food/agtech an investment thesis
TRANSCRIPT
Unsustainable Agricultural Model
Monocultures are eroding biodiversity among both plants and animals.
Soil is eroding much faster than it can be replenished
Water is consumed at unsustainable rates
Problems in our current Agricultural Model
Monocultures are eroding biodiversity among both plants and animals.
Monocultures provide vulnerabilities to the supply chain Disease Loss of other plants/animals to the food chain
Plants and animals selected due to predictability of growth under particular conditions. Global warming not just causing higher temperatures, but more
unpredictable conditions 12 Plants provide 75% of total food supply 15 Mammals + Birds provide 90% of livestock
Problems in our current Agricultural Model
Soil is eroding much faster than it can be replenished — taking with itthe land’s fertility and nutrients that nourish both plants and those who eat them.
Each year, an estimated 24 billion tons of fertile soil are lost due to erosion
It takes approximately 500 years for 2.5 cm layer of fertile topsoil to form under agricultural conditions.
On a global scale, around 10 - 20% of drylands and 24% of the world’s productive lands are degraded.
Problems in our current Agricultural Model Water is consumed at
unsustainable rates in many agricultural areas.
Agriculture responsible for 70% of freshwater usage
Increase in water demand of 55% by 2050
Increased urban population directly correlates to increased demand for meat, itself water intensive.
1000 gallons for 1 gallon of milk 440 gallons for 1 pound of beef
Parallels to Renewable Energy Investment Broken Long Term Model
Focused on short term profits and growth at the expense of long term health and sustainability
Same Setbacks Global Warming causing volatility in commodity prices and in turn
uncertainty in the underlying economic model Without Change Collapse of the system isn’t fantasy
By 2050 Additional 2.25 Billion people in urban centers 5 Billion more people on earth Water Usage ⬆ 55%
Food & Agriculture Investing In Infancy
Venture funding in the agriculture space has risen from $400 million in 2010 to $4.6 billion today.
Agriculture historically slow adopter of new technologies
Few liquidity events. Agriculture has largely been dominated by large companies. Agtech= new way of doing business.
Why Now?
Agriculture represents $7.8 trillion industry, or ~10% of global GDP
Minimal penetration into even the most high profile/best-funded subsectors
Farms increasing technology investments even with falling commodity prices and net income
Increased demand for impactful investments due to shifting mindset on importance of sustainability in portfolio construction
The Landscape – Subsectors (1/2)
Data from Slides 9-14 Pulled from Crunchbase, Agfunder
The Landscape – Subsectors (2/2)
Proof of Concept – Alternative Protein Ripple Foods
Overview: Ripple Foods produces a Pea based dairy alternative. Their products are less intensive on the environment, contain more protein, and less
Funding: Ripple Foods have raised $44 million over two rounds. Investors include GV and Khosla Ventures.
Opportunity: Milk alternatives have been gaining market share due concerns of milk’s nutritional value and increasing prices. American
Startup of Interest – Smart Equipment & Hardware Amber Agriculture
Overview: Amber Agriculture helps farmers monitor and manage the condition of their crops in storage through a system of sensors. Farmers can leverage the sensor data to make changes in real time to conditions like temperature in humidity.
Funding: Amber Agriculture has raised two rounds. Key investors include SOSV.
Opportunity: Food production consumes 10% of the total US Energy Budget, yet 40% of what gets produced ends up getting thrown out due to inefficiencies in production, harvesting, storage, packaging, distribution, and consumption.
Proof of Concept – Decision Support TechGranular
Overview: Granular provides a enterprise management
platform for farms to aggregate data to one location, Funding: Granular has raised $25 million over two rounds.
Key Investors include Andreessen Horowitz, GV, Tao Capital Partners, and Khosla Ventures.
Opportunity: Enterprise software represents a $300 billion dollar market. The current market is ~10% penetrated. Agriculture is a slow to move market and has shown recent willingness to spend on technology even when net income is down.
Startup of Interest – Drones & Robotics
Abundant Robotics Overview: Deliver robotic systems for the hardest
jobs in agriculture. Funding: N/A Opportunity: Wages, salaries, and contract labor
expenses represent roughly 17 percent of total variable farm costs and as much as 40 percent of costs in labor-intensive crops such as fruit, vegetables, and nursery products.
SourcesOrganic Consumers
Harvard School of Public Health
Agriculture Marketing Resource Center
Organic Consumers
Forbes Worldwatch Institute
Ajit Niranjan TechCrunch BCGSustainability:
Science, Practice & Policy
University of Illinois
Federal Reserve Bank of Atlanta
Kansas State Newco Shift TakepartUnion of Concerned Scientists
Pew Charitable Trusts
Food and Agriculture Organization of the United Nations
Bloomberg Vishal Vasishth OECDScientific American
Scientific American
New Haven Register
Foodtank Natural Resources Defense Council
Union of Concerned Scientists
Agfunder