Why We Invest in Ag Tech

Dec 12th, 2014

Farming may be one of the oldest industries, but there is no lack of opportunity for investment. Below are articles highlighting the need for innovations in agriculture, opportunities for investment, and the recent success of technology in the space.

Ag-tech could change how the world eats on Grand Haven Tribune

Venture capitalists are putting money into “ag tech” companies focused on anything from big data to drone technology, in an effort to feed the growing population without destroying the planet and turn a profit doing so.

“The food sector is wasteful and inefficient” said Ali Partovi, a Bay Area investor with stakes in multiple agriculture startups. “Silicon Valley has a hubris that says, ‘That’s stupid. Let’s change it.’” Investors and Entrepreneurs are working on doing just that. The booming activity around the ag tech sector has led experts to predict that its growth will outpace today’s hottest technologies in 5 or so years. In Q3 of this year, $269 million was invested into 41 deals in agriculture and food startups, double the amount invested during the third quarter last year, according to data from the Cleantech Group.“It’s going to be bigger than cloud software, it’s going to be bigger than Big Data, because everybody eats,” said Paul Matteucci, a partner at U.S. Venture Partners and founder of Feeding 10 Billion, a nonprofit organization focused on helping ag-tech entrepreneurs. Since 2009, investments in the sector have grown by an average of 63 percent a year.

Dozens of companies are creating technology to make farmland more productive and farming more efficient. Some are developing hardware or robotics, like Rowbot to automate farming practices while others are focused on software platforms, like OnFarm, that utilize data to inform management decisions. Farmers, for the most part, have welcomed new technologies into their world. “There is a kind of renaissance in technology in agriculture right now,” said Ryan Jacobsen, a farmer and executive director of the Fresno Country Farmers.

Surprise: Agriculture is doing more with IoT Innovation than most other industries by Jahangir Mohammed on Venture Beat

While growth in investments in agriculture technology is no secret, it’s a little known fact that farming has been, and continues to be, a leader in large-scale adoption for the Internet of Things (IoT). The global food challenge is pushing farmers to find better methods of feeding a population that’s expected to grow by 2 billion before 2050. From a business perspective, using IoT to improve farming practices makes sense. It improves operational efficiency, drives productivity, creates new revenue sources, and, ultimately, makes sustainability synonymous with profit.

Mohammed suggests, given the obvious benefits to farmers, the agriculture industry has emerged as a key testing ground for IoT strategy. There has been significant success in terms of productivity, pest control, conservation and continual value of service offerings beyond a product.

How young entrepreneurs are innovating in agriculture by Eleonora Crisafulli on News Hub

The ageing population of farmers has been, and continues to be, a global challenge. 50% of farmers in the US are 55 or older while in Europe the percentage of farmers under the age of 35 is incredibly low, 4.1% in the UK and 5.1% in Italy for example. However, young people involved in farming are beginning to bring their digital culture to the fields while tech startups are making agriculture their business. Crisafulli is calling it agriculture 2.0.

To support youth’s growing interest in agriculture, The EU Agriculture and Fisheries Council has just approved a document to support young farmers. The document will focus on access to credit, land and knowledge, and aims for generational change and innovation to invigorate the industry. In anticipation of more institutional incentives, the first push for innovation comes from young people who decided to bring their digital culture to agriculture, often combining ecommerce and organic farming. One such company is Contadini per passione, a group of entrepreneurs who grow an orange grove in Siciliy and use the web to promote and sell their products. 31-year-old founder Paolo Barbera commented on the new generation of agriculture, saying, “Arms aren’t enough. It is finally understood that agriculture also needs brains. It needs to involve new people, smart, dynamic, brilliant, so as to improve the relationship between innovation and tradition.”

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