IRAN IS MOVING ALL VEGETABLE GROWING INTO GREENHOUSES
Iran will be converting all its vegetable farms to greenhouses within 10 years, The Financial Tribune reports.
Its agriculture minister expects to save 10 billion cubic meters of water per year with the shift to protected ag. The Financial Tribune reports that Iran had 10,000 hectares of greenhouse cultivation. The plan is to increase it to 48,355 hectares over 10 years.
Almond trees are blossoming with flowers and soon they will be blossoming with financial opportunities.”What’s good is now you can invest in farmland if you’re not a wealthy individual. So, before it was institutional investors putting in millions of dollars, buying an entire farm, managing it. Now you can invest for as little as $10,000 and own a portion of a farm,” said Brandon Silveira, FarmFundr founder Silveira is a 4th generation farmer and founder of FarmFundr, a crowdfunding website that wants to make it easier for people to own farms without having to do all the work.
The website just launched and allows everyday people to own crops. “We have state of the art technology where you click invest, it goes into escrow and you own a farm. It’s pretty much that simple,” said Silveira.
A property in Lemoore is one of the first pieces of farmland people can invest in. Silveira is hoping to get 30 investors to buy into the farm. Investments start at $10,000 and depending on the crop, you can choose how much of a risk you want to take. “What we want to do is spread the risk out for investors as well. So you can invest in an almond orchard, a vineyard, some row crops. We want to people to spread their risk out, just like any other farmer,” said Silveira. Silveira said employees will take care of the day to day farming operations. He said investors will be able to monitor their investments through the web site and by pictures and videos. The goal is to keep people connected to the land and hopefully, their cash crops.
FarmFundr has three properties in the Central Valley now and if all goes well, they could have more properties around the country available in the future.
SILICON VALLEY AND VENTURE CAPITAL FIRMS BET ON AG START-UPS
Agriculture is suffering from a massive investment deficit. “At least $200 billion a year,” says Rob Leclerc, AgFunder. “It’s an industry hungry for capital.”
At the same time, ag lacks the proper financial infrastructure necessary to make it work. “There is no natural link to the capital because these ag tech companies and opportunities are not in places like California or New York. They’re typically in rural areas,” he explains.
As an entrepreneur looking to launch an ag start-up with partner Michael Dean, Leclerc experienced the disconnect firsthand. “I really saw how difficult it was to attract investors while at a global ag investment conference in 2010. The industry needed a lot of education and hand holding,” he says.
To bridge the gap, the pair founded California-based AgFunder in 2013. “We think food and agriculture is a place to literally put your money where your mouth is,” Leclerc says. “We all eat. It’s not going to go away, but we need to do ag smarter. To help get us there, we believe the future of agriculture is going to be driven by technology.”
Once seen as a long shot, a deal worth over $900 million that same year drew the attention of investors who had never given an industry steeped in tradition a second glance.
“In late 2013, there was a flood of Silicon Valley and venture capitalists (VC) trying to get into ag tech after Monsanto acquired Climate Corporation. It was a frantic, ‘You better get in before it’s too late mentality’, ” says Aaron Magenheim, founder of Ag Tech Insight.
“Investors assumed there must be 100 more Climate Corporations out there and you needed to get on the bandwagon and start investing to find the next one,” says Brian Jones, COO, Iowa Corn Growers Association.
In reality, Jones continues, Climate Corporation wasn’t purchased for its earnings or short-term revenue potential.
“It was bought to integrate with the other tools Monsanto is developing, and the strategy is to offer it as a package with other valuable tools to the farmer, which is still evolving. It’s still too early to say whether they’ve got it figured out yet,” Jones says.
PICKING A FAVORITE
According to the AgFunder AgTech Investing Report for 2015, investment in food and ag tech start-ups reached $2.36 billion in 2014. The following year, investments soared to an impressive $4.6 billion. The categories that drove growth were food e-commerce, precision agriculture and irrigation, and water technology.
Although money was now pouring into agriculture, that didn’t necessarily mean investors were making the right wager.
“The ag tech market will be the next worldwide, multibillion-dollar industry, but if you don’t bet on the right horse, you won’t win,” says Magenheim. “Many jumped on the ag tech train, but its direction was running opposite from what farmers actually needed.”
Silicon Valley, he says, has led a technology revolution for years and has the technology and investment infrastructure to do the same in agriculture.
“The issue is that it doesn’t have the most important part: people who have the experience and truly know the needs of farmers and production farming,” says Magenheim.
Over the last few years, Leclerc says they have seen a confluence of new technology, including mobile computing, machine learning, drones, digital imagery, robots, and automation mature all at once. “Oftentimes, however, these technologies were a solution looking for a problem. A start-up had a really cool technology and was looking for a market,” he says.
Start-ups that gain the most traction, Leclerc adds, are those that take the opposite approach. “In order for a technology to take hold in agriculture, an ag tech start-up has to find the real pain points and focus on a solution for the grower or someone else in the ag value chain,” he says.
Jones says there are probably over 1,000 companies right now with a widget, some interesting analytics, or technology they think is valuable. Yet, less than 5% will make it to the market or to the farmer.
“The tough economic environment agriculture is currently in will really weed out the good from the not-so-good ideas,” he explains. “To be successful, ag entrepreneurs need to focus on creating companies that reduce costs, increase yields or improve efficiencies, and deliver benefits that farmers can actually measure. If the benefits are not clear, farmers will not invest. It’s that simple.”The other issue, believes Douglas Hackney, is the time line expectations of investors. “Traditional technology VC is built on 10-year funds.
VC-funded companies must exit via an initial public offering (IPO) or acquisition within that 10-year life to deliver a financial return to the VC’s limited partners (LP) who provide the money for the fund,” says the president of Enterprise Group, Ltd. “It takes a few years to identify suitable start-ups and to deploy the capital from the 10-year fund. For the VCs to deliver their promised financial returns to LPs, the start-up must IPO or get acquired for 10 to 100 times the VC investment within as little as five to seven years.”
Those time lines, he says, do not work in ag because adoption rates are slow. “It can take five to seven years just to gain market traction in ag tech,” continues Hackney. “This means VC-funded ag tech companies will be under extreme pressure to sell out early or to get shut down by the VCs who control their boards.”
That said, Jones believes traditional VCs can work in ag. “They have to be prepared to understand the market they are playing in, though,” he says. “I think too few in the past have done that and that’s why I think they struggle.”
“There are problems in agriculture that are not easy to solve because you are working in a dynamic environment, which makes it hard to come out with a solution that demonstrates a return on investment,” says Leclerc. “It’s not that it can’t be done. It will just take a number of years of development to get there.”
Jones agrees and says, “It takes a long time for this technology to get to the market. It’s complicated and must be integrated carefully within the appropriate ag value chain. I think that is underappreciated by VCs who are unfamiliar with ag.”
Ultimately, Leclerc believes the innovations that emerge over the next five to 10 years will make this sector more investable to investors.
ALTERING THE ANTE
This past year saw a pullback in venture dollars.
“Investments dropped 20% year over year for the first half of 2016,” says Leclerc. “We expect that total investment levels for 2016 will come in lower than 2015, as continued caution – and perhaps discipline – is exercised in some of the subsectors that were growth drivers in 2015.”
“We saw high investment in ag tech in 2015, but investors are starting to realize this is a marathon and not a sprint,” says Magenheim. “Investments are trending more toward smaller and earlier stage investments without the expectation of everyone being a billion-dollar company but rather a profitable $100 million company that provides great solutions for farmers and is sustainable.”
The ag opportunities may not be big by traditional VC standards, but they are big for agriculture, says Jones. “There is still plenty of room to play for those who really want to understand ag.”
Mergers, Magenheim believes, will also drive the industry forward. “There will be a lot of consolidation of ag tech solutions in the next few years, so there will be many opportunities to accelerate success,” he says.
THINGS SILICON VALLEY SHOULD KNOW ABOUT FARMERS
Looking to disrupt agriculture as we know it, Silicon Valley start-ups are focusing much of their attention on technology and big data in the ag sector.
Todd Janzen, an attorney in Indiana who specializes in agricultural law, offers his insight on the mistakes these firms are making in assuming farming is just like any other business.
Farms are a business. “New companies entering the ag market should treat their potential farm customers as sophisticated business owners, not relatively uneducated consumers who make split-second purchasing decisions,” he says.
Farming is relationship driven. “Even before cell phones, email, and the internet connected everyone, farmers were tightly knit into their local communities,” says Janzen. “This is because the local community provides so much for the farm – from the local church, grain elevator, and café to the hardware store. Farming is built on these relationships, and farmers are loyal to the people they know. If you want to sell your product to farmers, you need to develop those relationships.”
Farmers are experimenters. “I think farmers have always been tinkerers, willing to experiment here and there to see if they can squeeze a few more dollars out of their production costs,” he says.
“If farmers seem really interested in your new start-up product, it may be a sign you’ve got something. Or it may be a sign that farmers like to experiment. If you cannot deliver a consistent return on investment, year after year, farmers will move on to experimenting with something else.”
There are no shortcuts to results. Janzen firmly believes big data will revolutionize farming. However, he says new companies entering the market should not overpromise results. “Show farmers how your product or program will increase yields by 3% but only cost an additional 1% per acre, and they will come. Promise them a 10% increase and only deliver 3%, and they will quickly leave,” he says.
There is no prize for collecting the most junk data. “We are in the midst of a digital land grab,” says Janzen. “If I added up all of the data start-up companies’ claims about how many acres they have in their databases, I would probably get a land mass of three times the size of the United States. Having acres of data in your database means nothing if it is junk.” It’s also where he sees a lot of companies going wrong. “In an effort to prove they have more acres of data than competitors, they are uploading data without determining whether it has any value or if it is accurate,” he says. “Eventually, this junk data will come home to roost, skewing big data analytics and causing farmers to doubt company promises.”
LAUNCHING A START-UP
The idea for IntelliDrive began when Rusty Kordick was asked to plant a customer’s soybean field. “He had a John Deere 1990 air seeder,” recalls the Iowa seed salesman. “After planting around contours in the field, I realized I was overlapping where I previously planted because the current machine only allowed for half of the planter to be shut off. I only needed three rows planting, but instead, I had all 17 planting. It was frustrating.”
Wanting to investigate further, Kordick asked the grower for his planting vs. harvest maps to learn exactly how much was being overplanted.
“On a square field, the result was 4% to 6% overlap. On an irregular-shape field, it could be up to 23%,” he says. “I talked to multiple growers. They all had the same problem. On average, each was overplanting 10% to 12%. In a 1,500-acre field, he would waste $8,700 or more a year on excess seed. Another pain point I discovered was that the air seeder wasn’t accurate on population. It was always a guessing game when changing seed size.”
LAUNCHING A START-UP
His solution was IntelliDrive. The attachment is a direct replacement manifold for John Deere and Case IH air seeders.
“The system takes a two-section machine and converts it into a 12-section machine to help minimize overlap,” explains Kordick. “My partner, Ryan Hanrahan, and I are accomplishing that by replacing the existing manifold with a manifold that is controlled by 12 electric motors. Each electric motor will run two to three sections depending on the size of the machine. To enhance a machine’s performance, growers will be able to calibrate different seed sizes to take the guesswork out of the population.”
While the pair knew they had a solid solution to a real problem in agriculture, resources and mentors were limited for the rural Iowa start-up. By enrolling in the University of Iowa’s Venture School, Kordick and Hanrahan were exposed to real-world experimentation and valuable mentor feedback to increase their chances for success.
“Venture School is a six-week accelerator designed to help a start-up take an idea from concept to market validation,” says Wade Steenhoek, Venture School instructor. “This school not only accelerates the start-up process, but also increases an inventor’s chance of success by 20%.”
The program challenged the pair to create a business model and to put their hypotheses to the test by having them talk to potential partners, competitors, and customers. “Getting potential customers involved in the product development process has been invaluable,” Kordick says.
Almost seven months after completing the accelerator, they are still asking questions about their product and tweaking the design to make sure IntelliDrive is what customers are looking for.
“Our goal is to make the attachment as easy as changing a tire,” Kordick says. “By redesigning the manifold, we are making it a little easier to install and work on.”
No matter the innovation, cost and return on investment are also critical to success. Although price varies based on the size of the machine, Kordick says, “We want the ROI to be one year for a larger grower and three years for a smaller grower.”
CHINA’S SILICON VALLEY SPARKING 49 TECH START UPS
China’s answer to Silicon Valley is experiencing a surge in new technology companies as the world’s most populous nation reduces its reliance on manufacturing.
Beijing’s Zhongguancun district birthed 49 startups daily last year as innovation takes root in the country, Wan Gang, the nation’s minister of science and technology, said Wednesday at a briefing for the National People’s Congress in Beijing. China now has more than 1,600 technology incubator.
Zhongguancun is home to a raft of established Chinese technology companies, from PC maker Lenovo Group Ltd. to search engine operator Baidu Inc. Xiaomi Corp., the nation’s biggest smartphone vendor, was established in the district five years ago and has reached a valuation of $45-billion to become the world’s most valuable startup.
“As innovation and entrepreneurship gain popularity, many high tech, small-and-medium-sized enterprises and micro enterprises are writing the wonderful story of Chinese innovation,” Wan said. “Entrepreneurship has gradually become the spark that started a prairie fire.”
The country now has more than 1,000 organizations investing in startups with capital exceeding 350 billion yuan ($56-billion), Wan said.
Along with the new companies, China is also experiencing a surge in technological innovation. The country had more than 660,000 effective invention patents last year, up 12 per cent from a year earlier, Wan said.
Xiaomi has already backed 27 startups and plans to fund as many as 100 new companies, Chief Executive Officer Lei Jun said March 6.
New Disruption The investments are designed to help Xiaomi expand from smartphones and tablet computers into smart home products from cameras to security systems and air purifiers, Lei said.
Traditional businesses in China are ripe for disruption by innovative startups, Baidu’s Chief Executive Officer Robin Li said in a briefing earlier Wednesday. Internet finance is a “very hot” area for development, as services including banking, insurance and consumer credit can all be improved online, Li said.
“The market economy in China is only a few decades old so it is not very mature and not particularly efficient,” Li said. “Using the Internet to do it all over again, we can see that there are many chances.”