Date: Jul 21, 2022
Magazine:
July/August 2022

By Walt Duflock, Vice President of Innovation

The 2022 Automated Technology Field Day was held in June at the Hartnell East Campus in Salinas, Calif. There was a great crowd with over 150 attendees and a great mix of growers, startups, and equipment dealers were in the audience. It was probably the largest agtech field demo day for startups since the Forbes AgTech demo day in 2019.

I talked to growers that were asking some in-depth questions to the startups about business models, service areas and pricing. I also talked to startups that were able to move conversations forward and start some new ones. In short, the event did what it should do: it gave growers and startups a chance to engage and get conversations turned into valid opportunities…or not. Conversations at and leading up to the event provide some clarity around the state of the market for agtech automation:

1.  There is continued fundraising momentum in the automation space. Recent fundraising includes $45 million for FarmWise, $27 million for Carbon Robotics, $10.9 million for Burro, and $20 million for Tortuga. This indicates that startups are making progress toward targets set by investors and are able to secure additional funds that are needed to scale. This is good because it indicates that startups and investors are learning to set expectations that can lead to future fundraising success for startups that execute well.

2.  Overall, it is still very early in automation. As part of the Harvest Automation Report, we talked to more than 50 automation startups and found that 75 percent do not have any venture capital raised and the other 25 percent only have gone through an A or B round. Traditionally, the first group is still in product design and build mode and not ready for market, and the second has built a version 1.0 product and is just starting to get into market and/or accelerate sales and marketing efforts. Serious scale rarely starts before C round funds are raised. There’s a long way to go to get automation solutions tested and scaled.

3.  We need more events like the Hartnell event. Talking to growers and startups at and since the event, it is clear that the in-person event gets both sides focused on the topic at hand: What needs to happen to get automation solutions into field trials and/or sales motion? The agtech industry should work to deliver more of these events and do it at scale. Sales pipelines are the lifeblood of any startup, and these events can help build pipelines and start or improve relationships. Luckily, there are multiple events coming up that can help, including these two excellent opportunities: (1) FIRA USA – October 18-20 in Fresno, Calif., which is focused on specialty crop automation solutions; and (2) World Ag Expo – February 8-10 in Tulare, Calif.

 

The promise of agtech automation solutions is growing and the need for them is accelerating. Given the decreasing availability of farm labor, the increasing usage of H-2A labor for immigrant workers (which pushes costs for labor higher but makes them more predictable), and the overall cost of labor of all sources from regulation (minimum wage, overtime, break rules, and adverse wage regulations), the need for more automation solutions in agriculture has never been more urgent.

Growers and startups can see the promise and the need but based on the reality that few automation startups have raised a C round, there is still a lot to be done. Growers are still not seeing enough solutions to address the labor shortage and solve the economics of it. Growers need to be open to more field trials and willing to have candid conversations with startups that have potential solutions that are not ready for market. Startups need to be open to these discussions and walk away when the grower feedback indicates a lack of market fit. Conversations that turn into pushy sales pitches make the space harder for everyone. As always, startups need to really listen to the customer to hear the feedback being delivered. If growers give candid feedback and startups can listen and make product changes, the entire space can move forward more quickly.

The biggest reminder from Hartnell—it’s not enough for automation solutions to just complete the task (i.e. harvest the crop or weed the field). The solution has to do the task at economics that work for the grower (i.e. weeding robots that weed perfectly but cost $600/acre will never get a field trial) and ideally leave economics in play for a potential sales partner like an equipment dealer. It’s the job of the startups to understand and develop product that meets economics demanded by growers, including the preferred buying metric ($x/acre or $x/yield metric) and current spend to complete the task. Both of these can vary by grower.

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