The human being has always had a unique challenge in turning from nomadic to sedentary: produce more. Now, however, with 2050 on the horizon and the shadow of a global population reaching 9 billion, the challenge is to produce more, but in a more sustainable way. To date, there are several companies that hold the aim of making the world of agriculture more sustainable and – as a matter of fact – many of them have achieved great results in this direction while saving valuable resources.
A little Google search is enough to discover that there are thousands of startups orbiting in the AgTech world, each of them with their own characteristic features, such as the use of drones and satellite data to measure vegetative indices, sensors placed to weigh exact environmental parameters, agronomic modeling and artificial intelligence for predictive models, and so forth. However, there are very few companies that have succeeded in climbing this market and managing to establish themselves.
Why? What is the right key to actually hack this market? I believe that the right key word to always keep in mind is simply one: the farmer. Who is the farmer? How does a farmer think? How many different types of farmers can we find?
Several companies hold the aim of making the world of agriculture more sustainable.
Some time ago, talking to a farmer in Tuscany, he told me: “Here the soil changes every inch of the hand ” This is why I believe we could ideally apply the same thought process to the agri-food market.
Each country has its peculiarities in the agri-food sector: Italy has an average farm area of 30 acres (12 hectares) but holds a high production value, $ 4800 per hectare. France, our neighbor, has farms with an average area of 59 hectares, but with a lower production value ($ 2700 per hectare), in the USA the average area rises to 170 hectares and the production value is about $370 per hectare.
Already with this short analysis we can understand that the mind-set of the Italian farmer is totally different from that of the French farmer and even more while in comparison to the American one.
The farmer that manages a small business surface could be more interested in technology with a price that is surface scaled rated and provides low economic investments with an immediate advantage, while the American farmer is used to making high economic value investments, managing a larger surface area and having therefore the possibility to amortize his investments first.
Another important factor in AgTech is the type of cultivation. Farms with multi-year crops, such as orchards, vineyards and olive groves, have the opportunity to gain only once a year, but with high earnings. This consequently involves paying attention to the timing of customer acquisition and to the business model, as it may be more inclined to single investments than subscription fees.
Those who cultivate vegetables and seasonal products, thanks to crop rotation, can guarantee a constant income to the company, but with low earnings. These could then be the ideal customers for “SaaS models” but – for example – hardware products will need to be designed as temporary measuring instruments.
Only by considering these few remarks we can understand that in order to climb the agribusiness market one needs to know, and be able to interpret, the farmers mind.
Thanks to our Acceleration Program I was lucky enough to know and select for LVenture Group a startup and an entrepreneur, Revotree and its CEO, Cosimo Calciano, who amazed me with the focus on their target, the adaptability and vision of their business model: an IoT device boosted by AI technology for watering multi-year crops. Indeed, he is a thirdgeneration farmer and an electronic engineer, combined.
Perhaps it’s exactly people with this background that can better understand the market. But only time and carefully gathered metrics will be able to tell.
