Photo courtesy of and text by Joel Harris
Conservatively, there was almost $17 billion invested into ag-tech and Foodtech startups in 2018, according to Agfunder. While a lot of the attention goes to the Beyond Meat IPO, Merck’s Antelliq acquisition and Climate Corporations billion-dollar price tag, there are plenty of other interesting and just as lucrative reasons to get into solving future problems in ag-tech.
Don’t despair that your “Aha” moment for alternative protein is 10 years after Beyond Meat or that you’re probably number 10,001 ag-tech drone company to come across a Venture Capitalists’ desk. There are still reasons to be encouraged to be an ag-tech startup, just probably not for the usual reasons you find yourself retweeting about.
1. Climate Change
Whatever you want to call it. It is happening. I’m not talking about Cleantech or Green Plans to combat Climate Change but to lean into climate change. The warming climate is already allowing crops like Canadian corn and UK winegrapes to be grown in more frigid areas. It is going to take a combination of new, innovative technology and sustainable practices. “The Fate of Food” by Amanda Little is a great read that doesn’t put sustainable practices versus technology but shows a blending of practices that will paint a starkly different and hopeful view of the food supply chain.
2. The 5G Cold War In China
5G promises to be 100 times faster than 4G, bring loads more data and tackles the latency issue. This will truly bring high-speed access to rural areas, which means more devices can talk to each other faster. Think about hundreds of remote sensors in a pig barn to identify potential breakdowns in biosecurity, production performance or actually count the number of pigs in a pen… in real-time. But will the adoption of new technology and business models happen in the US like it did when 4G was introduced or will it be in China? This quote from a white paper called “The 5G Ecosystem” from the Defense Innovation Board paints a clear picture of what might happen. “As 5G is deployed across the globe, China’s handset and internet applications and services are likely to become dominant, even if they are excluded from the US. China is on a track to repeat in 5G what happened with the United States in 4G.” In fact, the USDA even estimates that deployment of both broadband e-connectivity and next-generation precision agriculture technology on farms and ranches throughout the U.S. could result in at least $47 billion in national economic benefits every year. This is why we can’t wait around for 5G to come to rural communities and we need to solve the connectivity problem and the Cold War with China could drive that.
3. Zoonotic Foreign Animal Disease Threats
African Swine Fever Virus (ASFv) may be grabbing the headlines today for decreasing China’s production by 50 percent, but what will be next and when? Will it be another outbreak of Avian Influenza? In 2015, over 40 million birds in 15 U.S. states had to be destroyed. The initial losses in the first outbreak of Porcine Epidemic Diarrhea Virus (PEDv) were eight million piglets. Prior to PEDv and ASFv, Foot and Mouth Disease Virus (FMDV), which can decimate the swine and cattle industry, was estimated to have an annual impact between $6 and $21 billion, and that was in 2013. My point being, while investors may not like the rapid growth and predictable regulatory environment of animal health biotech, it is a huge and ever-present threat that won’t be going away any time soon.
4. Moore’s Law
Moore’s Law, which states that the number of transistors in a dense integrated circuit double about every two years, also applies in other sectors like storage of data in DNA. By 2020, an estimated 1.7 megabytes of data will be created per second per person globally. I reference Moore’s Law and the application in transistors and loosely apply it in the sense that the cost of Next Generation Sequence (NGS) has exponentially decreased in the last 20 years. And what we’re able to do with gene editing is getting to the point that some companies provide DIY home CRISPR Kits.
5. Global Impact
If you do it right, you get to live in the best places on earth and you can innovate from anywhere. Because food and agriculture have such a global impact, the usual innovation and investment hubs see their fair share, but there is also great startup communities in places like the Midwest, Australia, Israel and especially in Asia. So while the traditional non ag-tech investors want to get into the space, they may not be geographically located where the startups, customers, supply chain and academia reside. This is what has been so great about the Ag Startup Engine PortCos (Portfolio Companies) and what we’re trying to build in the heart of Iowa and the Midwest, which is solving the gap between ideation and preparedness for true institution venture capital investment.
These five reasons are just the tip of the iceberg in regards to opportunities or problems to solve in the agriculture and food supply space. Regardless of row crop, animal health applications or interest in software as a service versus robotic and hardware solutions, the world is at a tipping point with regard to how are we going to feed nine billion people in a world where we face longer droughts and more severe hurricanes? This shouldn’t discourage you from ag-entrepreneurship. It should motivate you to try something new and disruptive or better yet, evolve farming to the next level of the agricultural revolution.
Joel is the Co-director of the Ag Startup Engine, an early seed midwest investment fund focused on narrowing the gap between ideation and venture backing in the agriculture and animal health industries. He is also the Business Development Manager for IrishAngels Ventures, an early-stage venture capital fund investing in high potential B2B and B2C technology startups. As President of Charter Oak Creative, he focuses on helping startups and entrepreneurs solve problems. Formally, he was the VP of Harrisvaccines, which was acquired by Merck Animal Health in November 2015. Joel participates in several advisories and mentoring roles to entrepreneurs and startups in the SaaS, ag-tech, Biotech and Healthcare industries from his home in Chicago. Joel holds a degree in economics from the University of Iowa and a professional certificate in public relations, marketing and non-fiction writing from Northwestern University.