On Clubhouse, there are plenty of conversations you might hear in a Palo Alto coffeehouse (product management, VC, bitcoin, Gamestop, the nature of consciousness, and the role of media), but virtually nothing about the most important industry on earth: agriculture. To try to change that, my friend Jake Joraanstad (CEO of Bushel) and I decided to host a room earlier today devoted to AgTech.
Thanks to all of the people that joined, especially the speakers. We had Sachi Desai (AI+strategy at Climate Corp), the legendary Matt Walsh, Adam Bercu (founder of Kiwi Technologies), Hector Ferndandez (formerly Cargill who joined during a bike ride), PJ Amini (at Leaps by Bayer, their VC arm), Sarah Nolet (dialing in from Australia and founder of Tenacious.vc), and Louisa Burwood-Taylor (dialing in from England and editor at AgFunderNews). It goes without saying that the opinions expressed by each of these individuals are theirs and don’t reflect their employer.
The conversation started off discussing the upcoming Farmers Edge IPO, probably one of the most exciting developments this year in AgTech. After hundreds of millions of dollars in funding going to Indigo Ag and FBN last year, this is equally as big news, mainly because it provides a liquidity event in FarmTech that doesn’t involve a sale to a big company.
A big topic was around the size of the IPO: is raising ~$100m (CAD) enough money? That’s not nearly the war chest of Indigo and taking on the burden of public markets is challenging for a startup company in growth mode. With majority ownership by Fairfax, the Canadian insurance giant, perhaps IPO was the only option for raising money, since institutional investors would want to wrest control away from Fairfax. No one had a good answer for why an IPO right now.
Matt Walsh noted that a key part of the Farmers Edge business plan in their prospectus was around data. Certainly if they can build a proprietary dataset and a data refinery to turn that data into value for the farmer, then it will be worth it. But, hardware is exceedingly expensive to scale unless the customer is paying for the hardware. Perhaps an analogous company is DTN, which built out a weather and price information network on farms; though it’s hard to call DTN a massive FarmTech success, nor are there many other DTN-like examples.
Another suggestion from the group was that Farmers Edge would use the weight of its equity value to make acquisitions. If Farmers Edge has a billion or more in equity to throw around, they could pick up a number of startups and buy their way into revenue, growth, and technology.
Farmers Edge naturally led into a conversation about Indigo Ag and its recent layoffs. No one was surprised by this: the founding CEO left last year and the new CEO is surely streamlining the company and realigning the strategy. Though the group was generally positive on Indigo and its vision to help farmers become more profitable, no one could articulate its past or current strategy. If rumors of an Indigo Ag IPO are true, the new CEO has some work to do in the market to articulate why the company is valuable and what it wants to be when it grows up.
Paimun (PJ) made a really insightful comment that AgTech still hasn’t found product-market fit or, in other words, there is no asset class for AgTech. An investor in biotech knows that if a firm is able to produce a drug, they will likely be able to produce more drugs and the methodology, technology, and business model are all well-known. There’s no such clear business model in AgTech. Though Jake tried to suggest that SaaS was going to win the day, the group was lukewarm, noting that no one has been able to build a sustainable SaaS business model in AgTech—one of the big reasons why major startups (Granular, Climate) were acquired by wealthy parents who could invest in software at a loss.
A closing thought from the brilliant Sarah Nolet didn’t receive enough attention, since we were at the end of the hour: Why are we focusing so much at the farm level instead of the supply chain? Perhaps we’ll focus on that as the discussion next week.
Overall, Clubhouse was an experiment and one that succeeded splendidly. Jake and I are planning on doing round 2 next week. What would you like us to discuss? Don’t got a Clubhouse invite? Ping us on Twitter and we’ll see if we have any remaining.