No Farms, No Food
Venture Capital and the Agtech Opportunity
The only product more valuable than something people want is something they need. So as countless mainstream angel and seed investors continue to play a numbers game with trending sectors and sexy business models, the smartest money is looking into agricultural tech.
The greatest innovations of this century are as likely to come from Missouri, Indiana, and Iowa as they are to come from the coasts. Agtech ventures in these “flyover states” are building and deploying technology that will fundamentally change the way we develop, supply, and consume food.
“The greatest innovations this century are as likely to come from Missouri, Indiana, and Iowa as the coasts.”
OPPORTUNITY
Agricultural innovation currently reaches a $6.7 trillion market, driving 8.5% of global economic activity, and serving 7 billion end users. More importantly, a dire need for expansion makes this the greatest potential growth sector since the industrial revolution.
Population growth, water scarcity, and pollution increasingly threaten global food supplies. Worse still, the UN projects food production will need to increase by 70% in the next 35 years to meet global demand. National Geographic recently suggested it will actually need to double.
Only technology can save us.
From high efficiency fertilizer delivery via robotics to engineering highly reflective soybeans for reduced water demand, advances in agriculture are rapidly becoming our most important and valuable technologies. Yet the sector has been relatively untouched by the innovation catalysts of startup culture and capital.
MARKET CORRECTION
The greatest investment opportunities alway lay in inefficient markets, and the farm-to-food supply chain is a prime example.
While angel investors on each coast move as a herd to inflate the latest dating app toward a billion-dollar valuation, an immediately profitable Indiana compost venture (a $22 billion market) is generally overlooked. Such an imbalance of supply and demand has slowed innovation, but also provides a rich opportunity for investors.
Savvy investors in the heartland have been always aware of this, and there are signs that coastal capital is catching on. VC leaders like Kleiner Perkins and Khosla Ventures understand this (read about Bioconsortia’s $15M Series B, for example), and incubators like Y Combinator and 500 Startups have made recent investments as well.
Finally, the recent launch of the AgFunder investment platform is now introducing the agtech opportunity to independent investors everywhere. The arrival of AgFunder and other trailblazers — with any luck at all — will bring the rapid iteration, competition, and access to capital that other tech sectors have enjoyed since the 1990's.
FARM CAPITAL
Tomorrow I will share a Q & A with Rob Leclerc, founder and CEO of AgFunder. What is most exciting about someone like Rob Leclerc is not his investment pedigree or the way he’s seizing this opportunity before others, but that he knows the raw science behind these ventures better than most. With a PhD in Computational Biology and years of VC experience, his insights into the future of agtech are worth paying attention to.
2019 UPDATE
A couple of key changes in the 5 years since this was posted:
When I wrote this, nobody was covering this sector effectively at the time. AgFunder News soon became a credible non-stop news source, and is now the go-to source for industry updates. Their emails are required reading for anyone investing in food and agriculture.
Second is a disclosure: I have since invested in Agfunder and their funds. AgFunder has been a major catalyst in funding for agtech, and their portfolio companies are leading the way to a more sustainable and profitable future.
Also, nothing has really changed.
All politics aside, the United Nations Special Report on the Ocean and Cryosphere in a Changing Climate, the U.S. Department of Defense Security Implications survey, and countless other scientific and industrial studies have continually reaffirmed what we have known about ocean acidification, declining water resources, and increasing threats to food security. Our need to innovate has never been more urgent.
You can find out more about me at robmillis.com.
