My Adventures in the AgTech Start Up Space
It seems that Agtech start-ups are all the rage right now, or maybe its just my overexposure to the industry. Regardless, Agtech and AgData start-ups are getting a bunch of articles and attention from many industries. Once I was laid off from my last position, I decided to engage with this community and see if there was a place for me. I reached out to a number of people, inside and outside my network, responded to job adverts and received 17 interviews, some with firms dedicated to Agriculture, and some Ag adjacent.
Within those interviews I had 10 informative interviews (hey we like your skill set we want to talk to you, but we don’t have a spot for you NOW) and the rest were your typical jump through the hoops of HR interviews. I’ve talked to CEOs, CDOs, Senior Tech People and more than a couple Spatial Argonomists (When did this become an actual thing?). This blog post is an amalgamation of those interviews, my insight into what is going on behind the veil, through the peephole I was given.
Caveats:
This is a report on MY experiences, its all qualitative. None of the people I talked to knew that I would blog about this experience, so no names or corporations will be given. Also, these are all classic start ups, backed mostly by VC. None of these are internal groups to large firms that are being spun up. Also, I am going to use Agtech as an umbrella term, this will include AgData, and other technical Agronomy.
Startup Demographics:
Most of the firms I talked to were less than 30 people, one or two were slightly above 50 people. They are geographically dispersed across the United States, but about a quarter of the total are in Silicon Valley. The rest were mostly in the midwest, in either college towns, or the local major city.
Outside of the firms in Silicon Valley, most of the firms would not provide a relocation package. Remote work was completely off the table for 16 of the 17 firms I talked to. So, attracting talent from the major tech centers doesn’t seem to be even on their radar. Salaries tended to be on the low side for the region for their skill sets. While more senior positions tended to be in the mid range based on geographic location.
Typical insurance/401K package, but few offered equity or profit sharing. None of the firms I talked to had a continuing education package.
So, what this tells me is they’re focused on local talent who aren’t greatly experienced. Which is fine if thats what they are after. But a larger, more diverse talent pool will create a better product.
The 4 questions:
I’ve been in this game for a long time, and I know its fine to ask tough questions during an interview. I have a standard set of questions that I ask depending on industry. Within this little adventure I asked each person/group the following questions:
At your current burn rate, how much longer will your current round of funding last?
Who do you consider to be your major competition in this space?
Where do you see your firm in 2020, what about 2025?
What keeps you awake at night?
Answers
- At your current burn rate, how much longer will your current round of funding last?
Excluding those who had recently received funding, the answers fell within 6 months to a year. Some were very sure they would get the next round of funding before they would run out. Others weren’t so, optimistic. Some indicating they are doubling down on sales teams to start to break even, or just turn some sort of profit.
50,000 ft candidate analysis: So, accepting a job with most of these firms would be high risk.
2. Who do you consider to be your major competition in this space
Most of the respondents indicated either Major Equipment manufacturers, seed producers, or local partners to these large firms who are beginning to expand their services to include Agtech offerings. The reason for this is because those larger firms have the capital backing to build those groups, without the fear of being profitable right away.
Two indicated they did not have any direct competitors.
50,000 ft candidate analysis: So, odds are IF you’re purchased I’m going to go work for a large firm.
3. Where do you see your firm in 2020, what about 2025?
A number of people indicated that in 2020, they would still be seeking funding (which isn’t unusual for a start up), but many, including CEOs couldn’t indicate they couldn’t see 2025, “YET.”
50,000 foot candidate analysis: You’re going to sell this thing as soon as an offer comes along
4. What keeps you awake at night?
Oddly, this was the question I got more tap dancing than the other ones. Maybe it was the broad nature of the question, or maybe they just didn’t feel comfortable saying what really makes them feel uncomfortable.
From the tap dancing the only thing I could really get is failing their employees.
One did say, that the partnering of a Major Seed Producer with a Large BI Software provider, gave him nightmares.
50,000 ft candidate analysis: You pushed me hard on personal questions, yet you won’t answer one about your business.
Analysis:
There is a bunch to unpack here. So, lets just toss question 4 out the window. I didn’t get much information about their start up with it, and what I did was pretty ambiguous.
The answers to the first question show that most of these firms only have a year or so on solid ground. So any position with these firms would be either constantly at risk or short term. Couple that with their general aversion to remote work, they’d be asking you to pay for your move to a city, where its likely they’re the only game in town, for a job that might last a year. Sure, they might get more rounds of funding, but in the end that increases the likelihood of being sold off by the VC backers.
The second question is the real meat of this whole thing, and its what jumped out at me. Farmers are already getting a large number of these services through a pre existing trusted provider as part of their equipment budget. So, what do you add? Why should I pay more for this stuff, when I get just as good over here?
Couple that with the current commodity prices, and you have a number of farmers who are going to be risk averse. Below are the current price trends of the 3 “main” crops produced in the United States, wheat, soybeans and corn. Big ups to macrotrends.com for existing, the being the source for all these charts.
If Fintech, or Defense had their funding drop by almost 50% in 3 years, there would be people flocking FROM the the industry, not to.
So, as you can see, the market isn’t the greatest for Farmers right now. While it will spring back, can Agtech Startup X last long enough for that rebound. No one can be sure, but you know who will be around, Large Equipment Manufacturer Z, because they know it’s a long term investment and is part of their business model in 2030, and they have the capital to invest for their future and ride out this downturn.
Question 3 shows a lack of vision for a number of these firms. Its not hard to see 3 years out, but looking out 10 years requires a commitment to this, and how you want to see your firm evolve, and grow. This speaks to me as “I’m cashing out before that if I can.”
Conclusions:
I want to stress again that these are my experiences and perceptions. That being said, the current group of Agtech start-ups would be difficult for people in tech centers to move into. With the lack of remote work, and you bankrolling your own move would put you in a location where you would have a limited network for work, or the ability to “get out of town” if that start up dies or is bought out. You couple the risk of the move, with the risk of the firm, and the situation goes past the yellow line, for me at least.
What do I think is going to happen to these start ups is less than average amount will survive. I believe most of their tech and some of their staff will end up with the Big Ag companies, as the VCs attempt to reduce their losses. (Yes, this paragraph needs to really be unpacked, there is a lot here in these 2 sentences)
These start-ups are bringing unique views and concepts to the field of Agriculture especially in data capture and processing. They are important to the technical growth of this field. That being said, with state of the commodities market, most of this current crop of start ups might not survive until the market rebounds. The large firms will survive, and with the influx of the technology from these start ups, the larger firms will be smarter, and better.
I don’t mean to be all doom and gloom, the Agtech space is awesome, is an amazing mix of big data, spatial data, and unstructured data real time data. its enough to make a data geek’s heart go pitter pat.
If anyone wants to converse about this with me, my twitter DMs are open and I would be more than happy to engage with you. But, do not expect me to disclose names or firms or anything that might be close to “unmasking”
