Chicago Forum: ‘Data is my least favorite word’

Though agtech’s promise emerged as a theme throughout most of the panels at the Agri Investor Forum in Chicago this week, the session devoted to technology had a more specific focus: the challenges of slow adoption by farmers and the effects of a recent investment raft.

Led at first by venture capital firms and more recently joined by large established companies throughout the agriculture industry, agtech investment reached $1.2 billion during just the first half of 2017, according to research cited by the panel’s moderator.

Much of it has gone to digital marketplaces linking farmers with consumers, farm management software, robotics and others, the speakers said. Several panelists highlighted biotechnology as currently being the most exciting subsector, with one saying the industry was now approaching many of the scientific breakthroughs that had been overhyped by the media amidst the introduction of GMOs during the 1990s.

One investor noted that their firm is looking at between 500 and 700 new companies every year, with plans calling for investment into just 12 over a five-year cycle. As investment levels have increased in recent years, another said, there has also been a decrease in the number of what they labeled as “meaningful” agtech companies, from as many as 600 a few years ago down to 150 today.

“We’re getting a natural reallocation to the winners and there’s really no doubt that the IP [intellectual property] rollup has begun in a very, very significant way,” the panelist said. “The idea is not picking just winners, but surviving as the rollup happens. When a firm goes down, quite often the best IP goes somewhere else where it is better deployed.”

Data binge

Panelists agreed that new technologies have dramatically increased the amount of data farmers can capture, outpacing the industry’s ability to translate that data into value for the farmer.

“Data is my least favorite word in the world and I’ve spent 20 years in technology, healthcare and ag,” one panelist offered. “If you focus on a system that creates data, all you are doing creates an expense for the consumer. It’s the information that is the value you get out of it. The analysis that provides actionable information is what is valuable.”

The slow adoption of new agricultural technologies was seen as a key challenge currently facing agtech investors. In response to this difficulty, one panelist described how their firm is focusing on investments that embed new technology within existing software platforms, tractors and irrigation systems, rather than those that require farmers to install distinct new systems.

“The investment would have to be in less data entry, moving away from trying to get farmers in front of a computer and instead trying to get them out into their field, because that’s where farmers spend most of their time,” the panelist said, when asked to describe a theoretical $100 million agtech investment they would like to make right now. “If you’re building technology that drives farmers to an office, you are always going to struggle with a technology adoption problem.”

Another speakers observed that, in many cases, the issue stems from the fact that agricultural technologies have evolved quicker than the support system necessary to facilitate their adoption. Investors should be aware, the panelist said, that without an underlying infrastructure of education and IT support, the pace of adoption by farmers is likely to stay the same.

“If you roll out a new product right now in Silicon Valley that’s an IT product, you have this entire ecosystem that helps you with adoption of the technology, implementation of the technology, support of the technology, at almost no cost the firm that is building the technology,” he said. “In ag, that doesn’t exist.”