Tag: Startups

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Animal AgTech

What Lewis & Clark teach us about Expeditions & Startups

To find “the most direct and practicable water communication across this continent, for the purposes of commerce.” That was the mission of the grand expedition taken by Captains Meriwether Lewis & Wiliam Clark to explore the newly acquired land in the Louisiana Purchase in 1804. The expedition travelled two years and eight thousand miles through a land largely uncharted by citizens of the newly formed United States. They interacted with previously unknown Indian tribes, identified new plant and animal species, and can you even imagine the wonder of seeing the Rockies but then having to describe the majestic view with words only? 

I’ve recently been on a road trip through Idaho, Wyoming & Montana. All areas with rugged mountains, roaring rivers, and truly breathtaking views. I’m not doing the exact route of Lewis & Clark but trust me, I’m paying my respects to their expedition and the Native Americans who enabled them to make a successful journey. But let’s face it, “exploring” from the safety of my Ford Escape on a paved road with A/C and Spotify is hardly the same as getting in a canoe and pushing off the bank hoping that you’ll find enough bison to get the expedition through the winter or that the river runs where you hope it runs. But still, its exploration of its own kind.

Similarly, all startups are – by definition – an exploration, an exploration for the right product, the right business model, the right pricing model, the right market. In my mind there are two types of startups:

  1. The Navigating-the-Rockies-for-the-first-time kind
  2. The Off-the-beaten-path-but-navigating-with-Google-maps kind

In the first version you are creating the map as you go in every sense, while the second one has well defined routes but requires a navigator with the appetite to explore and good judgement to navigate the unexpected.

Let me be clear, both are valid. Not all innovation has to be groundbreaking. Not every startup has to have a mission to change the world. Farm management software, for example, is a very useful tool for producers to help them manage their business. Yet 20 years ago Salesforce created the pay-as-you-go business model, what we call SaaS, so farm management software providers have a business model playbook to run. It’s “simply” a matter of identifying the right use cases, workflows, etc. (Caveat: that wasn’t true several years ago, like when the Millers were developing CattleSoft. They were pioneering.)

A manager of a large feed yard recently told me that the worst consumer apps still represent better technology than software being marketed to feed yards. Meaning, there’s still room in this market. Or, launching a digital marketplace – might be needed in a market, but its a known technology and there’s a relatively known playbook to do so. 

Meanwhile startups like GoTerra (waste management via flies) or P&P Optica (sophisticated imaging for meat plants) are bringing breakthroughs to market. 

We’ll soon start looking at specific categories within animal protein value chains, and the innovation happening within those categories. I’ve been thinking about how to break down the big problems and below is my first attempt, but any framework has to establish producer profitability and consumer satisfaction as two equally important pillars. 

Value chain Profitability 

  • Live performance. Animal health, nutrition, genetics. Alternatives to antibiotics.
  • Precision health / Precision nutrition. Managing health & nutrition at granular levels. Improved feedback loops.
  • Labor / automation. Access to reliable labor sources. Access to automation alternatives where appropriate.
  • Channel diversification. If COVID has taught us anything it’s that diversification matters for producers & processors.
  • Market transparency. Price discovery. Improved workflows for transactions.

Customer satisfaction

  • Environmental footprint. Reducing GHG & the carbon footprint of livestock production. Waste management.
  • Quality. Product innovation – cuts, packaging, etc. Animal health, nutrition, genetics.
  • Food safety 
  • Channel diversification. If COVID has taught us anything its that diversification matters for consumers, e.g. consumers want options to buy how and when they want.
  • Price – speed – quality. The Harvard Business School model said that you could differentiate on up to 2 factors among price, speed, quality. Today’s consumers want all 3.

There are a lot of problems in search of solutions, and a lot of technology in search of problems. Some are version 1 startups, some are version 2. I’m excited to dig in and identify startups of each type that are creating value in animal protein. 

What are some interesting startups working throughout animal agriculture in any of these areas, or related? Send the names my way!

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Categories
Funding

There’s a Meat Vacuum in AgTech; how do we fill it?

$16.9B in venture funding went to agtech companies in 2018. Sensors, robotics, machine learning, CRISPR, plant based <anything>, wearable tech for livestock, and so on. A ton of activity in row crops, a lot of activity in dairy, some interesting plays in livestock…but what about the meat sector? 

What about that massively critical phase from the time an animal leaves the farm (swine, poultry) or feedyard (cattle) until it shows up on the front step of a retailer, foodservice, or consumer. Where’s the venture backed innovation in that space?

Think of all that happens in that black hole from plant gate to table: 

  • Harvest
  • Carcass disassembly – there’s still many manual processes, complex decisions about how to disassemble the carcass most profitably
  • Selling meat – let’s not kid ourselves, price discovery could use a little upgrading as well as the processes around transactions of all sizes
  • Shipping a perishable product to customers likely to unpack, further process, repack, and ship again

All of this complexity while operating in a world where consumers increasingly expect transparency and sustainability.

The meat value chain is complex, it’s capital intensive, and it’s a bit of an innovation black hole with very few venture backed businesses working within the sector.

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So disruptors are coming from outside. And from the outside, it appears the best way to disrupt the meat business is to replace the most complicating factor about it: the animal. More than $2B dollars have been invested into plant based meats alone!

But why isn’t more venture capital being deployed to tackle the problems *within* the meat industry? To radical innovation that allows consumers to feel great about eating meat? To allow producers to feel good about their relationship with the rest of the value chain? To drive cost out of the system (something this industry knows how to do!) and expand industry relevance and revenue (something slices of the industry know how to do).

Is it because the market isn’t big enough? Negative.

Is it because the industry isn’t interested in innovation? If you can show ROI, companies will follow the money.

So what gives?

Here’s my hypothesis: the lack of venture backed startups solving problems in the meat industry is because the meat value chain is essentially a black box to those outside the industry. Within the industry, game-aware leaders know where the industry needs help. They know the big problems that need solving. And they need outside innovation but often don’t know where to go to get it, for a few reasons:

  1. Meat is a nuanced space. These aren’t widget factories. Even with improved genetics and refined feed rations, there’s variability in nature that must be reconciled in the processing plant. 
  2. The industry has exploded based on scale & cost efficiencies. Now the pendulum is swinging to other growth drivers: distribution, packaging, product, sustainability. 
  3. Limited incentive to disrupt from within as scale has been the path to market share and profitability, when commodity cycles cooperate. 

The upside of the venture capital subsidized plant meat venture backed ad frenzy is that meat is a relevant topic right now. More and more people – and entrepreneurs – are interested in the meat industry….but they don’t have first hand, up close experience with the problems that – if solved – could elevate the industry.

So what if….

What if there was a way to get the big players to bring identified unsolved problems to the table, and entrepreneurs to bring startup scrappiness and fresh views, and bridge the gap that’s prevented the meat industry from benefiting from the Agtech boom? 

This article isn’t a thought exercise, I’m looking for discussion 🙂  What do you think would drive more innovation around the meat industry? 

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