies that can truly add value for farmers. Their active involvement is defining the future of agriculture.

About six years ago, Wilbur-Ellis began to see a great deal of entrepreneurial activity happening outside of the normal ag channels. Several of its branches also were being overrun with different point solutions. Believing it could play a role in delivering these technologies to its customers, the company created Cavallo Ventures.

“We wanted to bring organization to how we dealt with these companies and curate the better ones to bring forward,” says Michael Wilbur, president and CEO of Cavallo Ventures. “We could be innovators in the market, while giving a more value-added experience to our customers.”

Founded in 2017, Cavallo Ventures looks at about 200 start-ups a month. It sees a lot of shiny and cool innovations, but, “At the end of the day, if someone’s not willing to pay for it, it won’t do an entrepreneur any good to pursue it,” Wilbur says.

The investment team leans on the expertise within Wilbur-Ellis to provide candid feedback from the real world. “We are a 100-year-old company. If we are going to make it to the next 100 years, we must constantly be innovating and taking risks,” he says. “We have a lot of tools and resources in-house that can help entrepreneurs figure out product market fit. The better companies really try to understand if there is a need for their product or service.”

To date, Cavallo Ventures has invested more than $60 million in about 25 start-ups. In nearly every investment, the group has either collaborated on research or partnered with a start-up to commercialize an idea.

With investments in Verdant Robotics, FarmWise, and Sabanto, the team is pursuing automating labor- and time-intensive processes. Although several start-ups are employing a farming-as-a-service business model, Wilbur says it’s not yet clear that approach is going to work or whether growers are going to want to buy automated equipment and operate it themselves.

“Those models are still being tested, but we are seeing a lot of pitches in that direction,” he says.

One criterion Wilbur often hears among investors is that unless they can envision a billion-dollar exit, they won’t make an investment. “Obviously, we want a return on our investment, but we must also consider the start-up’s impact on our reputation and business as well as the opportunity for a relationship down the road,” he says.

Another deciding factor for Cavallo Ventures and others is the people behind the idea. “Some back the jockey. Some back the horse,” says Shubhang Shankar, a managing director at Syngenta Group Ventures. “We need to be convinced the team is credible, has the tenacity to battle hard problems, believes in what it is doing, and has a track record of delivering what it promises.”

Educating Outsiders

When John Deere became active in the broader technology scene in 1993, there was a lot of interest in ag. The company also noticed that, in some cases, the tech world was wildly misinformed. “The pain points in agriculture were either over- or underamplified or simply misunderstood,” says Julian Sanchez, director of emerging technology for John Deere.

Announced in 2018, John Deere’s Startup Collaborator began as an experiment. The company saw a two-fold benefit to creating the program. First, it could serve as a mechanism to help give innovators a dose of reality. Second, Deere could learn how those outside of agriculture were solving similar problems through different methods.

“While we wanted to collaborate and leverage each other as much as possible, we really didn’t know what it was going to lead to,” Sanchez says. “With three years and the acquisition of one of the participants, Bear Flag Robotics, under our belt, the importance of this program has been legitimized. From day one, we saw a culture of innovation and collaboration in the Bear Flag team that got us excited. It’s also a template for what we look for in other start-ups.”

By maintaining active relationships with at least half of the companies that have gone through its program, Deere is also able to see if a start-up can maintain a trajectory of growth and evolution toward a viable solution. “A start-up is like a living, growing organism. It is constantly changing,” he says. In 2022, Deere plans to expand from four to about a dozen start-ups per class; it also intends to broaden the program’s scope to include automation, sensors, data management, and sustainability.

The acquisition of Blue River Technology in 2017, Sanchez says, was a down payment on a road map in helping farmers do more with less. “Their team actually shifted our mind-set and how we look at the problem of optimizing inputs, as well as labor,” he says, noting that the addition of Bear Flag Robotics in 2021 accelerates the development and delivery of automation and autonomy on the farm.

Innovation Pockets

Tamar Rosati believes digitally enabled crop protection is going to be one of the next big frontiers in ag tech. “We’ve seen a lot of precision technology in seed and fertilizer, and software such as Granular Insights that helps with on-farm decision making, but not as much development in crop protection,” says Rosati, president, digital business platform, Corteva Agriscience.

“Using predictive analytics combined with precision application technology, there are several exciting tools becoming available that can help a farmer better target his spraying,” she says. “All these things are coming together. This area is going to see a transformation, ultimately driving an increase in ROI for farmers and better stewarding of land.”

Shankar says innovation has been limited to specific pockets in the value chain for a variety of reasons. “The tragedy of agriculture is it’s a multitrillion-dollar industry that invests less than 0.5% annually in research and development across the whole farm to fork value chain.”

To drive more value, Syngenta knew it had to look at innovating in other areas. The company also realized the innovations necessary to solve the challenges in agriculture for the next century weren’t all going to come from within.

“It was an admission that we had to be open to innovation coming from other sources because we couldn’t do everything in-house,” Shankar says. “Start-ups, we thought, could be a key driver in helping us accomplish that.”

Since its inception in 2009, Syngenta Group Ventures has invested more than $100 million in more than 40 start-ups, with 25 currently in its portfolio. Areas of interest include high performance inputs, nutrient use efficiency, e-commerce, robotics, and alternative proteins.

“For decades, we were chasing yield, trying to figure out how to produce large amounts of food cheaply,” he says. “As the conversation continues to move toward how to repair the environment, I think the definition of efficiency will change. It’s no longer how much can we produce cheaply, but how much can we produce sustainably. Innovation is growing in that direction.”

It is where ag tech will play a vital role.

Rather than identifying one pain point and trying to solve it independently, Sanchez maintains that “You must look at a minimum of five pain points and try to solve them together, which has been a challenge for ag tech.”
With the recent acquisitions of FarmLogs and GrainBridge, addressing multiple pain points is an objective at Bushel. Not only do the additions create a stronger digital connection between growers, commodity buyers, ag retailers, and consumer packaged goods companies, but they also complement Bushel’s focus to lead the grain supply chain into the digital age with strategies that solve real pain points.

“For us, the more that can be automated, the more benefit the farmer is going to get out of it,” says Jake Joraanstad, CEO and cofounder of Bushel.

Launched in 2011, Bushel has more than 40% of the grain origination in the United States coming into its platform, which translates to about 10 billion bushels annually. “That’s 10 billion bushels of data, which is properly permissioned, that we can make more valuable for the farmer and the grain company. We are trying to embolden these relationships, so both can prosper,” he says.

When it comes to managing data in multiple software systems, there isn’t a one-size-fits-all platform. “I don’t believe that will ever be the case,” Rosati says. “It’s really on us as an industry to work together better to standardize that and make it easier for customers to move their data between different platforms. We just haven’t had the breakthrough there yet, but with the recent investments in ag tech and the advancements of the tools available, we are getting closer.”

Recognizing that a digitally enabled farm was the farm of the future, Corteva acquired farm management software company Granular in 2017, as it looked to create a digital ag ecosystem that supported information sharing, services, and commerce. “When you help a farmer make more profitable, efficient, and sustainable decisions, you also need to help him collaborate with the trusted advisers he or she works with day-to-day to make those decisions,” she says.

Engaging Farmers Sooner

As the connections between major ag companies and start-ups continue to grow, not only is the trend bringing a technology to market more quickly, but they are also engaging farmers sooner in the process — a critical piece that has been missing.

“Start-ups have a certain ability and freedom to innovate quickly, with access to funding from many different sources,” Rosati says. “However, they don’t necessarily have access to the end customer required to bring the product to market, enabling a technology to scale. The connections between established large players and start-ups are important because it helps bring some of these solutions to customers in ways they wouldn’t have been able to do on their own.”

“It’s one thing to do a customer survey and quite another to actually talk to farmers,” Shankar says. “There is no substitute for getting to know your customer better.”

Bridging a Gap

When Trimble Ventures launched in August, it was created to bridge a gap between research and development and acquisitions.

“There is so much happening in technology innovation. The fund allows us to get involved with a start-up at a much earlier stage,” says Ron Antevy, managing director and cohead of Trimble Ventures. “It also demonstrates to farmers that we’re investing in their future as well."

With 40 years of experience in the ag space, Trimble’s strategy is to be an invited guest, working with start-ups that want them to be a part of their journey because of the value the company adds. In the first five weeks of announcing its $200 million venture capital fund, Trimble Ventures received more than 600 inquiries.

“There is a lot more money in ag tech than there are great companies,” Antevy says. “As we sort through it all, we are taking a very deliberate approach.” While the fund is focusing on start-ups that already have revenue, have tested their product in the market, and are ready to scale up or grow their business, the No. 1 goal is to invest in a technology that complements Trimble’s existing platform for the benefit of the farmer.

Categories that pique interest at Trimble include predictive analytics, connectivity, autonomy, automation, and labor.

“You can’t talk about production agriculture today without recognizing there is a labor challenge,” Antevy says. “We are focused on the operational workflows of helping a farmer grow a crop. How can we automate equipment, so it’s smarter and easier to use, to reduce the skill set needed to perform certain actions, at a price point that makes sense?”