Fear and hoping in San Francisco

The collapse of Silicon Valley Bank introduced a potent counterbalance to the inherent optimism among the start-ups, investors and supply chain participants gathering last week in San Francisco for ReThink Events’ Agri-Tech Innovation Summit.

In three consecutive conferences held over five days devoted to animal tech, ag tech and foodtech, more than 3,500 delegates exchanged notes on the well-known challenges facing agriculture in the shadow of an unfolding banking crisis that moved from a potential sale of SVB toward confirmation of some contagion into Europe over the course of the week.

For those closest to agriculture’s LP/GP nexus, the conference provided a chance to look back at 2021’s market highs, when global annual agtech fundraising more than doubled to hit $53 billion before falling just as rapidly in 2022 to land at $29 billion, according to AgFunder. It set the stage to ask important questions about why certain start-ups were so unprepared for recent macroeconomic changes and how the path toward exit remains so unclear in many subsectors this far into the market’s overall development.

Temasek, International Farming Corporation, CPP Investments and many other institutional investors joined panels alongside corporates including Walmart, Syngenta, PepsiCo and others. On and offstage, investors described advising portfolio companies that can afford to avoid coming into the market now should do so, as most agreed recent turmoil would encourage a continued “wait and see” approach among LPs as SVB’s dust continues to settle.

“The potential upside – if there is an upside – is the market potentially bottoming earlier,” said S2G Ventures chief investment officer Sanjeev Krishnan on a panel devoted to the agtech mergers and acquisitions outlook. “In this market, we’ve been down about 20 percent for about two years, and it may go down another 5 or 10 percent. The more we can just bottom, from a market perspective, and just get it over with, that provides a little bit more certainty to capital markets, corporates, etc. It sounds like the government is really committed to doing whatever it takes on the liquidity side.”

Although panelists’ discussions were inevitably weighed down by a sense of uncertainty renewed, the programming provided attendees with an astonishing display of human effort and innovation aimed at solving problems both age-old and new.

A NASA team described how its network of satellites has created a field-by-field map detailing the near real-time state of agricultural production in war-ravaged Ukraine. One start-up described trees designed for maximum CO2 absorption suitable for use on marginal land, while another detailed UV light’s potential for use in robotic pest control. Microsoft and Bayer announced a strategic collaboration focused on agricultural data management and artificial intelligence.

Calls for increased partnership in an ag sector traditionally trailing its counterparts in collaboration were a constant. The week also saw many speakers invoke the ongoing energy transition in saying both conventional and innovative supply streams will be equally vital.

Verdant Robotics co-founder Gabe Sibley responded to a co-panelist’s familiar invoking of the size and scope of challenges facing production by reminding that innovations such as those being pursued by companies at the conference – in his case robotics and automation – also have the potential for massive societal impact equating to a “one-way trip for humanity.”

“Ten thousand years ago, 20,000 years ago, we settled down and we started agriculture. It radically decreased the health of the human population. We have been subservient to the land. Now, we are actually going to emancipate ourselves from the land,” he said. “The value that we are going to be able to unlock is massive. It’s really exciting times.”

Such ambitious sentiments are an essential component of all investment conferences and can help explain the well-established connections between agriculture and the species of nature-loving venture capitalist native to the Bay Area.

These connections may be tested over the coming months but will likely prove an essential component to the strengthened ‘agtech 2.0’ inevitably waiting to be heralded as soon as conditions can support it.