The only product more valuable than something people want is something people 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 agtech.
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.”
Agricultural innovation currently reaches a $6.7 trillion market, driving 8.5% of global economic activity, and serving 7 billion end users. More importantly, desperate 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 massive agriculture sector has been relatively untouched by the innovative catalysts of startup culture and finance.
The greatest opportunities for investment are always inefficient markets, and agtech has been lopsided for decades.
While angel investors on each coast inflate the latest dating app toward a billion dollar valuation, an immediately profitable Indiana compost venture (a $22 billion market) is widely overlooked by investors on the coasts. Such an imbalance of supply and demand has slowed agtech innovation, but also provides a rich opportunity for investors.
Savvy investors in the heartland have been always aware of this, but there are signs that coastal capital is catching on. Kleiner Perkins and Khosla Ventures certainly understand this (read about Bioconsortia’s $15M Series B, for example), and incubators like Y Combinator and 500 Startups have made some investments as well.
Finally, the recent launch of crowd funding platform AgFunder has opened the gates of the agriculture market to independent investors everywhere. Introducing this sector to widely distributed investors enables the mechanics of startup finance to finally stimulate the rapid iteration, high value competition and ready access to growth capital that other sectors have enjoyed since the 1990's.
With all of this in mind, I’m launching FarmCap, a news resource for innovators and investors to stay on top of agricultural technology and capital.
Tomorrow we begin with 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 market opportunity before others, but the fact that he knows the raw science behind many of 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.
A couple of key changes in the 5 years since this was posted:
First, I scrapped the launch of “a news resource for innovators and investors to stay on top of agricultural technology and capital,” which was originally mentioned here. Nobody was covering this sector effectively at the time. Fortunately, AgFunder News quickly 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.
Secondly, I now have investments 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.