How startups can meaningfully connect with farmers post COVID-19
Agrifood tech startups are finding value in collaborative investment models, while riding the wave of market volatility amid the COVID-19 pandemic.
Australian venture capital firm Artesian Venture Partners – at the forefront of the change – sees opportunity for companies to “emerge out the other side with a stronger offering”.
Despite rising economic pressure agrifood tech startups have not just responded quickly to COVID-19 but found a silver lining set to accelerate innovation and future-proof business.
Rob Williams, Director of Australia’s largest early stage venture capital firm Artesian – that has invested in over 400 companies across the Asia-Pacific region –said engaging proactively with customers will offer innovators an advantage within the ever-changing and competitive landscapes.
“There’s actually been a really interesting opportunity for startups and innovators to take the time to have conversations with their potential customers around what an interesting product or service would need to look like, in-light of some of those challenges that have emerged,” said Mr Williams.
The uncertain market access conditions have seen startups seeking clarity more than ever. This increased communication is helping nurture relationships and innovation strategies that will protect innovators against future disruption.
“As we look to see the Australian agrifood tech sector evolve and mature the engagement with offshore investors is going to play a big part,” said Mr Williams.
“This is why we are working hard as a firm to develop those co-investor relationships. For startups, at a certain stage in their development, those relationships are going to be critical in supporting a global go-to-market opportunity.”
Artesian’s venture capital portfolio worth $400 million invests in transformational startups developing software, hardware or new business models agnostically, and with a focus in the agrifood, clean energy and medtech sectors.
As a service platform Artesian provides corporates, government organisations and family offices access to startups delivering research and development, financial and strategic returns, collaborative partnerships, co-investment opportunities and a pre-screened and de-risked pipeline of merger and acquisition opportunities.
Mr Williams said the cooperation with co-investors has been a great source of opportunity when looking to use industry partnerships and relationships to add value.
GrainInnovate Fund offers valuable customer feedback for startups
In February 2019 Artesian partnered with Grains Research and Development Corporation (GRDC) to launch the $50 million fund GrainInnovate designed to invest in startups to drive future profitability and sustainability of Australia’s grain growers.
“We believe GrainInnovate is a great example of risk sharing between the industry or government and the private sector to bring forward change that benefits society, which in this case is resilient and affordable food,” said Mr Williams.
Ongoing engagement with growers is proving effective for startups (like Data Farming and FluroSat, now portfolio companies of GrainInnovate) to enhance their offering, he explained.
“GrainInnovate assists in ensuring that innovative ideas and technology advancements are efficiently shared between the tech and farm community. This is by no means a one-way flow of information but a virtuous cycle where technology innovation is trialled in real-world situations.”
GrainInnovate areas of interest:
- Genetic tools and technologies
- Crop and environmental sensing
- Grain storage logistics
- Renewable technologies
- Task automation
- Crop protection technologies
- Water and nutrient use efficiency
- Crop management logistics
The Clean Energy Seed Fund is another example of this collaborative model established by Artesian in partnership with the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.
“Different investors bring different things, with GrainInnovate, we have worked to develop those industry relationships to provide optimal returns to our investors and industry partners,” said Mr Williams.
“For a startup, those types of industry relationships and networks and their perspectives are valuable when startups are looking to validate the solution or the products they’re putting into market.”
Forecasts show agrifood tech startups across the Asia-Pacific region are much better placed than others. According to Artesian’s survey results, recorded on 6 April 2020, the average projected change in revenue for agrifood tech startups, over the next 12 months is 32.5% compared to Australian startups in other categories predicting a 45.4% change or Australian and Chinese startups predicting a 42% change.
Artesian believes food security and sustainability will remain major themes in the face of potential future biosecurity risks.
“Time is critical for the development of the Australian agrifood tech ecosystem,” said Mr Williams.
“We need to resist the urge to become impatient when judging outcomes, the reality is the Australian agtech opportunity or asset class is still developing. It is important to bear in mind that ecosystems are built from the bottom up.”
Advice for startups: “It’s okay to fail”
“There’s a lot of success that comes out of multiple failures, in fact it can be seen as a positive,” Mr Williams said of second-time founders. “As it’s often where you learn the most.”
“We recognise that the entrepreneurial journey is hard and it’s long, it doesn’t always work out, particularly the first time. We really value the opportunity to engage with entrepreneurs that have had prior experience and used that prior experience, and resilience, to come back with a product based on what they’ve seen and learnt previously.”
“We need to create more engagement between the farmer and innovator in order to develop feedback that will ultimately drive industry forward.”