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−− The Capital-favored Agtech Sector is Scaling Up

Mar. 11, 2019

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Mar. 11, 2019
In the past few years, the application of modern computer technology to the agricultural sector has been exciting for both agricultural practitioners and investors. Since Monsanto (now acquired by Bayer) purchased the US company, The Climate Corporation, in 2013 at a price of US$930 million, Agtech (agricultural technology) has become a hot word in the agricultural field, and there has been a significantly growing interest in financing Agtech among venture capital companies in recent years.

Global agtech VC deal activity
 
According to the 2018 Agtech Investment Review, the latest report published by Finistere Ventures, as of October 31, 2018, the global investment in the Agtech sector reached $1.6 billion across 209 deals, which is expected to exceed $1.9 billion in 2017, and by more than twofold the amount in 2012, when the investment binge in the Agtech sector was just around the corner. In the past five years (2013 to 2017), the total investment in the Agtech sector exceeded $5 billion.
 
The Agtech sector is showing signs of scaling up. The number of deals in the late stage transaction in 2017 and 2018 has increased significantly. Many startups have come to the stage of Series C and later market.
 
When it comes to the future of agriculture, the unavoidable topics are the growing global population and the consequent food pressure, as well as the challenges currently facing all aspects of the agricultural industry chain. Humans must not only improve food production to meet the basic needs of survival, but also take into account sustainable development; therefore, the demand for scientific and technological innovation in the agricultural sector is particularly urgent. The agricultural innovation wave driven by some Agtech startups in the past 5 to 10 years not only provides new acquisition targets for agricultural giants, whose innovations have lagged in recent years, but also assures us about the possibility of tremendous changes in agriculture in the future.
 
Agricultural technology is a multidisciplinary industry that covers crop planting, crop protection, genetics, computer software technology, big data, biochemistry, food processing, etc. This article focuses on innovations related to crops led by startups and reveals the most cutting-edge agricultural technologies through the review of startups in this sector with the latest financing events in 2018.
 
Review of the innovations in agriculture brought by Agtech startups
 

 Global agtech VC deals ($M) by subvertical (2018)*
 
Finistere Ventures categorizes the Agtech sector as shown in the figure above. From the perspective of investment in agricultural technology in 2018, agri-inputs management is mostly favored, attracting some $577 million, followed by plant science ($171 million), indoor agriculture ($146 million), and sensors & farm equipment ($142 million).

Agri-inputs management
 
Agri-inputs mainly refer to products used to control crop pests and diseases and increase crop yield. At present, research in this field is more apt to improve the plant or soil health and reduce other inputs, while focusing on the development of biological products, seed treatment agents and crop nutrition technologies.
 
AgroSustain: Founded in 2018, AgroSustain develops a pipeline of plant-inspired antifungal solutions based on an internationally patented PhD thesis by Dr. Olga Dubey, CEO of AgroSustain, to identify and bring to the market organic treatments against a broad range of fungal pathogens present in food storage facilities. The fresh capital will be used to move forward with the certification and product development of AgroSustain’s first plant-inspired product to prevent molds on fruits and vegetables post-harvest. 

BioPhero: BioPhero is a pioneer in providing low-cost bio-based pheromones for pest management. Its product lures pesky pests away from a crop. As the insects ultimately fail to find each other, this disrupts the mating cycle and helps reduce the pest pressure without impacting the crop.
 
Pivot Bio: Pivot Bio believes that microbes can deliver nutrients, protect against pests, and improve crop quality better than chemical fertilizers and pesticides. Their new product Pivot Bio PROVEN supplies a clean alternative to synthetic nitrogen to the crop each day. As the first nitrogen-producing microbial product available for U.S. corn farmers, it is already approved for use in states that represent about half of the U.S. corn producing market. Additional state approvals are also in process for 2018 and 2019. 

Precision agriculture
 
Precision agriculture aims to achieve high quality, high output and high efficiency with the least investment. Precision agriculture technology covers a wide range of fields, including robots, sensors, drones, satellite imagery, big data and Internet of Things (IoT), among others. By creating software suites, data management and analysis tools, it can be used to improve farm management and provide planting decisions. Precision agriculture is a hothouse for breeding startups and cutting-edge agricultural technologies.

Farm management systems
 
Growers: This company focuses on developing software to help farmers capture field data and analyze soil quality at scale and provide data-driven seeding recommendations that enable yield improvements and to grow crops more efficiently.
 
Understory: Understory comprehensively assesses the impact of weather on cities, businesses, and fields with ground-truth data. Deploying and operating large-scale, rugged, and maintenance-free weather and air quality sensor networks, Understory is introducing the precision into precision farming. Understory’s technology has broad, cross-sector applications including insurance, agriculture, risk mitigation, and pollution reduction.  In agriculture, Understory has the ability to introduce precision weather technology into any field in the world, regardless of connectivity challenges. Understory enables better predictive recommendations and tracks exactly what is going on in a field to help farmers and the ag industry best deal with things such as inclement weather, climate change, supply chain visibility, operations optimization and more.
 
FarmLab: FarmLab provides a free, easy-to-use mobile application to help land managers process soil tests with a chosen testing lab. By giving people a platform to view all their results in one place, they can help soil testers make better decisions around soil management in the long term. Simply put, their vision is to help farmers more sustainably manage their soils by showing them the impact their management practices have on soil nutrients, chemistry and ultimately yield. This starts with providing better access to soil data.
 
Imagery
 
Ceres Imaging: Currently operating in Asia, North America and Australia, Ceres Imaging is the world’s largest agricultural aerial imagery company. They help producers master the elements by predicting water, fertilizer, pest and disease issues weeks before they become apparent. Their product, chlorophyll index, could solve many of the problems of traditional NDVI tools by helping producers understand nutrient rate deficiencies to support in-season variable rate applications.
 
Agremo: Agremo offers a cloud-based software platform that performs analytics from aerial imagery using computer vision and machine learning technologies to provide crop intelligence for better management of agricultural processes. Agremo is used by agribusinesses, crop growers, and anyone interested in plant status and health. 
 
Agrograph: An information-as-a-service startup that combines satellite imagery and field data with machine learning algorithms to predict crop yield at the field level. 
 
Sentera: Sentera supplies integrated remote sensing, analytics, and IoT solutions to agronomists, crop consultants, and farmers through a subscription-based service. Designed to rapidly detect nutrition, disease, and plant status issues, the company describes its technology as making it easier for users to integrate field data with a variety of digital ag platforms.
 
Drones
 
Rantizo: Rantizo is a targeted drone-spraying platform using electrostatic technology to apply cartridge-dispensed agrochemicals precisely where and when they are needed. Their technology identifies problem areas and diagnoses a precise treatment plan; from there, drones apply the proper agrochemical application only to the necessary areas, truly providing an end-to-end solution versus the fragmented options that currently exist. They developed a patented electrospray technology that applies the agrochemical with precise levels, better optimized than traditional spraying equipment.
 
Skycision: Skycision uses drone and satellite imagery to help farmers with decision-making in order to boost yield and profitability. The technology focuses on identifying changes in fields over time, analyzing three to five years of satellite data and present-day drone imagery to find variances and spot disease earlier in specialty crops, especially higher margin crops like grapes.
 
Field sensors
 
WaterBit: WaterBit, an Autonomous Irrigation Solutions (AIS) company that enables growers to control local irrigation considering plant stage, soil conditions, and weather, at a level of granularity and accuracy that is not possible with manual control or using programmable logic controller (PLC) based methods.
 
Augmenta: Describing itself as “an ag IoT and automation start-up”, Augmenta has attracted $ 600,000 (€ 512,500) of seed-funding from a venture capital technology investor to help commercialise a tractor-mounted crop scanner. Capturing 4K video data using hyperspectral computer vision, the company’s Isobus-compliant cab roof-mounted device translates the data through crop-calibrated software to control a fertiliser spreader or sprayer to apply variable rates where and when they are needed.
 
Plant science
 
Plant science refers to technical research to improve plant health and increase yield through methods such as plant breeding, genetic modification/editing, and development of new plant traits.
 
Imago AI: They are building a digital phenotyping platform to measure traits in crops by just clicking on an image. Imago AI’s autonomous software does non-destructive phenotyping and reduces the phenotyping time by up to 75%. The AI-based software has more than 99% accuracy and removes human bias from the phenotyping process. They aim to build a one-stop breeding software which can collate the phenotypic data of years of breeding of millions of seeds varieties and can provide insights after learning from millions of past data points. 
 
PlantArcBio: The Company developed and proved a unique, highly innovative Direct In Plant (DIP™) gene discovery platform. The company works to improve seed traits for both conventional and biotech applications. PlantArcBio focuses on four key market segments: yield and abiotic stresses (environmental stresses); insect resistance; herbicide tolerance; and disease control.
 
Hi Fidelity Genetics: This company uses computational biology to measure and predict plant traits for advanced breeding programs. The company will accelerate development of RootTracker, a scalable in-field root architecture sensor system for breeding more robust root systems, and Luther, its end-to-end artificial intelligence (AI) breeding platform with what the company describes as the first prediction engine for hybrid seed creation.
 
Pairwise Plants: Pairwise, founded in-house by Monsanto Growth Ventures, is a gene-editing company that has licensed programmable base editing technology from Harvard University, which will leverage various CRISPR-based technologies to create new crop varieties with favorable traits.
 
Benson Hill Biosystems: An agricultural biotechnology company focused on the development of traits to increase intrinsic crop yield. Benson Hill's CropOS™ revolutionary crop design platform combines the most advanced data analytics and biological knowledge with cloud-based computing – an intersection of disciplines known as cloud biology – to empower organizations to develop food and ingredients with better flavor, nutrition and environmental sustainability.
 
Inari: Inari is a transformational plant-breeding company developing state-of-the-art technology for agriculture's current and future growing needs. Inari employs an unusual blend of disciplines - including biology, computational agronomy, data sciences and software engineering - to provide a faster, more predictable, environmentally healthy, and more affordable growing process for farmers. The company's holistic approach begins by collaborating with seed partners to reduce breeding time and cost, increase profitability for farmers, be respectful to the environment, and provide healthier food for consumers.
 
PlantResponse Biotech: This plant biotechnology company develops and commercializes novel products of natural origin that enhance crop performance, improve crop quality and promote yield potential. They offer four distinct product arrays: Plant Health Care, Plant Stress Care, Nutrient Use Efficiency and Plant Breeding.
How is the Agtech sector going to change farming practices in the long run?
 
After reviewing so many startups in agriculture and their new technologies, we also wanted to know how the Agtech sector is going to change farming practices in the long run. Therefore, we interviewed several founders of Agtech startups to discuss how technology will change agriculture.

“As the world’s population grows by 2 billion over the next 30 years, agriculture needs to become far more efficient. However, previous Agtech was focused on increasing yields today at the expense (or ignorance) of yields and fertility in the long run. In fact, poor soil management is already leading to a decline in the world's arable land by 1% per year. In order to change current agricultural practices, and influence farmers to focus on long-term sustainability, Agtech needs to help farmers understand the long-term impact their management practices have on the land and soil. In my experience, this starts with data. If Agtech can improve farmers’ access to data, farmers will be able to make better long-term decisions in relation to soil fertility and management practices, which will help improve yield in the long run.”




“We believe farming practices will be such that each plant is treated as a separate individual and farming practices are based on the local environment condition of the plant. Every seed has to interact with the environment and the environment can often be unfavorable. The farming practices under those conditions need to counter the effects of an adverse environment, and based on the needs of individual plants, they will come into play. Farming practices will be such that each plant is able to achieve its maximum yield. The role of micro-level management machines, which can cater to the needs of every plant separately, based on the assessment of that plant, will increase significantly and heavy machinery will be used for generic purposes. Even further in the long run, seed varieties will be more adaptable to adverse environment conditions and plants will be less dependent on farming practices. Imago AI is helping companies develop such seed varieties.”


“Agtech will inevitably change farming practices, if for no other reason than the evolutionary advancements necessary to keep up with a shrinking labor force and growing world population. The ability to ensure the precise application of seeds, chemicals and fertilizers will dramatically improve yields, which is absolutely necessary to feed the growing populace."
 
"Farming practices already are and will continue to be data driven, which will make the collection, delivery, and analysis of that data all the more important for decision makers in their respective fields."
 
“Agtech will also change farming practices that have been hands-on and dependent on humans to more automated and predictive processes. This will shift the industry into a far more efficient, safer, and more bountiful landscape to work in.”


“Agtech is bringing more organization and optimization to farming practices. It is also bringing accountability. Knowing what you have in your farm and what you applied to your crops, in what dosage, all logged in and with easy access, besides having alerts during the growth cycle when things are abnormal, are great advances to prevent losses and increase profitability. This is attracting entrepreneurs, capital and talent to the farming sector and creating more jobs in the rural areas of the main and emerging economies. Take for instance the Netherlands: it is the second food exporter in the world and its territory is still small when compared to other traditional agricultural countries. The future of farming practices is already taking place there: vegetables and fruits planted in big controlled greenhouses, an educated workforce, automated fruit picking and vegetable selecting robots in a social responsible environment. Those giant greenhouses can produce up to 10x more than an open field in the same area, and use up to 97% less chemicals.”



“Agtech will vastly improve efficiencies across the agriculture value chain before, during and after farmgate. Agtech will connect farmers into a complex global web of food logistics to ensure we are sustainably feeding a growing population. Farmers adopting Agtech will get more precise recommendations from their input suppliers for fertilizers, seeds, crop protection and services to best optimize those resources in relation to that of farmers' fields and needs. That will begin the production cycle with a layer of shared visibility both to the farmer, but more importantly, to the consumer who demands traceability alongside an assurance of environmentally conscious practices typically certified under a 3rd party guarantee for sustainability. Agtech will be the underlying support platform that connects all the facets of on-farm production.”





 
This story was initially published in AgroPages 'Annual Review 2018' magazine. Download the PDF version of the magazine to read more stories.

Source: AgroNews

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