Soil sensors, drone crop protectant applicators, laser-weeding robots, oh my! Where do the ideas for inventions in agriculture come from?
About Startup Companies
While an idea may start with anyone, one way these ideas come to fruition is as a startup company. Let’s say Nancy Normal has an idea for a brand new farm implement. She thinks a LOT of farmers could use this implement, and she could make money on the idea. What should Nancy do?
Those who work in the invention and innovation space may be familiar with a few options, namely incubators and accelerators.
An incubator supports startups in the initial stages of their company. The startup has an idea but no business model or direction about how to make the idea a reality. The timeline with an incubator is open-ended and focuses on forming a legal entity for the company, patenting the idea and other basic steps.
Let’s say Nancy is a bit further along. Pretend that with the help of her engineer friend, Eddy Engineer, she completes the implement design, and they patent it. Nancy and Eddy decide to go into business and form a small corporation. Initially they are the only shareholders. However, neither Nancy nor Eddy know how to commercialize their idea and produce it on a large scale.
Who do they talk to now?
In this situation, Nancy and Eddy may look for an accelerator instead.
Accelerators work with startup companies on a several-month-long timeline. During this time frame, the startup works with mentors and capital provided by the accelerator. During and after the program, the startup may begin pitching their business to investors. To be selected by an accelerator, Nancy and Eddy’s idea must appear to be quickly scalable and investable.
Why does a startup need investors? For individuals willing to put their own money and assets at risk, it might not. However, investors may be able to contribute large sums of money which can help the inventor take their idea to the next level in sales.
Why would someone invest? Let’s look from the perspective of a venture capitalist. Think about ABC’s “Shark Tank” – the sharks are venture capitalists. Their goal is purchase stock in the small corporation and become shareholders. The purchase money can be used by the startup to scale up and commercialize their production – producing many units with relative efficiency. Once the startup has shown commercialization potential, the venture capitalist hopes Nancy’s startup will attract a large company, like John Deere or Case IH. Once they attract a large company, the venture capitalist hopes to sell the startup to the large company for more money than what they invested.
Nancy, Eddy and their venture capitalist investors sell the company and cash out.
In reality, startups are working all around us. Some survive; some don’t. Some are purchased by big companies; others continue as small businesses. Let’s learn more about where we see agricultural startups in the real world.
Where does this happen in the real world?
In 2017, John Deere acquired Blue River Technologies, a company that hoped to make farming more sustainable through robotics and computer vision. Blue River Technologies started in 2011 as an idea between two Stanford graduate students and was supported along the way by a grant from the National Science Foundation and venture capital from four investment groups.
In October 2018, I had the opportunity to attend a venture capital event closer to home. The Golden Angels Investors (a group from the Milwaukee area and Wisconsin) hosted AgTech Venture Day. Fifteen startup companies with an agricultural connection presented their products, business plans and financial requests to investors and other attendees. The startups included cell phone apps for farmers, autonomous drones for spraying, genetic traits, chemistry processes, animal health monitors and more.
I was so excited to share with my father and brother about the startup companies but was disappointed by their response. For example, when I mentioned the autonomous drones for spraying, my father informed me that the version I showed him wouldn’t work – it didn’t have space for the volume needed to combine water and crop protectants. It was amazing to me that a company had made it all the way to a group of investors without having already learned this – didn’t they talk to farmers?
I don’t know whether that startup had consulted with farmers, but I hope in the future, they do. It made me wonder – do we need a partnership between farmers and startup accelerators to serve as mentors when agricultural innovations cross the table? Perhaps it would further serve as an opportunity for farmers to learn about agricultural technologies before the general public has grabbed hold and formed an opinion and to participate as new technologies enter the regulatory landscape.
If you’re interested in learning more about technology start-ups, a few agriculture-specific venture capital firms I’ve run across include Pontifax AgTech and Cultivan Sandbox.
If you have an idea for a startup, your local economic development corporation may be able to point you to local incubators or accelerators. As you develop your idea, you can apply to the UW Law School’s Law & Entrepreneurship Clinic for free legal services for Wisconsin startups (including items like entity formation, contracts, patents, etc.).
In addition, the American Farm Bureau offers the Ag Innovation Challenge each year. The Ag Innovation Challenge is in its fifth year and was the first national business competition focused exclusively on rural entrepreneurs working on food and agriculture businesses. The application process typically opens in August.
Kelly Wilfert is a member of the Manitowoc County Farm Bureau. Her family’s farm raises fresh fruits and vegetables, cash grain, and processing vegetables. Kelly is currently a student at the University of Wisconsin Law School in Madison.