Fall 2016 issue of Horizons

Annual VC Investment in Ag-Related Tech

While these are still highly relevant technologies and areas for further innovation, the breadth of innovation in agricultural production is expanding into other areas such as microbials and precision agriculture. Microbials are microorganisms such as bacteria that can be beneficially applied in ag production to provide desirable outcomes such as improved disease resistance or improved efficiency in the uptake of nutrients from soil. The BioAg Alliance, a partnership between Monsanto and Novozymes to research and commercialize sustainable microbial products, is a recent example of the potential for microbials in the market. Precision agriculture is another major area of opportunity. Increased computing power and the integration of networked hardware and software (i.e. the “internet of things”) has made precision agriculture a reality. Precision agriculture, broadly speaking, is the use of historical data, satellite imagery, drone and robotic technology and real time or near real time production data to better manage and optimize production activities. Precision ag integrates one, some or all of these aspects into decision making and management processes. The pace of innovation is also accelerating. Breakthroughs in genetic sequencing, enhanced computing power and the connectivity of hardware and software solutions is speeding up the innovation cycle in agriculture. Potential solutions can now be identified, tested and validated faster than ever before. The digital nature of some of the new areas of innovation, such as those in precision agriculture, also creates a much faster iteration cycle than what was historically experienced (for example with traditional breeding or genetic trait development).

$5B

$4.6 B

$4B

$3B

$2.4 B

$2B

VC INVESTMENT

$0.9 B

$1B

$0.5 B

$0.5 B

$0.4 B

$0B

2010

2011

2012

2013

2014

2015

Source: AgFunder.com, AgTech Funding Report 2015: Year in Review

Continued advances in traditional innovation channels, combined with the introduction of new innovation channels is harboring in an unprecedented era of developments in ag-technology. Growth in Ag Related Investment There has been an explosion of ag-related investments over the past couple of years. Multiple factors are driving this including: the recognition of supply and demand dynamics for the global food supply chain, the rapid expansion in innovation and the increasing adoption of innovation. This increase in investment is highlighted in recent venture capital data. As depicted in the graph above, there was an explosion in ag-related investment in 2014 and 2015. While the growth in investment will, in all probability, slow down going forward, we expect investment to continue to grow and be more in line with 2014 – 2015 levels than 2010 – 2012 levels. The broadening of innovation channels (such as into IT hardware, software, drones, etc.) provides many new avenues for investment, but also increases the supply of investment

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