By Hank Giclas and Stephanie Metzinger
Farmers across the world face the daunting challenge of producing 70 percent more food by 2050 to feed an ever-growing population. Achieving this dramatic increase in global food production will require a proactive approach to modernizing our food system.
Growers are “taking the bull by the horns” and implementing innovative practices on their farms to help them increase yield while facing more restrictive access to natural resources. However, they are not alone in their quest to save our food system and feed the world.
Across the food supply chain, there are a host of industry partners who are coming together and collaborating on solutions. These players are the academics who are researching how to get ahead of critical issues such as food safety outbreaks. They are trade associations that are advocating for necessary resources that allow farmers to continue to grow food, and the government agencies that are implementing initiatives to sustain a viable food supply. They are the entrepreneurs who are developing technologies to optimize growing practices and the investors who are providing capital that enable emerging businesses to build infrastructure and scale new ideas. Together, as partners, they are moving the needle to ensure a safe and sufficient supply of food for decades to come.
In 2017, Western Growers (WG) partnered with S2G Ventures (Seed 2 Growth) to launch a groundbreaking initiative to identify key innovations in the fresh produce industry, called the AgSharks® Competition. AgSharks is a live event, hosted at the WG Annual Meeting, where start-up companies compete for equity investments totaling up to $250,000 to support the development and growth of their businesses, as well as for farm acreage to pilot their technologies. These startups pitch their ideas to a panel of AgSharks—which is comprised of venture capitalists and growers—who will decide on the spot whether and how much to invest. The entrepreneurs must then accept the offer, negotiate or decline.
“We strongly believe that in order for entrepreneurship to be successful and innovation to take hold, you need to have the right stakeholders around the table,” said Audre Kapacinskas, vice president at S2G Ventures, a multi-stage food and agriculture venture fund. She refers to interested parties such as entrepreneurs, venture capitalists and end users like WG members. Kapacinskas also expresses how domain experts, like WG Senior Vice President, Strategic Planning, Science & Technology Hank Giclas, are key players as they have a deep understanding of current trends and challenges and are knowledgeable on what priorities matter to all audiences involved.
“Combining the capabilities of an association like Western Growers with all the resources that a corporate partner such as S2G Ventures can offer results in a unique innovation model of one plus one equals three,” said Kapacinskas. “Working together, we have taken a holistic approach to the advancement of our food systems and expedited the time it takes to develop and deploy emerging technologies that can have an extraordinary impact on the evolution of the industry.”
Though AgSharks is only going into its third year, the initiative has already produced tangible results. The three winners of the competition have used their winnings to elevate their businesses to the next level. Here is a look at where they are now:
Technology Offered: Hazel Technologies’ products are inserts that time-release active ingredients into the storage atmosphere of commercially-packed produce. The active ingredients biochemically fight spoilage by slowing the aging process and fight the proliferation of diseases.
AgSharks Winnings: $2 million in equity investment during the 2017 AgSharks Competition.
Startup’s Progress Since AgSharks:
• Funding: The $2 million contribution that S2G Ventures awarded to the startup during the AgSharks competition led to a $3.26 million Series A round. Just this July, the startup closed $13 million in Series B funding, bringing the company’s total private equity capital to $18 million.
• Expanding Client Base: In 2017, about a dozen customers were trialing Hazel’s products. Today, they are active in 14 countries, servicing more than 300 million pounds of produce this year and preventing upwards of 60 million pounds from going to waste. They also closed a final deal with Mission Produce (a WG member) and launched a formal partnership with the avocado giant earlier this year.
• Technology Enhancement: The company is launching new product offerings, along with the core product pitched at AgSharks.
• Expanding Employee Base: Going into the AgSharks 2017 competition, the Hazel team consisted of 14 employees; today, the company has 25 employees and plans to hire five more by the end of the year. Going into 2020, the startup expects a 10-fold increase in revenue, which will require the startup to expand its workforce to 40 team members.
“There’s really a quality partnership between S2G and WG, and I believe that they have built a community that promotes good emerging companies. You see a lot of these pitch-orientated competitions, but not a lot of them necessarily have actionable investment behind them. I think the dual system that S2G and WG have created where you get in front of customers to build customer confidence and get in front of investors to build confidence on the investment side is critical.” – Aidan Mouat, CEO and Co-Founder at Hazel Technologies, Inc.
Technology Offered: AgVoice is a mobile voice-interaction service designed for food and agriculture professionals to capture insights on the go. By using proprietary analytics and processing of raw voice files—including captured time stamps and location data—users can improve productivity and workflow management, increase documentation accuracy and gain valuable insights to optimize the use of resources in production.
AgSharks Winnings: A $250,000 convertible note at a $4 million cap, during the 2017 AgSharks Competition. The cap is the maximum price at which the note will convert. AgVoice is still in the early stages of growth and when it reaches the next round of growth, the convertible note will transform into a percentage of the company.)
Company Progress Since AgSharks:
• Funding: The startup closed a pre-seed round six months after AgSharks. With S2G’s help in networking with additional investors, AgVoice has expanded its network and is currently working on a seed round.
• Expanding Client Base: Since the AgSharks competition, customer interest in AgVoice has increased. AgVoice has gained early adopter customers and now has 10 large customers who are all participating in paid pilots.
• Technology Enhancement: The startup has grown its product from a mobile app to now a fully integrated product, where customers can easily integrate AgVoice into their existing food safety software. The company is in the midst of developing a seamless integration kit that will allow fieldworkers to work with their eyes free and heads up as they dictate food safety updates into the farm’s current data collection system.
“If startups have a solution that solves real-world problems, the AgSharks competition is the best ecosystem in the world for helping them get to the next level.” – Bruce Rasa, CEO of AgVoice
Technology Offered: Augean Robotics builds robots to help farmworkers work more productively, with the long-term objective of automating all of the tedious work performed on the farms and outdoors. Their product, Burro, is a robotic platform that follows workers, moves cargo autonomously, and captures the data needed to further automate farm work.
AgSharks Winnings: $250,000 in equity investment during the 2018 AgSharks Competition.
Company Progress Since AgSharks:
• Funding: The $250,000 equity investment from S2G Ventures played a significant role in helping propel the robotics startup to reach a $1.5 million seed round in April.
• Expanding Client Base: Augean has been working with the California Table Grape Commission and several WG member companies to deploy their robots in table grape vineyards across the state. The robots are assisting farmworkers who are picking 12 to 16, 40-pound bins per hour. After the implementation of the robots, table grape farmers are now seeing a 20-30 percent productivity gain from having Burro carry materials autonomously in the field.
• Technology Enhancement: As a direct result of the AgSharks winnings, the startup was able to launch a fleet of 16 Burros. The fleet has run for about two months now, racking up several hundred autonomous miles in a variety of fields including blueberries, blackberries, raspberries and grapes. Burro is now on its fifth version and the startup is working out the last kinks related to the autonomous movement of the robot. Augean anticipates that going into the 2020 season, the sixth generation of Burro will be available commercially to growers of table grapes.
• Expanding Employee Base: At the time of AgSharks, the company had four employees. Today, the company has seven team members, all who have a technical focus.
“AgSharks very directly helped us raise enough money to scale up and get a fleet of robots out there in the field. Also, as a result of the competition, customers are very apt to talk with us because if they Google us, they see how we are supported and backed by well-respected, well-regarded organizations like WG and S2G.” – Charlie Andersen, CEO of Augean Robotics
In addition to creating the AgSharks competition, S2G and WG are embarking on several other initiatives to accelerate technology in the food and agriculture industry.
“Through AgSharks, we’ve created a foundation that will allow us to be more fruitful beyond one event each year,” said Kapacinskas. “We are now going deeper with members to identify specific pain points and opportunities that can result in serving the grower/shipper community and ag network in a more engaging manner.”
S2G is fully engaged with WG in developing a deep understanding of member concerns and works directly with both WG and its member companies to develop strategies and bring technology forward to address those concerns. S2G holds a unique position within the WG Food Safety, Science and Technology committee, which is comprised of 20 members of the WG Board of Directors who are involved in routine discussions with the board about priority issues for the association.
In addition, WG and S2G staff work together to conduct “deep dives” with select WG members to better understand technology needs, problems, markets, etc. These one-on-one conversations with leaders in the produce industry are invaluable for both WG and S2G as they provide detailed information on technological needs, how things are being received and the potential for them to scale.
WG also engages companies that S2G has invested in with member trials, as appropriate, and S2G has full access to the innovation sessions that originate within WG or the WG Center for Innovation and Technology. S2G is currently participating in WG’s automation initiative as well as the Association’s food safety and data initiatives.
“Through these initiatives, we are hoping that the industry will get increasingly capitalized to push forward with innovations that are still in a nascent stage,” said Kapacinskas. “We anticipate that in the future, we can be more preventative and have a concrete system in place that allows us to test and deploy in a turnkey manner.”
The S2G – Western Growers relationship is extremely valuable to Western Growers, as it allows the Association to marry deep domain expertise that originates from staff and members of WG with a massive technology pipeline administered by S2G and their expertise on what is necessary for a startup to succeed in the early stages of development. Together, the two organizations are poised to help these companies succeed and bring solutions to the industry much more quickly.