AgTech Investments Taking Shape

03.11.15
Features

Rapid adoption of information technology and big data analytics are driving growth in the agricultural technology (AgTech) industry, providing farmers as well as small and large agricultural companies with opportunities to greatly increase efficiency and crop yield. According to the most recent Agricultural Census, as of 2013, there were over 2.1 million farms in the United States. While projections say that the U.S. population will increase by 50 million people over the next 15 years, the United States Department of Agriculture reports that the amount of land used for agricultural production in the U.S. is expected to remain relatively constant in the near future; farms must become more operationally efficient and yields will need to improve in order to meet this increased demand.

With U.S. total annual farm production expenditures of more than $367 billion, there are plenty of areas where even small improvements can have a significant impact – the largest categories being feed, farm services, fertilizer, seed and machinery. AgTech companies across the spectrum, from farm management software developers to decision support systems, have been investing heavily in this mission.

The farm management software space has achieved significant growth in the last several years as the infrastructure needed for real-time data collection and analysis at scale has become more ubiquitous with more refined internet of things (IoT) technologies, among others. Michigan-based FarmLogs was founded in 2012 to provide an online platform that allows farmers to accurately forecast and measure farm profits, track expenses, and manage risks. The company’s software also enables farmers to measure rainfall, other environmental, and topographical characteristics that influence their land under cultivation and the growing season. This mission has attracted over $15 million of investment from Sam Altman, Andreessen Horowitz, Drive Capital and Hyde Park Ventures, including most recently a $10 million Series B in December 2014 to build out its product to intelligently predict and optimize crop rotations as well as automate activity data collection.

While a lot of solutions integrate aspects of data analysis, certain companies have chosen to really focus in on a big data approach. aWhere, founded in 1999, provides “agricultural intelligence” through daily data capture of over a billion points across the globe. This data, which includes weather and other agronomic data, is then made available via its platform and API with the end goal of providing increased insights into weather and farm productivity trends to guide farmers’ decisions. aWhere raised approximately $14 million in 2014 from Elixir Capital and via the agricultural marketplace AgFunder. Farmers Business Network (FBN) is another notable company in the space, having raised $6M from Kleiner Perkins Caufield & Byers while still in its early stages. FBN is focused on becoming a full data stack solution for farms, and it is building a unified network across geographies and farm types for the benefit of the farmer community. FBN was “created by farmers and for farmers” as an independent third party to ensure they can remain completely unbiased whereas other companies focused on Ag data aggregation often have close relationships with equipment providers and others whose main business is selling additional services to farmers.

Conservis is another company that has made significant inroads into farms; it is now responsible for managing $8 billion worth of land across various stages of cultivation. Conservis helps track logistics and operational data on operators, trucks, and their drivers as they handle loads coming out of the field. This data helps capture the true cost of production and allows for better optimization decisions. Since its founding in 2009, Conservis has received $10 million of funding from Middleland Capital, Heartland Farms and Cultivian Ventures.

Not all growth in the AgTech industry has come from the farm management software and agronomics industries, however. Advanced Animal Diagnostics, headquartered in Durham, North Carolina, develops on-site diagnostic technology and software systems for farm animals. Since its founding in 2001, the company has raised over $33 million in funding from investors Intersouth Partners, Laboratory Corporation of America, and Novartis Venture funds, among others. The company’s platform, QScout, can help detect infections such as Mastitis in livestock long before farm animals begin displaying any symptoms. Mastitis has resulted in $2 billion worth of annual costs for the U.S. dairy industry, roughly $200 per cow, and it is the goal of Advanced Animal Diagnostics to minimize these costs while improving the health of the livestock and increasing livestock production. The company’s most recent $15 million Series C closed in December 2014 will allow it to expand its product line to other types of diagnostic systems.

The intersection of agriculture and technology is beginning to have far-reaching economic and environmental effects. Growth capital has allowed the AgTech industry to rapidly develop and provide better outcomes for farmers, and in doing so has created more formidable competitors for agriculture industry stalwarts Cargill, DuPont, and Monsanto. “Big Ag” players have been both developing new technologies of their own as well as acquiring innovative independent platforms along the way. Monsanto, for example, spent $930 million in its acquisition of weather data company Climate Corp. Companies like FarmLogs, Conservis, and Advanced Animal Diagnostics, among many others, have shown strong growth in the past few years. Institutional investors and family offices alike will continue to help AgTech companies deliver on their missions to further improve on farming practices with the aim of meeting the needs of a rapidly growing population.

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