By Walt Duflock, Vice President, Innovation
The cost for an agtech startup to build its initial product and get it into market are among the highest for any tech segment. It frequently runs $50-100 million to get a version 1.0 product into market with partners or direct sales teams that can sell and support it.
Roughly two-thirds of that cost is the initial product effort, including both early R&D and product development, and the rest is spent on getting the product into market and into customer fields, often in multiple markets (a requirement because growers typically need multiple growing regions to support year-round product availability).
This type of fundraising requirement can work for weeders and thinners, where one automation solution can work on multiple crop types with minor adjustments. However, for harvest automation, where in most cases it takes one startup to succeed for each crop type, this amount of fundraising can be very difficult. The total market for a solution for one crop is a lot smaller than one that can handle multiple crops. Also, the amount of product development effort for something that requires a gentle touch (like harvest) is much more stringent than weeding or thinning, which destroy weeds or extra plants by design.
Given that, the more that can be done to reduce the capital and time required for agtech startups to get to a 1.0 version of their product, the higher their chances of success. Western Growers is working with multiple partners on a tech stack that can help by producing a set of reusable “Lego style” components that can be used by all agtech innovators (big and small). This will help with reusable image libraries and other key components that are important requirements but are not huge competitive differentiators. This means they can be commoditized, and startups can focus on the key areas where there is intellectual property (IP) to be protected and valuation to be captured by the startup.
Even as the tech stack is getting developed, it is clear that startups are getting the message and standardization is happening on multiple fronts. First, in the operating system (OS) space, which startups need to act as the brains of the entire automation solution, more and more startups are leveraging Linux or ROS (Robotic operating system) as their core architecture OS. Over the last couple of years, fewer startups have felt the need to develop a brand new ag-style OS and have opted to go for industry standards like Linux or ROS because they keep improving and it gets harder to justify the investment in a new OS that only your startup will be using.
Second, the device format for a lot of the key players is beginning to standardize. Startups like Verdant Robotics and Stout AgTech have, from launch through development, focused on a “back of the tractor” implement format which allows them to leverage tractors that almost all farmers have so they can concentrate on just developing the machine that does the task. Recently, Carbon Robotics and Farmwise, two of the leading players in weeding robots along with Stout and Verdant, redesigned their core products to a back of the tractor format. This may seem trivial, but the cost and time savings it generates can be significant.
Third, the use of standard image libraries has begun in strawberries, thanks to some great work by John Lin of the California Strawberry Commission and the Cal Poly Strawberry Center. Lin has led the development of the initial library, and the efforts behind it to get all startups to better understand what is possible (and what isn’t) for various types of image libraries.
Taken individually, this looks like three straightforward advancements—standardized OS options for agtech startups, standard implement format for the equipment, and standard image libraries. I believe the stronger point is that all three are happening at the same time. This is a good sign for the space because it means the startups are acknowledging there is no competitive advantage to spending extra time on OS/implement/image library development, and instead are focused on development in the areas that are more likely to generate intellectual property that can be protected and secure an advantage in the marketplace.
In the long run, this should be good for startups because cycles for R&D and product development should shrink, along with their capital requirements. I expect this standardization to continue and extend to other items, which will help costs and time required for startups to decrease further as more components are standardized. Equally important, it should be good for growers because quicker startup cycles will help get the products into field trials and into market faster, and that’s the best result for growers, who are ready to adopt new agtech when solutions are ready for market.
