Five years ago, Google executive chairman Eric Schmidt started a venture capital fund called Innovation Endeavors, with the goal of providing early-stage capital to startups innovating in old industries.
It made early investments in Uber, the car share company, now one of the most highly priced startups in the world, and Addepar, which uses big data to analyze portfolio risk, started by Palantir executives.
Now the fund, which has just one limited partner in Schmidt, has shifted gears, venturing into environmental investments. On Monday the fund announced it is leading a $9 million round in a company called CropX, founded in 2013 by Isaac Bentwich. The company, which started out in New Zealand and now has headquarters in Silcon Valley and Tel Aviv, uses big data to help farmers save up to 25 percent of water used to grow crops.
“We did not have a focus on sustainable agriculture to begin with,” says Dror Berman, Innovation Endeavors’ managing partner. “Our mission has been to enable the next generation of companies.”
A New Mission
It’s one of the first investments as part of Innovation’s involvement with something called Farm 2050, a cross-industry collaboration with companies ranging from fertilizer producer Dupont, to search engine giant Google, to supply chain management software company Flextronics. The partnership has the goal of increasing farm production by 70 percent by 2050, to meet the global demand for food from a human population that is expected to reach 11 billion by that time. The partnership was launched at the end of 2014.
As the drought in California shows, it’s not a trivial concern, especially as food and water are inextricably linked. By some estimates, California’s agriculture industry uses 80 percent of the state's water. Nationally, the statistics are less pretty. The U.S.'s 140,000 farms use upwards of 90 percent of the nation’s water, and more than 90 percent of those farms don’t use any form of advanced water management tools, according to a recent study by the Department of Agriculture.
So there's clearly a need for new firms innovating in agriculture technology, as well as an opportunity for businesses. In the past year, Innovation has received requests for funding from 400 agriculture technology startups, Berman says. And in March of 2014, it participated in a $10 million investment in Blue River Technology, which uses data science, the cloud and robotics to help farmers manage nutrient delivery on a per plant basis.
For its part, CropX, is all about better irrigation. It uses a combination of sensors placed in the ground, cloud based software and an application that can be downloaded to any mobile device, to analyze irrigation data and produce a detailed map that allows farmers to control how much they're watering in a particular field, based on the plants' needs.
“We save water and boost crop yields,” says Bentwich, who adds it takes just three sensors to manage 125 acres of farmland.
CropX is testing its products and services in an advanced beta in more than a dozen farms in Colorado, Kansas, and Missouri. It plans to roll out services to as many as 1,000 farms in 2016, using three tiers of service for which it will charge between $4 and $18 an acre, with progressively more sophisticated irrigation data and capabilities. Savings to farmers, Benwtich says, can be from $12 to $100 an acre. Sensors are provided as part of the package, and there's no need for expensive equipement upgrades, a critical factor considering the extreme cost sensitivity of farmers.
While technology like CropX’s is a start, environmental business experts say the goal shouldn’t only be to increase production. Another important area of focus should be food production waste. Nearly one third of food produced today is wasted or winds up in landfills, by some estimates.
“If you’re throwing out [one third] of food, you’re also throwing out 1/3 water,” says Andrew Winston, an environmental strategist and founder of Winston Eco-strategies, in Greenwich, Connecticut.
And food producers could increase food supplies by 50 percent by getting rid of waste, adds Brad George, a professor of entrepreneurship at Babson College who specializes in sustainability.
Still for Berman, Farm 2050, and Innovation Endeavors, investments in companies like CropX are just the beginning. Berman says he envisions applying IT and data analsysis to agriculture, ultimately, the way it’s being applied in enterprise today.
And the data that CropX will collect on farmers’ fields to help them water more intelligently should also help the next generation of agriculture technology build even better software platforms and services for agriculture.
“Over the next decade or so, the first successful digital agriculture companies will pave the way for others, which in turn will be able to go to market more quickly with more data,” Berman says, adding that these companies should also be critical in managing food production by 2050.