In a proof of concept moment, AgLaunch and 42 of its farmer network members, announce they have cashed out an early investment in an irrigation technology startup.
“We believe that first, farmers have to be at the center of any new innovation in agriculture,” says Pete Nelson, executive director of Ag Launch Initiative. “We set out with the premise of having farmers in the middle that could have a play in the ag tech sector, and we could probably grow companies better by putting capital, data and farmer influence on what the problem is.”
Nelson explains the AgLaunch engages startups very early, in pre-commercial stages.
“The core business is a group of farmers being able to identify problems in agriculture that need technology solutions and then searching for those solutions,” he says. “So we have these early stage companies now selected by farmers — think kind of [a] crowdsource. Our farmers are all voting up and down and then scaling those through an accelerator process focused on agriculture. Then they go into up to two years of field trials to help these companies. And farmers are taking actually stock in those companies as part of this whole ramp up through selection and field trials.”
First started in 2015, AgLaunch recognized while typical venture capital returns could be in seven or eight years, in agriculture the time frame could be closer to 12 or 15.
“But one of the companies we worked with very early with five farmers doing field trials in 2017 was an irrigation company doing predictable work mainly on pivots. We thought that company would grow in the U.S., but they are doing a great business in South America, and we had an opportunity to cash out with about a 5x on the effort we put in,” he says.
Of the checks farmers received, the lowest amount was in the hundreds and the highest was $9,000.
“This is the first time that we can tell in the world where a systematic process that farmers know how to get involved in is open to every kind of farmer, regardless of crop, gender, background, type of farm, this is the only time there’s a system like that that has been able to monetize these services in a holistic way,” Nelson says. “So we’ve delivered a check back to farmers for essentially a new farm product. That’s the proof point that we needed to take this all to the next level, and nobody’s done this in the world. Today, the AgLaunch portfolio is 39 companies in the pipeline, so it’s just the beginning of delivering cash returns,” Nelson says.
How can you get involved?
“What are the only things that aren’t going to change over the next decade in agriculture? They are farmers and eaters. And we’re in this unique environment where everything else is at play,” Nelson says. “We’re going to build a network of farmers that can help bridge how we farm now to how we farm in the future, and that becomes sort of the gateway toward how we think about innovation and what we’re building together.”
AgLaunch has forged partnerships with Ag Ventures Alliance in Iowa and The Pacific Northwest Ag Innovation Cluster in Oregon to form a national network.
Specifically, Ag Ventures Alliance and AgLaunch have formed a joint venture, Farmers Innovation Network, in which any farmer can get involved.
“Our tactic is to build with the farmers,” Nelson says. “If we get all the right farmers into this network at the right terms, then we’re actually building the ag tech system, which I would say right now is flailing.”
Going against the grain, Nelson says he and the AgLaunch team are ready for the next big win.
“We’re gonna have a few more solid base hits over the next 18 or 24 months,” he says. “But what we’ve also gotten better at doing is picking better companies as our reputation has grown up. So the farther along in general, the bigger ones are still going to be out in that five to seven years, because they’ll just have been coming in over the last two or three years. There’s even massive potential as we keep growing to get bigger checks and to tie the outcome of the technologies even more closely to the long-term outcome of the farmers.”
