A plethora of agricultural technology in recent years has been fueled by internal budgets of major agricultural firms and venture capital aimed at start-up ventures. COVID-19, though, has tightened all aspects of doing business, including research and development (R&D).
Still, major agricultural firms say they are committed to research and development. “Our R&D is not a short-term investment,” says Tim Glenn, executive vice president, chief commercial officer of Corteva Agriscience. “Those are long-term decisions we make. It’s important to continue to invest in those critical technologies, whether it’s germplasm, traits, crop protection, or digital solutions. If we fall behind in that space, the market is very unforgiving.”
Investors looking to back start-up firms investing in agricultural technology are taking the long-term view, says Han Chen, co-founder and chief executive officer for ZeaKal, a plant traits firm that secured $15 million in Series C financing in September 2019.
“Capital is definitely more scarce,” Chen says. “Raising capital still relies on (developing) personal relationships. It is hard to have the same level of interaction through Zoom meetings.”
Still, investments are being made, he says. “Investors are still looking at fundamentals and long-term needs,” he says.
The COVID-19 environment is tough for cash-strapped start-ups that are trying to raise money, adds Mike Miille, chief executive officer of Joyn Bio, a joint venture founded by Bayer and Ginkgo Bioworks to develop engineered beneficial microbes.
Still, some are faring the COVID-19 downturn well. “We’re in a very envious position, given our cash situation,” he adds.
More flexibility will be needed in evaluating investments in start-ups like those in agricultural technology, says Kiersten Stead, managing partner with DCVC Bio, a venture capital fund investing in early-stage computational biology startups. Stead spoke at a recent World Agri-Tech webinar last May.
“This means liaising with other venture firms in different cities and getting them to do proxy diligence,” she says. “That means bringing in consultants and friends in cities that we have around the world to help us do that.
“When you really look at what’s critical to understanding a person and a team on what their capabilities are, we believe that can be done in this environment,” she says. “It’s not optimal. It will take more time, but we believe people just have to be flexible.”