Bayer+Microsoft: A digital platform for agriculture?
While I was in Los Angeles, soaking up some sun and visiting with space companies (plus clocking my millionth mile on United), AgTech was having a big week.
My instinct, like Louisa Burwood Taylor at AgFunderNews, is to ignore press releases about “partnering” with a cloud provider. It’s akin to a company announcing that they’re using Slack to improve internal communications. Nope: you’re actually a customer, just like everyone else.
Let’s assume though, that this is something very real and and that Bayer is building out a digital platform for building better software in agriculture. Because that would be a very interesting announcement, indeed.
What is a digital platform? It’s a set of software, services, and data that make it easier to build software. iOS is a platform because it contains a development environment (where you write the code), lots of UX widgets (like buttons), services (like Apple Pay), and many other out-of-the-box features. If you had to build all that from scratch, it would take a lot longer to build an application. Key to a platform is that you’re only a platform if others build on top of you.
Should there be a digital platform in AgTech? Whatever would it do?
I certainly can imagine some shared data services. FieldView already has the ability to integrate with other pieces of software to share things like field boundaries, perhaps that could be part of the platform. External data, such as USDA data or NOAA weather data could be very valuable.
I can also imagine taking the data refinery approach, and combining sets of data to create standard services. Satellite data could automatically identify fields or a crop production forecast could be built from weather data. That’s a tough, crowded business; I should know, as a cofounder of Descartes Labs.
Perhaps there’s a much, much bigger play here.
Great Plains and Microsoft Dynamics (i.e, enterprise software) have a big footprint in agriculture. So does Microsoft itself as an OS and IT platform, so much so that I still can’t do a Google Meet with most ag corporations: it’s all Teams. Perhaps this is a venture into moving its cloud business into agriculture, to make sure GCP can’t get a hold on these companies and lose valuable Office contracts to Google Docs.
Building a digital platform targeted at big agricultural companies could be a perfect solution, as they’re all struggling to become more innovative and digitally nimble.
Imagine a development environment where all the data is easily available(satellite, weather, price, etc.), there are widgets for all kinds of agronomic analysis, functions like payments are standardized, and there are integrated tools for communication (e.g., text messages). Then, instead of a massive investment in expensive, scarce engineers from MIT, ag companies could focus their development resources on the product itself.
I have trouble believing that this platform company could exist within a drug and chemical conglomerate; but if they truly believe that digital is the future of ag, why not try to create the platform that runs the whole thing?
Let’s check up on it in 6 months.
Second, FBN announced another huge round of funding. Last time they raised money, I suggested that they buy up AgTech startups. Instead, they followed a wiser path, focusing on their customers and their core business. They continue to hint at an IPO, though these days it seems that anyone can IPO (see Farmers Edge’s laughable Q3 results; and resulting stock crash).
However, I can’t find anyone though who really understands FBN’s business. Any good perspectives? Thoughts?
Finally, GROWMARK+CHS announced a venture fund for breakthrough AgTech. What’s most interesting here to me is the following line:
“The combined markets of the two companies cover millions of acres and thousands of farmers that will create an industry-leading test field for products and services within North America.”
Capital can come from anywhere; access to potential customers is absolute gold. I’d love to see the two cooperatives create a beta technology platform to distribute to farmers at scale. One of the biggest problems in getting an AgTech company off the ground is farmer adoption. With a network of farmers primed to try out new technology, that could be a real accelerant for portfolio companies.