Category: Animal Health

Categories
AgTech Animal Health Venture Capital

Prime Future 122: Not all heroes wear capes.

I’m increasingly convinced that in a world of blowhards who overpromise and underdeliver, to underpromise and overdeliver is a superpower.

Not only is it a superpower, it’s one that compounds and proves its power over time and relationships and results.

Let me start by saying I used to think the opposite was true. Despite this being one of the oft-repeated pieces of advice early in my career when I was a brand new baby sales rep, when I transitioned from animal health sales to startup founder I temporarily left that advice behind as too old school and short sighted….

I thought that painting a big picture of what’s possible (even when my intuition told me it was probably impossible) showed ambition to do big things which could then unlock resources to actually make big things happen. Financial projections up and to the right, further and faster.

Now I tend to think over-ambition just looks naive.

(I hope I can attribute that to the increasing pragmatism that comes with experience, and not cynicism creeping in🤞🏽)

It’s not that the effective under-promiser over-deliverers play small.

It’s that they can separate the future from the present, and they can distinguish between their aspirations and their realities. And they don’t shy from those gaps.

Under-promiser over-deliverers can tell the difference between a base-case scenario, a best-case scenario, and an “only in our wildest dreams” scenario.

Under-promiser over-deliverers still have a compelling vision, especially under-promisers who raise venture capital. The venture game is, by definition, one of big risks and big rewards so a big reward has to be possible.

Under-promisers still sell a big vision with plenty of ambition, but they capture the nuance of what it will take to make the vision a reality.

It’s hard not to be energized by a person/team/company with genuine enthusiasm and commitment to solve big problems. Maybe this whole under-deliver vs over-deliver idea is just all contextual. Know your audience. Know when to paint the grandiose vision and when to manage the reality of what it will take to get there.

Maybe it's all about managing expectations.

There are at least 4 stakeholder groups whose expectations have to be managed well in the pursuit of doing something new and hard and unpredictable:

(1) Early customers.

While it seems obvious that you’re playing with fire as an early-stage company to overpromise and underdeliver, it’s not at all uncommon for agtech startups to create unmet expectations with early customers. Get the right early customers and they have a lot of grace for glitches in an early product, they do NOT usually have a lot of grace for a big gap between reality and the sales pitch.

(2) The team.

The earlier stage the company is, the more the team needs reasons to believe we are on the right track. Whether that is in the form of product development milestones or commercial milestones is irrelevant (for this convo), the main thing is managing the team’s expectations to maintain morale and commitment. Working 75 hours a week is fine as long as there’s progress being made and a light at the end of the tunnel that it will pay off at some point.

Once your team loses faith in your misguided expectations, trust quickly erodes and suddenly a founder finds themselves scrambling to recruit new talent….which of course slows the company’s progress further.

(3) Yourself, as a founder.

This might be the most important of the 4. Being a founder is really hard, mentally and emotionally. A huge part of avoiding burnout is managing your own expectations so that when something takes an extra 6-18 months, you have a frame of reference to handle it. (Have I mentioned how I learned this the really, really hard way??)

(4) Investors.

“There’s more fiction written in Microsoft Excel than Microsoft Word”

I recently heard someone say that and it’s been living rent-free in my head ever since. It’s funny bc its so so so true, isn’t it?

Anyway, I’ve been thinking about this whole idea lately in the context of startup founders, but maybe it applies to…everyone?

“IMHO…. The best sales people under promise and over deliver. The best investors under promise and over deliver. The best founders under promise and over deliver. The best <at anything> under promise and over deliver. 👆🏼Incredibly underrated super power”

Not all heroes wear capes, but maybe they all have the superpower of consistently underpromising & overdelivering. #goals

Categories
Animal AgTech Animal Health Funding

Venture Investing in Animal Health

“If we can’t get to a strong ROI for the producer very quickly, it’s an easy pass for us.”

?? a nugget that the partners from Fulcrum Global Capital, a global food & ag venture capital firm, shared in a conversation on venture investing in animal health including:

  • The key areas of opportunity in animal health, across both biotech and digital, and from an outcome based perspective – not just raw efficiency. (Go to the 5 minute mark in the YouTube link below.)
  • How Fulcrum works with their investor base of actual producers, a non-traditional approach compared with most venture funds backed by institutional capital. (12 minute mark)
  • The benefit to producers of investing in a venture fund. I’m intrigued by the idea of giving producers an opportunity to invest in their area of expertise and generate venture returns while giving them access to solutions that address operational problems, potentially creating even larger returns from an operational standpoint. (19 minute mark)
  • When is venture capital the right tool to scale a startup. “Venture is good when you have a founder that has aligned beliefs with venture capital – disruptive tech, scale quickly, exit within a specific time frame. We’re looking for solutions to billion dollar problems across global agriculture.” (27 minute mark)
  • “The exit market is being defined as we speak. One of the challenges with animal health, especially drugs and vaccines, is sometimes those are long runways that don’t match up with venture timelines. Understanding how those pieces fit together (runways, exit paths, multiples, etc) will start to define what levels of risk capital will be available to founders and help investors understand what parts of animal health will be venture backable.”

This conversation has relevant gems for producers, entrepreneurs, and strategics. Check it out here (link) and subscribe to the Prime Future YouTube channel while you’re there.

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Categories
Animal AgTech Animal Health

Can gut bacteria save livestock & poultry? Yes. Here’s why:

Here’s the thing: I’m bullish all things microbiome. Soil. Plant. Animal gut. Human gut.

Pressure to reduce antibiotic use has led to the launch of more companies bringing non-antibiotic pre/pro/post-biotics to the market to “support gut health”.

The obvious reason is that producers simply have to figure out how to offset lost performance from reduced antibiotic use. Look at the US poultry industry that has gone from <10% No Antibiotic Ever production to ~60% NAE….in less than 5 years. Presumably swine and cattle will follow at some point and to some degree, though that is tbd.

But in an industry accustomed to FDA regulated products brought to market with impeccable rigor by pharma co’s, most microbiome products have been viewed by producers as foo-food dust….rightfully so. Here’s why:

  1. The approval process to launch a non-antibiotic product means the manufacturer can make no claims about impacts on animal health. What’s the benefit to the animal? Sorry, we can’t say…but it helps, trust us.
  2. Microbiome products typically brought to market with limited data, either in # of studies or # of head per study. So you did 1 study with 22 birds in Italy and you want to sell to US producers? Adorable but no…
  3. Because of #2, there is limited guidance about recommended use on these products. “Here ya go producer, we recommend you use this product but good luck finding the dose that leads to the best response, most cost effectively”

Truly, its been the wild west out there with microbiome products. And it has damaged the category’s brand with livestock & poultry producers while raising the skepticism hurdle for future products.

And yet, I’m optimistic the category’s wild west era will soon end. Why?

Technology.

Look at our friends over in the crop side of the world where soil microbiome has been a fringe topic for a while, slowly making its way to the mainstream. An entire generation of technology companies are bringing precision to the soil microbiome through analytics, covering the whole range of measuring, analyzing, and ultimately enabling precision decisions to improve the soil microbiome to unlock productivity and (hopefully) profitability. Soil tech startups like Trace Genomics, Pattern Ag, and Biome Makers are proving this can be done in the world of soil microbiome.

So if we can have precision in measuring, managing, and improving the soil microbiome…..why can’t we ultimately do the same in livestock and poultry for the gut microbiome?

This would shift the entire category from product driven to outcome driven.

Instead of convincing a producer that one product is better than the next based on generic results or good branding, what if the producer could start their decision making process with baseline analysis of gut microbiome activity based on this location or these genetics, or, or, or. Then, what if the producer could monitor the microbiome through grow out to adjust their product decisions between turns, to  remove this pre-biotic and add that post-biotic or try that combo in order to hit XYZ microbiome objective because it correlates with improved feed conversion or reduced methane. And so on.

Ultimately, what’s exciting about the microbiome is not what we know….it’s how much we do not yet know. And there is a lot we don’t know. Like, for example, the interplay between the microbiome and genetics. Or environment, or diet, or any number of other factors.

Increasing the fundamental understanding of the microbiome’s baseline creates a foundation from which to build product (feed additive) decisions and then to understand the impact of those product decisions. Just like is beginning to happen in soil management.

Leveling up on the analytical understanding of the gut microbiome and how livestock producers can manage the microbiome with precision to drive performance and profitability is not only a huge opportunity, it is the only way to meaningfully reduce antibiotic use in a systematic way.

3 more questions while we’re here:

  1. We know that microbiomes are variable whether we’re talking from pasture to pasture, person to person, or pig to pig. Which obviously creates some challenges when the unit of management is 10-50,000 animals. What will precision livestock management or precision poultry nutrition look like in 10 years as we solve for this dynamic?
  2. This category is driving the convergence of animal health and animal nutrition as more companies have a microbiome element to their portfolio. What will that mean in the next 5-10 years for M&A activity and who buys or aligns with whom?
  3. With more producers looking at the benefits of grazing cattle on cover crops, what if it turns out that there’s a connection between the gut microbiome and soil microbiome? What if that gave producers 2 new levers to improve animal health & soil health? The mind reels…

I’m bullish on this space because of the potential of the unknown and the belief that through technology we can harness nature’s systems more effectively. If you are, or know, a company working to bring precision microbiome management to life, shoot me a message.

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Precision microbiome management is happening in soil; it’s only a matter of time until the same tech comes to the gut microbiome, shifting the livestock & poultry microbiome space from product driven to outcome driven.
Categories
Animal Health

It’s Zoetis’ (digital) world, we’re just living in it

ICYMI, Zoetis recently acquired Performance Livestock Analytics, an analytics software for small to midsize feed yards. Today we’ll look at 2 elements:

  1. The venture funds that backed the company early, one in particular with a fantastic investment thesis around animal ag.
  2. Zoetis’ digital strategy that drove the acquisition, including the $140M valuation (according to AgFunder).   

“In April, Zoetis acquired Performance Livestock Analytics, a technology company that simplifies data and analytics for the livestock industry. This acquisition will help Zoetis to accelerate progress in precision livestock farming and improve sustainability of producers’ operations.” 

Here we go  ?

The VC’s Behind Performance Livestock Analytics

According to Crunchbase, PLA raised $3.3M from Cavallo Ventures, the venture arm of Wilbur Ellis, and Builders VC. Interestingly, Builders VC has created an entire thesis around investing in livestock.

“While Silicon Valley technologists search for the science-crafted animal replacements to address the world’s growing need for protein, they are ignoring the most impactful solution – bringing efficiency, process, and basic analytics to the existing $1.7 trillion industry.”

Yes!!! This is a critical point that gets overlooked by VC’s and entrepreneurs in search of the next big opportunity in row crops or alt meats. Furthermore…

“Beef and livestock have never been considered “sexy” industries, especially for VC firms focused on the next big thing. However, these are massive, core industries. As the global protein supply is strained, the potential for long-term growth through sustainable, technology-driven solutions creates tremendous opportunities as global protein supply is strained. As with most antiquated industries, IT and biotech contain untapped benefits for these sectors. Entrepreneurs will be a critical part of fixing these laggard industries through technology. What problem could be more important than feeding the world?”

Now it gets interesting with the explanation of the PLA investment and the problem being solved:

“Many small and medium sized feedyards are struggling with negative gross margins and high variability year to year. Performance Livestock Analytics helps these feedlots better manage their operations. Their technology allows farmers to see daily performance and farm profitability, something previously only calculated at bi-annual reconciliations. Using bluetooth scale devices, a mobile data platform, and real-time feed prices, they allow feedyards to make data-driven decisions. This is crucial at a time when overall profitability is declining.”

A feedyard manager recently said “the worst apps in the real world are better than what we have for use in livestock”, which validates this:

“Whether solutions are to be found in operations technology, or in genetic improvement, there is a lot of potential growth in the livestock industry. While other industries readily adopted IoT years ago, only now can we see feedyards do the same. Technology is just beginning to penetrate this sector, with incredible potential for higher yields, growth optimization, and improvements in animal health.”

This next point is one I wrote about recently, “Can Robots Save the Meat Industry”?

“The food production industry now has at least two incentives to invest in non-human mechanization. Mechanization, via the reduced dependence on human labor, reduces the exposure to human pandemics. Mechanization is risk mitigation not just for the private businesses, but for governments as well. Ultimately, restricted production because of human labor hurdles will cause beef prices to rise. Higher prices will create the incentives for investments in production technologies.”

More on their portfolio companies & problems to be solved:

  1. “Another issue is the efficiency of cow-calf operations. Often they do not focus on efficiency because cattle are not a substantial portion of income. However, Agriwebb is changing this. They have created farm management software that increases the efficiency of cow-calf operations and enables animal traceability. Resources are allocated more efficiently, and grazing becomes more effective. Agriwebb matches business goals with operational metrics.
  2. On the biotech side, a lot can be done to create superior cattle. Ascus Biosciences utilizes a platform for microbial discovery to identify naturally occurring bacteria that increase nutrient uptake and overall health. Their technology has increased the milk fat concentration by 10% in dairy cows, and has demonstrated decreased mortality rates for other animals such as chicken. 
  3. Finally, beef is only one area of potential technology impact. Swine, dairy, poultry, and aquaculture all stand to benefit from increased efficiency. For example, Soma Detect is a company using spectroscopy to directly monitor dairy milk quality and the health of an animal at the stall. Their technology can monitor diseases before they are visible to the rancher, helping to decrease the use of antibiotics, and creating healthier animals.“

I couldn’t agree more with this thesis and the most compelling dynamic is that much of this thesis can be extrapolated to dairy, poultry, and swine. 

The Acquisition Strategy (Zoetis)

CEO Kristin Peck highlighted the company’s digital strategy in her recent letter to shareholders. This is a company that believes every company of the future must be a technology company, even animal health companies.

Zoetis has identified key future value drivers and built an acquisition strategy to enable the digital offering that their customers expect. This is not haphazard, it’s a clear vision to “skate where the puck is heading” which could make it hard for their competitors to catch up and compete along this digital dimension. And “this digital dimension” should not be viewed as a small silo, but as an enabler of their core portfolio and future portfolio.

“Leading in digital and data analytics” is one of the company’s strategic objectives. The following is an explanation of how they will achieve it and why it matters.

“At the same time, the profile of our customers is changing as well established practices and producers are consolidating, and as new distribution channels and e-commerce players become more prevalent. As these trends shape the future of animal health, our customers’ successes and competitive advantages will depend increasingly on a partner who brings them comprehensive solutions and choices to predict, prevent, detect and treat disease for their animals—an approach we call the continuum of care. To that end, areas like diagnostics, genetics, precision livestock farming, nutrition, digital and data analytics will all be increasingly important to our customers over the next decade.”

This context aligns pre-COVID trends in the macro-environment with trends in the farm economy, all of which are accelerated by COVID.

“As new distribution channels and e-commerce create more avenues for selling Zoetis products, we are working to further improve our engagement with customers while also making it easier for them to do business with us. This includes selling more products through e-retail sites while ensuring that our veterinary customers can still offer our products at competitive prices. More than ever, our customers are relying on technology including smartphones, servers and tablets— and the data they produce— to run their operations. At the same time, they’re using these tools to detect and treat sick animals; pursue more sustainable practices; monitor pet health; and provide virtual veterinary consultations in rural areas. To address this trend, Zoetis is investing in digital and data capabilities in the following ways: 

  • Expanding our portfolio with new digital products and digitally connected solutions like our Smartbow® digital ear tag technology for cows and our poultry biodevices that can help automate hatchery operations.
  • Delivering the best customer experiences through greater personalization, relevance and consistency based on new, cloudbased marketing software that generates data insights to better understand our customers’ needs.
  • Reaching new customers through digital channels that complement our direct touchpoints—such as our U.S. Petcare Rewards program, which gives pet owners credits they can use for products and services at their vet clinics. 

And the punchline that positions this capability as a core business capability:

“At the same time, we know that digital tools must be a core part of how we operate our own business to drive. The future of animal health will depend on integrating many different solutions and technologies to help producers and veterinarians make early and accurate decisions to prevent disease, and deliver targeted, effective treatment. …by integrating our products and solutions in a way that truly advances animal health, we will help our customers achieve better results…”

You can see why startups like PLA fit into the future Zoetis is creating. So with a string of acquisitions under their belt to enable this strategy, who are the next acquisition targets Zoetis might pursue? 

  • Smart tag companies targeting beef cattle and/or smart scale companies for feed yards, swine or poultry houses
  • Companies using computer vision for animal recognition and detection of key on farm measures
  • Data analytics companies like Data Robot that simplify forecasting and AI

One of the most interesting ideas wrapped up in their strategy is the pet insurance offering. The next iteration of Marc Andreesen’s 2011 “software is eating the world” is the idea that every company eventually becomes a FinTech (financial technology) company. As Zoetis builds its data capability, could it be poised to offer some intriguing FinTech products across the food animal space….perhaps even compete with financial institutions like RaboBank? It’s far fetched but, in short, yes.

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