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Investors Cultivate a New Crop of Ag Tech Start-Ups

Players ranging from real estate investment trusts to sovereign wealth funds are betting on agricultural technology.

  • Kaitlin Ugolik

Entrepreneurs and investors gathered in New York in early March to test their appetite for agriculture technology — and for eco-friendly hors d’oeuvres like vegan “salmon.” Hosted by Netherlands-based Rabobank, the inaugural Brooklyn edition of the FoodBytes! networking event focused on food companies with a bent toward sustainability. But one of the day’s first speakers was Gabriel Wilmoth, investment director at Syngenta Ventures, the venture arm of the Swiss agrochemical giant.

“Big Agriculture has a place in the sustainable conversation,” said Wilmoth, who worked at several major production farms and with early-stage tech companies before joining Syngenta. Farmers don’t have the capacity to take on a lot of the risk that’s required to meet changing agricultural needs, he explained, but Big Ag does. “Everyone knows we’re going to have more mouths to feed,” Wilmoth added. “The question is how to address that, and big companies need to adapt.”

As the world’s population keeps expanding and the climate warms, growing food, finding water and managing their processing and distribution present new challenges. China National Chemical Corp. is bidding $43 billion for Syngenta to gain access to its ag tech, which it sees as vital to China's food security. Many investors that have concentrated on agriculture for decades are making changes to keep up – and turning their attention to a slew of technology-driven start-ups.

Though Syngenta, Monsanto Co. and other major seed makers are still the biggest players in agriculture technology, the sector is diversifying. Online food sales is the biggest piece of the ag tech pie: In 2015 it saw $1.65 billion worth of investment globally, according to a recent report by AgFunder, a web-based agriculture investment marketplace. The rest of the industry, which includes sustainable protein, irrigation and water, drones and other robotics, and data analysis, pulled in $2.9 billion, a surge from 2014, when investments outside of food totaled $1.9 billion.

Venture capital financing of agriculture technologies jumped 78 percent in 2014 and another 44 percent last year. Sovereign wealth funds such as Singapore’s Temasek Holdings and Khazanah Nasional, the strategic investment vehicle of the Malaysian government, have recently boosted their agriculture plays, devoting more attention to investment targets that take advantage of innovative technologies.

Rabobank, one of the world’s largest banks and a major food and agribusiness lender, has long been at the forefront of the industry but recently began putting more effort into promoting ag tech entrepreneurs and connecting them with investors. FoodBytes! launched in 2015 through a partnership with SF New Tech, a monthly San Francisco mixer for entrepreneurs and investors. The recent Brooklyn event, whose attendees included bankers, venture capitalists and other institutional investors, showcased ten of the roughly 200 businesses that applied.

Exhibitor Arable, a crop data analytics outfit founded by agronomist Adam Wolf, is beta testing a product to deliver personalized analyses to farmers. Known as the Pulsepod, the product — designed with the help of engineers who also worked on the Fitbit activity tracker — measures rainfall, crop water demand and other information and connects to Wi-Fi to send data streams to analytics software.

But with mobile technology now ubiquitous, competing for investors is becoming increasingly difficult for companies like Princeton, New Jersey–based Arable, notes Manuel Gonzalez, Rabobank’s West Coast head of corporate clients in San Francisco.

“Arable is a very interesting company, and there are others that do the same,” Gonzalez says. “It’s going to be a tough market for a little while until they get a few really big accounts and become a bit of a standard.”

This air of disruption and competition exists outside Silicon Valley and Silicon Alley too. In Durham, North Carolina, Research Triangle Park has become a hub for life sciences and agriculture, and the overlap between those sectors is helping to fund more ag tech innovation in the region. Alexandria Real Estate Equities, a Pasadena, California–based real estate investment trust that focuses exclusively on science and technology clusters, or campuses, is developing 1 million square feet at RTP for the Alexandria Center for Science, Technology and Agriculture, whose second phase will include the first such ag tech accelerator for early-stage firms. The first phase, launched in November, focuses on biotechnology and life sciences.

Alexandria, which already owns and operates about 1 million square feet of office, lab and greenhouse space in the Triangle region, will provide the same type of facilities to accelerator tenants. The firm also plans to back accelerator companies through its Alexandria Venture Investments division. The location will put ag tech start-ups close to giants like Syngenta, Monsanto, Bayer CropScience and BASF Plant Science, as well as agriculture and technology experts at North Carolina State University.

RTP has been evolving from a Big Pharma cluster into one with a big ag tech component, notes Alexandria founder, chair and CEO Joel Marcus: “We’re seeing a lot of mainstream health care venture guys diversifying into agriculture, and we think, over the next decade or two or three, it’s going to be a huge opportunity.”

Follow Kaitlin Ugolik on Twitter at @kaitlinugolik.