Silicon Valley Bets on the Farm
It's hard not to get nostalgic for simpler times when you drive past a farm. The wooden barns, rolling fields, and other bucolic scenery often look like something out of a Currier & Ives print; in a pleasant way it feels worlds apart from our always-on digital lives.
But come a bit closer and you might be surprised to find sensors spread out on the soil and irrigation systems watering seeds remotely without any help from a human. You'll even see farmers checking Androids and iPhones for the latest on futures and crop stats.
Welcome to the new era of farming, where advancements in the Internet of Things, Big Data, and the biotech industry intersect. Things have been trending this way for some time, but now that the so-called agtech (agriculture + technology) market has matured, investor interest is heating up and big agricultural companies like DuPont, Monsanto, and John Deere are gleefully acquiring smaller startups.
"A Big Opportunity"
In November agricultural biotech giant Monsanto spent $930 million for Climate Corp., a weather data-mining company in San Francisco launched by former Google executives. "Monsanto's acquisition opened investors' eyes about the value of data in agriculture," says Lance Donny, chief executive of Fresno, California's OnFarm Systems, a data management platform for farmers, or growers, as entrepreneurs like to call them. "AgTech is like the next Facebook. It's the a-ha moment when you realize that data in agriculture is worth so much."
John Selep, managing partner for AgTech Innovation Fund, a venture capital fund in Davis, California, agrees that the Climate Corp. acquisition was a milestone. In the business of taking publicly available weather data and turning it into a financial service for growers, the startup essentially functions as a form of crop insurance. Once larger companies saw that farmers were willing to pay big money for its insights--namely the ability to track how weather patterns would impact crops--they came to see big data in agriculture as a "big opportunity."
In the past seven years, the market has become more saturated and startups like Donny's began to have an easier time raising capital. Earlier this year OnFarm closed a Series A round worth $800,000 led by Investment Development in Boston and Launch Capital in Connecticut, as well as strategic and angel investors. He expects to raise more funding in the fall.
"Our next round later this year will be exponentially easier," Donny says with an air of confidence. "Traditional VCs realize agriculture isn't going away and that the technology is changing dramatically. They see what farmers are doing and they want a piece of that."
Not Your Grandfather's Corn Farm
Jeff Gaskill, a midsize corn grower in Weston, Missouri, has seen the benefits of adopting agtech. He relies on a smartphone app--he can't recall which, he's downloaded so many--to automate his irrigation systems for his crops. "I can turn it on, check the operations, even use a satellite picture to see where it is in the field," he boasts. "It's just pretty amazing technology." Whenever something goes wrong, he receives a push notification, then opens the text for more details.
Before purchasing the app, which costs $10 a month, managing the systems was "all just manual," which was a time-consuming "nightmare," Gaskill says. "You had to go out and do everything physically on the site." Now the irrigation app "will even turn on the motor and start it up."
Darren Furbeck, another midsize corn grower with 2,500 acres in Northwest Missouri, says that in the past year he's become so addicted to iPhone apps that track futures and pests, he can't go a day without them. With the pest app, he plugs in his region and the app "will say look for this, this, or this," he says of the information furnished by crop consultants. He credits Monsanto's commodity pricing app agIndex with helping him make at least $5,000 last winter, though he's sure the app has helped him make more.
For Farmeron spokesperson and sales associate Dave Saunders, the appeal of these apps is being able to bring all the data together in an actionable, time-saving way. His cloud-based software, which is compatible with any Android device, syncs up with any other farming software to help dairy farmers capture and record farm events and information in one place and then run business analytics on top of them to provide a dashboard view of how the business is doing. It's information at-a-glance that would take growers hours to cobble together otherwise.
"There's esoteric stuff," Saunders says of his company's software, which can analyze milk quality and trends, collect milking data from machines, and provides standardized milk sales forms. "You can run reports that are financially related, like how much you're generating at what cost and what your profitability looks like down to each individual animal."
Columbus, Ohio-based Farmeron charges growers 50 to 80 cents per animal, per month for a software subscription, including the app. Although the business model isn't common among most consumer-facing startups, several agtech entrepreneurs have found success tethering their app to a wider software ecosystem, mainly because they can charge thousands of dollars a year for them.
Saunders also claims operating in the cloud keeps costs low, while "making it easy to release new capabilities." "If you want to add a button, that's something that we can programmatically enable and surface for you and it doesn't take a release [of a new version], per se."
The Future of Farming
Donny, who's spent 20 years in software and founded OnFarm in 2012, believes the next hurdle for agtech startups will be providing only the data growers need for specific crops, and nothing more. "One thing we learned when our first product went to market was that we gave too much detail," he says. "Now we have a fully digitized drag-and-drop interface. If [the grower] just wants to focus on four things, he can have as much or as little data as he wants." The trick is "understanding what the user expects to see" when he logs in.
Beyond that, drones and the satellite imaging they can provide will also begin to play a key role in the business. "It [augments] silo data with precision imaging," Donny says. "But how do we use data to predict crop trends, then fully automate it and get that data back to the grower? We're several years from that, but that's where agtech needs to go."
With all the funding now flowing into the industry though, it may not take so long after all. Skybox Imaging, a San Francisco startup (and Inc. Audacious company), has raised $91 million "to index the earth the way Google indexes the Internet," says co-founder and director of marketing and customer relations Ching-Yu Hu. And lest anyone still doubt the market's strength, in December agriculture cooperative Land O'Lakes acquired Geosys, a Plymouth, Minnesota company that collects crop data via satellite.
Down on the farm, it appears the future has arrived.
JILL KRASNY | Staff Writer
Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.