Cultivating ag tech

Examining how the agriculture industry is being reshaped by

technology
The technology market
intelligence platform.
CB Insights software lets you predict, discuss, and
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@cbinsights
#agtech

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 December 12 – 13, 2017 | San Francisco, CA

A-ha! is a gathering of Fortune 1000 executives, investors,

academics, and startup founders discussing the next wave of
ideas and technologies that will shape our world.
SPEAKERS INCLUDE

Daymond John Liza Landsman Mudassir Sheikha Benedict Evans

The Shark Group Jet.com Careem Andreessen Horowitz

Star of ABC’s Shark Tank President Co-founder & CEO Partner

and CEO Sold to Walmart for $3.3B MENA’s $1.2B Unicorn “Working Out What’s
Happening Next” at a16z
FUBU
Founder/CEO
About the lead analyst
Nikhil Krishnan
Research Analyst, CB Insights

Focuses on Healthcare, Agriculture, Construction, and VC Trends

Published research and data analysis have been featured in The

New York Times, Wall Street Journal, Financial Times, Bloomberg,
and CNBC, among other major media outlets.
@nikillinit
Graduate of Columbia University

nkrishnan@cbinsights.com

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Table of contents
9 What is ag tech?
10 Macro trends
20 Private market activity
35 Role of corporates
50 Monsanto case study
48 Business models, approaches, and trends
67 The next frontier of agriculture

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What are we analyzing in
Ag tech?
We’ll be analyzing hardware/software companies that
are changing the way produce is grown and
distributed.

Private market funding data will be focused on

companies that use technology as a key differentiating
point where agriculture is the primary use case.

While we will briefly talk about how genomics and

genetic engineering are changing seed design, this
presentation will not be talking about agricultural
biotechnology or farming products (e.g. pesticides).

9
Ag tech:
Macro trends

10
Agriculture is in the spotlight
How Data Science and Gene Editing Will
Transform Farming
October 15th, 2017

11
 Agriculture commodity
prices slowly decline

Prices for agriculture

commodities have slowly
declined since 2011 and
have stagnated in the
last year. Farmers are
looking for ways to
improve their margins
and profitability while the
prices stay low.

World Bank 12
Agriculture takes a massive toll on water supply

Ceres 13
 Erratic weather harms
crop production

Climate change is
creating more
unpredictable weather
patterns, taking a toll on
farmers. Technology
allows us to build better
models and find more
weather-independent
solutions to growing
food.

EPA 14
Especially around the world

Source: WRI 15
 Agriculture is one of the
least digitized sectors

Agriculture is at the
bottom when it comes to
digitization. The lack of
existing IT infrastructure
could also provide an
opportunity to create
new systems without
extensive overhaul.

McKinsey 16
 In the not-too-distant future, precision
agriculture may evolve to a point that
farmers will be able to monitor,
manage and measure the status of
virtually every plant in the
field…Precision farming is a big deal. It
is an area almost certain to shape, if not
define, the future of our industry.
Samuel R. Allen
CEO, John Deere

John Deere 17
 Mobile penetration is
growing

Mobile is becoming more

of a staple in countries
around the world,
enabling more people to
use connected
technologies. Most of
these productivity
increases are happening
in countries where
farming is a larger
percentage of the labor
force.

GSMA 18
 Cheaper, Better LEDS Falling Cost of Sensors
A confluence of new
technologies have
arrived

Several technologies are

enabling the changes in
agriculture today. LEDs
are getting better;
sensors are getting
Better, More Ubiquitous Robots More AI – More Data Handled cheaper; robots are
becoming more reliable;
and new techniques
allow us to ingest
massive datasets.

Quartz, Goldman Sachs., IFR Statistical Department, CB Insights Blog 19

Ag tech:
Private market activity

20
The Climate Corporation acquisition triggered
an uptick in ag tech interest

CB Insights Trends mines

a massive corpus of
media articles to enable a
data-driven, real-time
method to discover,
predict, and plot the arc
of rising expectations
and excitement.

CB Insights Trends 21
 The Climate Corporation
demonstrated data
demand

29.6x Valuation Growth In 6 Years

The Climate Corporation
proved the demand for
ag data, and grew a
business by nearly 30x.
Major winners in this
investment were early
investors (New
Enterprise Associates,
Index Ventures, First
Round Capital and Allen
& Co.).

CB Insights 22
Global equity funding since 2013:

$1.5 Billion
across

453 deals
23
 Ag tech is picking up
speed…fast

Activity in the ag tech

space has significantly
increased, with 2017
already more than
doubling last year’s
funding numbers and on
track for 65% growth in
deals. Interest has slowly
been building since 2013,
with a big jump in 2014
after Monsanto acquired
the Climate Corporation.

CB Insights 24
 Ag tech Series A and B
is maturing

Early-stage deals into ag

tech dominated 2013-
2014, with seed/angel
deals taking off in 2014
and taking 58% of all
deals. Since then the
industry has slowly
matured, with Series A
deal share growing
significantly in 2015.
2017 has seen some mid
and later stage deals,
especially at the Series B
but also D and E+ as well.

CB Insights 25
Biggest ag tech deals since 2013
COMPANY AMOUNT/ROUND QUARTER SELECT INVESTORS

$200M/Series B Q3'17 Bezos Expeditions, Softbank Group, Data Collective

$41.1M/Unattributed Q1'16 Mistui & Co., Kleiner Perkins Caufield & Byers, Osmington

$40.5M/Series D Q1'16 AllianceBernstein, IKEA Group, GSR Ventures

$40M/Series B Q3'14 OpenAir Equity Partners, Thorndale Farm

$40M/Series B Q1'17 Acre Venture Partners, GV, DBL Partners

26
 Ag tech is
geographically spread
out

Even though California

takes the majority of
deals, It’s notable that
more than half of all ag
tech deals happened
outside of the major tech
hubs (CA, NY, MA).
Colorado had a
particularly strong
showing, including
several deals specific to
indoor agriculture such
as Grownetics and
Infinite Harvest.

CB Insights 27
Grants becoming increasingly common AG TECH GRANTS
for ag tech companies
Grants are becoming an
increasingly popular
financing mechanism for
ag tech companies.
While most grants are
small, some are greater
than $4M. The grants
come from the
government at both the
Federal and State level,
as well as some
corporations.

CB Insights 28
 Ag tech exits spiked
after the Climate
Corporation acquisition

After the acquisition of

The Climate Corporation,
acquisition of ag tech
companies picked up
significantly in 2014.
However since then it
has tapered. 2017 saw 1
ag tech IPO, of
CropLogic, which went
public on the Australian
stock exchange and is
now valued at less than
$10M.

CB Insights 29
Biggest ag tech exits 2017 has seen some
Acquired by Monsanto recent successes
Valuation: $1.1B

The Climate Corporation

has been the largest exit
in the space, but recently
we’ve seen John Deere
Acquired by John Deere and DuPont make
Valuation: $305M
midsize acquisitions,
indicating agribusiness
companies are
interested. These exits
are also relatively capital
Acquired by DuPont
Valuation: $300M efficient, generating
sizeable returns for
investors and could
possibly catalyze more
interest in the space.
30
 Number of unique
investors sees a huge
surge

The number of unique

investors into ag tech
companies jumped after
The Climate Corporation
acquisition, but 2017 has
seen even more growth.
More than 200 investors
made at least 1
investment in ag tech in
2017 so far, a 64%
increase from 2016
already.

CB Insights 31
 This is especially true
for VCs

VC involvement in the ag
tech space has been flat,
with the same number of
VCs investing in the
space between 2014 and
2016. 2017 however saw
a huge jump in interest,
with 118 VCs making at
least one ag tech bet.

CB Insights 32
VCs are putting out ag tech theses

“In agriculture, everyone agrees that

maybe not right away but say in 15 years
water will be expensive, healthy soil will
be scarce and it will be more expensive to
farm outdoor than inside. Why wait to
work on that problem until it’s a crisis?”

Rob Hayes
Partner, First Round Capital

Source: TechCrunch 33
Most active ag tech investors Most active investors
2013 – 2017 YTD (11/2/2013) are diverse

Y Combinator topped the

list with 10 portfolio
companies. Corporates
from different sectors
made up 3 of the top 10
most active investors.
We’re starting to see
more ag tech dedicated
funds (Middleland
Capital, Omnivore
Venture Partners,
Pontifax), accelerators
(SproutX, THRIVE), and
crowdfunding platforms
(AgFunder).
34
Ag tech:
The role of corporates

35
 Corporates are
increasing ag tech
activity

From barely any

participation in 2013,
corporates are playing an
increasingly important
role in the ag tech space.
Nearly a quarter of all
deals in 2017 included a
corporate, compared to
5% in 2013.

CB Insights 36
 The number of
corporates involved in
ag tech is increasing

The number of
corporates investing is
also going up, though it’s
still small in absolute
numbers. Corporates
from pharma, tech,
agribusiness, robotics,
etc. are also becoming
active players.

CB Insights 37
Agribusiness & chemical corporations: deals and acquisitions Agribusiness moves in
2013 – 2017 YTD (11/3/2017) private markets

For a lot of the large

agribusiness corporates,
their private market
activity focuses on
consolidation in their
space. BASF and
Monsanto were the most
active (and have
dedicated VC arms).
Many corporates invest
across healthcare and
food production, given
their interconnected
nature.

Source: CB Insights Business Social Graph 38

Agribusiness corporates are getting involved with accelerators Corporates partner with
accelerators

Agriculture corporates
have been getting more
involved with startup
accelerators focused on
the ag tech sector. This
strategy gives them
access to early-stage
startups as they develop.
Many of these
accelerators are based
outside of the major tech
markets (or outside of
the US altogether).

\ 39
Monsanto is looking at agriculture applications
of data science
“…Data science is going to touch broad
swaths of our life. What we are seeing is
more efficient, more specific, accurate
applications of fertilizer, a much deeper
understanding of disease in plants and
addressing disease at a much earlier stage.”

Hugh Grant
CEO, Monsanto

Source: Wall Street Journal 40

 Monsanto shifts focus
to investing

In earlier years,
Jan 2011 – December 2013 Jan 2014 – December 2016
Monsanto made an
aggressive move to
acquire companies
across the agriculture
spectrum (genomics,
seed biotech, ag data,
etc.). Recently the
company has ramped up
its investments while
scaling back its
acquisitions.

CB Insights Business Social Graph 41

 Monsanto patents over time Monsanto patents
2010 - 2016
Monsanto has stayed
relatively consistent with
the number of patent
applications. The general
gap between patent
applications and patent
grants is small, which
could be due to a host of
reasons, but most of the
patents we tracked
received approval.

*Patent filing process involves a

significant time lag before the
423 340 333 306 525 406 400 430 446 483 370 447 303 465
publishing of applications. This delay
2010 2011 2012 2013 2014* 2015* 2016*
can range from several months to
Patent Applications Patents Granted over two years.

42
 Monsanto’s top phrases in patents (by significance) Analysis of Monsanto’s
2010 - 2016 patents

2009 2010 2011 2012 2013 2014 2015 2016 Most of Monsanto’s
cultivar soybean soybean soybean soybean soybean soybean wheat patents are focused on
corn cultivar corn cultivar corn cultivar corn soybean
applying different genetic
combinations to different
soybean corn cultivar corn cultivar corn cotton cultivar
popular crops. This can
icon cotton container derivative composition composition cultivar cotton
be used to increase yield,
packaging derivative transformation plant trait derivative canola derivative make crops resistant to
cotton plant derivative culture derivative trait derivative composition certain pathogens, and
raster canola plant cotton wheat wheat wheat container
accomplish many
other outcomes.
gene tissue tissue container container plant composition cell

file complement cotton seed plant cotton dna control *Patent filing process involves a
promoter seed complement tissue canola resistance sprayer dna significant time lag before the
publishing of applications. This delay
can range from several months to
over two years
43
 Monsanto’s top phrases in patents (by significance) Analysis of Monsanto’s
2010 - 2016 patents

2009 2010 2011 2012 2013 2014 2015 2016 Most of Monsanto’s
cultivar soybean soybean soybean soybean soybean soybean wheat patents are focused on
corn cultivar corn cultivar corn cultivar corn soybean
applying different genetic
combinations to different
soybean corn cultivar corn cultivar corn cotton cultivar
popular crops. This can
icon cotton container derivative composition composition cultivar cotton
be used to increase yield,
packaging derivative transformation plant trait derivative canola derivative make crops resistant to
cotton plant derivative culture derivative trait derivative composition certain pathogens, and
raster canola plant cotton wheat wheat wheat container
accomplish many
other outcomes.
gene tissue tissue container container plant composition cell

file complement cotton seed plant cotton dna control *Patent filing process involves a
promoter seed complement tissue canola resistance sprayer dna significant time lag before the
publishing of applications. This delay
can range from several months to
over two years
44
 Monsanto’s top phrases in patents (by significance) Analysis of Monsanto’s
2010 - 2016 patents

2009 2010 2011 2012 2013 2014 2015 2016 Most of Monsanto’s
cultivar soybean soybean soybean soybean soybean soybean wheat patents are focused on
corn cultivar corn cultivar corn cultivar corn soybean
applying different genetic
combinations to different
soybean corn cultivar corn cultivar corn cotton cultivar
popular crops. This can
icon cotton container derivative composition composition cultivar cotton
be used to increase yield,
packaging derivative transformation plant trait derivative canola derivative make crops resistant to
cotton plant derivative culture derivative trait derivative composition certain pathogens, and
raster canola plant cotton wheat wheat wheat container
accomplish many
other outcomes.
gene tissue tissue container container plant composition cell

file complement cotton seed plant cotton dna control *Patent filing process involves a
promoter seed complement tissue canola resistance sprayer dna significant time lag before the
publishing of applications. This delay
can range from several months to
over two years
45
 Some patents lend clues
to new technologies

Monsanto has hardware

and software patents for
some technologies
involved in seed sorting
and monitoring which
leverage machine vision.

CB Insights Patent Data 46

 The Climate Corporation
continues Monsanto’s
data push

While Monsanto’s
patents are still focused
on seed types, the
Climate Corporation has
been filing patents
looking more into the
farm hardware space as
well as continuing to use
its data to build more
sophisticated models.

CB Insights Patent Data 47

Ag tech:
Business models and approaches

48
 STARTUPS ARE
CHANGING FARMING

Startups are changing all

different aspects of the
farm. How they’re
changing it and what
parts they’re applying
technology to vary. This
market map helps
segment some of the
different areas of ag
tech.

CB Insights Blog 49
 WHAT FARM COSTS ARE BEING TARGETED?

Operational
Expenses

Overheard
Expenses

Iowa State University 50

 Placement in the supply
chain

Understanding the
different points in the
food distribution supply
chain can help sort who
the buyers of
software/products are
and the specific pain
points that they’re
solving (or how they’re
reformulating the supply
chain altogether).

The National Academies of Sciences Engineering and Medicine 51

Does the technology replace, enable, or create processes?

Completely automates parts of the

Replace farming process

Makes existing processes more

Enable efficient or scalable

New processes created by technology

Create that didn’t exist previously
Farm management software Farm management
software

Dashboards which
aggregate all relevant
information farmers
need to run their
operations. They make it
easier to spot
inefficiencies in their
systems and track their
production over time.

CB Insights 53
Sensors Sensors

These companies
provide hardware
solutions that provide
data streams about the
performance of crops,
soil conditions, health of
machines, and more.

CB Insights 54
Farm robots Farm robots

Robotics being used on

farms. Some of these
automate the more labor
intensive processes in
the fields, while others
are creating new ways to
assess farm health (e.g.
drones).

CB Insights 55
Next gen farms Next gen farms

These companies
leverage new technology
to create entirely new
farms or greenhouses.
This is usually a
combination of LED
lights, aquaponics,
robotics, vertical farming,
and nutrient blends.
These are some of the
more capital intensive
startups.

CB Insights 56
 Today Tomorrow? Trend 1:
Decentralization

The dropping cost to

operate farms and the
ability to have farms in
more environments
(especially closer to the
end consumer) means
that growing produce
has become more
decentralized. This
means fewer supply
chain shocks, new types
of farmers, and food
produced closer to the
consumer.

Harvard 57
 Trend 1 (cont.):
Decentralization

Lower upfront and

operating costs for new
farms make farming
more accessible to the
average person (urban
farms, modular farms,
vertical farms, etc.). This
creates more local
networks and produces
supply that can
supplement the produce
from large farms.

Freight Farms 58
Much cheaper than the smallest farm
Approximately
$7308
Monthly Operating
Expense

VS.

Freight Farms
$1170

*Different types of
farms have different
operating costs
Iowa State University 59
 Trend 2: Accumulating
leverage

Software tools are

aggregating the leverage
of small and midsize
farms while also
providing them
necessary tools and
information about other
farmers. With more users
on their platforms, these
companies can negotiate
for better prices and
perform some of the
functions farming
cooperatives currently
fulfill.
Farmers Business Network 60
 Trend 3: Integration

Many companies are

moving from one layer of
the ag tech stack to
another in order to
capture more data per
customer. Companies
that are building
proprietary datasets are
moving into the service
layer, and some
companies are starting
with a full-stack
approach from the start.
This is especially true for
hardware companies,
which have become
commoditized.
FarmersEdge 61
 Trend 4: Mobile sees
Mobile-focused ag tech companies
strong footing in ag tech

The number of mobile

users in the agriculture
industry is increasing,
especially in field-related
use cases. This is
important in emerging
markets particularly,
where mobile is the
primary computer.
Mobile plays a variety of
important roles (remote
monitoring, information
dissemination, data used
for ag financial products,
etc.).
CB Insights 62
Trend 5: Fintech +
Agriculture

New tech-enabled farm

financing startups
believe data can better
predict crop pricing and
offer financing options.
Speed of financing is
especially important in
agriculture, where
extremely short time
windows exist to ramp
up production due to
seasonality.

63
Crop insurance is using alternative data

64
Crop insurance is using alternative data

65
Crop insurance is using alternative data

66
Ag tech:
The next frontier of agriculture

67
AI deals heatmap – agriculture is nascent but growing

Source: CB Insights AI Deals Tracker 68

5 use cases for AI + robotics in agriculture

69
 Could farms become
fully automated?

Robots are becoming

more advanced and
cheaper. As they become
more widespread on
farms, will we reach a
point where they aren’t
needed at all? Many of
the new indoor farms are
near fully automated.

Youtube 70
 Genomics
Agriculture Healthcare/ advancements move
Pharma forward in agriculture

Thanks to the dropping

Gene Sequencing cost of sequencing and
new gene-editing
techniques,
Genotype Driven R&D developments in
genomics are happening
in both agriculture and
healthcare. Fast
DNA/RNA Detection experimentation cycles
and demand for higher
yield and higher
resilience seeds means
CRISPR
many genomics
(Gene-Editing)
companies are going to
agriculture to test these
new technologies.
71
Companies are coming for Monsanto via
genetic engineering
Description: Indigo uses genetic
sequencing to analyze crop
microbiomes, then designs
beneficial microbial formulas that
improve crop health and increase
yields. Its first product, Indigo
Cotton, increased yield 11%
without increasing water usage.

Disclosed Funding: $319.5M

Select Investors: Flagship
Pioneering, Alaska Permanent
Fund
72
Gene edited food is coming
DuPont aiming to engage consumers on
genetically edited crops
October 24th, 2017

73
Rewriting the supply chain allows for increased
produce variety
Description: Apeel turns agricultural
byproducts into invisible (and
organic) coatings for fresh
produce, to protect produce before
and after harvest. This can reduce
waste in farms and grocery stores,
limit pesticide use, and extend
produce shelf life.

Effects: Produce that could not

previously survive long supply
chains now can. “Local” produce
from around the world becomes
more accessible.

74
Apeel patent pictures show benefits
Photos from a recent Apeel patent application show the difference between fruits coated with
Apeel’s formula and uncoated fruits; the uncoated fruits tend to shrink, shrivel, and grow moldy.

Patent: Plant extract compositions and methods of preparation thereof 75

 Alternative proteins

Will food preferences

change entirely,
increasing the need for
specialty farms? Insect
protein as an alternative
is one area that has been
getting a lot of attention
in the media as a more
sustainable alternative to
meat. New plant
alternatives for meat
could change demand
for livestock and certain
replacement crops.

CB Insights Trends 76
Select meat & dairy replacement startups Investors aim to disrupt
2012 – 2017 YTD (6/18/2017) animal-based industries

Since 2012, dozens of

investors have backed
startups designing plant-
based beef substitutes,
nut- and plant-based
milk, insect protein
snacks, and other
products with potential
to reduce consumption
of animal products.

CB Insights 77
Pea protein replicates seafood

Description: New Wave Foods is

creating plant-based seafood,
starting with a shrimp product
made with pea protein and algal
oil. It plans to launch its products
in early 2018.

Disclosed Funding: $200K

Select Investors: Efficient Capital,

New Crop Capital, Indie.Bio

78
Can bars make crickets palatable?

Description: Exo makes protein bars

using crickets. Crickets produce
100x less greenhouse gas than
cows, and have a higher
proportion of protein than beef or
chicken. Since crickets require less
feed than livestock animals,
production is also more efficient.

Disclosed Funding: $5.3M

Select Investors: AccelFoods,
Dentsu Ventures, Collaborative
Fund
79
Big CPG companies are looking at new proteins

“Bug-related stuff is big… the

hottest thing is eating
crickets.”

Indra Nooyi
CEO, PepsiCo

Sources: CNBC (quote) 80

 Will lab grown food take off?

$325,000 vs $11
Cost of one cultured burger in Cost of one cultured burger in
2013 2015 (though not yet
commercially scaled)
Foods from the lab Lab foods could remove
farm dependency

Lab-grown foods are

raising more funding to
do things like make
meals-in-a-bottle and
creating animal products.
These labs could
produce food faster and
at a greater scale without
needing a farm at all.

82
 What are the skills of
tomorrow’s farmer?

As farms approach full

automation, the skills
needed to be a farmer
could also shift, blending
both knowledge of
agronomy and
technology. Tomorrow’s
farmer could also be a
scientist in a lab if food
production moves in that
direction. This is
important given the
number of people
employed by the
agriculture industry.
Agriculture.com 83
 @nikillinit

QUESTIONS? nkrishnan@cbinsights.com

84
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