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Food/Agtech An Investment Thesis

Food/Agtech An Investment Thesis

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Food/Agtech An Investment Thesis

  1. 1. FOOD & AGRICULTURE AN INVESTMENT THESIS MATTHEW BEDICK MATTHEW.BEDICK@GMAIL.COM
  2. 2. Unsustainable Agricultural Model  Monocultures are eroding biodiversity among both plants and animals  Soil is eroding much faster than it can be replenished  Water is consumed at unsustainable rates
  3. 3. Problems in our current Agricultural Model  Monocultures are eroding biodiversity among both plants and animals  Monocultures provide vulnerabilities to the supply chain  Disease  Loss of other plants/animals to the food chain  Plants and animals selected due to predictability of growth under particular conditions  Global warming not just causing higher temperatures, but more unpredictable conditions  12 Plants provide 75% of total food supply  15 Mammals + Birds provide 90% of livestock
  4. 4. Problems in our current Agricultural Model  Soil is eroding much faster than it can be replenished—taking with it the land’s fertility and nutrients that nourish both plants and those who eat them  Each year, an estimated 24 billion tons of fertile soil are lost due to erosion  It takes approximately 500 years for 2.5 cm layer of fertile topsoil to form under agricultural conditions  On a global scale, around 10 - 20% of drylands and 24% of the world’s productive lands are degraded
  5. 5. Problems in our current Agricultural Model  Water is consumed at unsustainable rates in many agricultural areas  Agriculture responsible for 70% of freshwater usage  Increase in water demand of 55% by 2050  Increased urban population directly correlates to increased demand for meat, itself water intensive  1000 gallons for 1 gallon of milk  440 gallons for 1 pound of beef
  6. 6. Parallels to Renewable Energy Investment  Broken Long Term Model  Focused on short term profits and growth at the expense of long term health and sustainability  Same Setbacks  Global Warming causing volatility in commodity prices and in turn uncertainty in the underlying economic model  Without Change Collapse of the system isn’t fantasy  By 2050  Additional 2.25 Billion people in urban centers  5 Billion more people on earth  Water Usage ⬆️ 55%
  7. 7. Food & Agriculture Investing In Infancy  Venture funding in the agriculture space has risen from $400 million in 2010 to $4.6 billion today  Agriculture historically slow adopter of new technologies  Few liquidity events  Agriculture has largely been dominated by large companies  Agtech = new way of doing business
  8. 8. Why Now?  Agriculture represents $7.8 trillion industry, or ~10% of global GDP  Minimal penetration into even the most high profile/best-funded subsectors  Farms increasing technology investments even with falling commodity prices and net income  Increased demand for impactful investments due to shifting mindset on importance of sustainability in portfolio construction
  9. 9. The Landscape – Subsectors (1/2) Data from Slides 9-14 Pulled from Crunchbase, Agfunder
  10. 10. The Landscape – Subsectors (2/2)
  11. 11. Proof of Concept – Alternative Protein Ripple Foods  Overview: Ripple Foods produces a pea based dairy alternative. Their products are less intensive on the environment, contain more protein, and less sugar.  Funding: Ripple Foods have raised $44 million over two rounds. Investors include GV and Khosla Ventures.  Opportunity: Milk alternatives have been gaining market share due to concerns of milk’s nutritional value and increasing prices
  12. 12. Startup of Interest – Smart Equipment & Hardware Amber Agriculture  Overview: Amber Agriculture helps farmers monitor and manage the condition of their crops in storage through a system of sensors. Farmers can leverage the sensor data to make changes in real time to conditions like temperature in humidity.  Funding: Amber Agriculture has raised two rounds. Key investors include SOSV.  Opportunity: Food production consumes 10% of the total US Energy Budget, yet 40% of what gets produced ends up getting thrown out due to inefficiencies in production, harvesting, storage, packaging, distribution, and consumption.
  13. 13. Proof of Concept – Decision Support Tech Granular  Overview: Granular provides a enterprise management platform for farms to aggregate data to one location  Funding: Granular has raised $25 million over two rounds. Key Investors include Andreessen Horowitz, GV, Tao Capital Partners, and Khosla Ventures.  Opportunity: Enterprise software represents a $300 billion market. The current market is ~10% penetrated. Agriculture is a slower market and has shown recent willingness to spend on technology even when net income is down.
  14. 14. Startup of Interest – Drones & Robotics Abundant Robotics  Overview: Deliver robotic systems for the hardest jobs in agriculture  Funding: N/A  Opportunity: Wages, salaries, and contract labor expenses represent roughly 17 percent of total variable farm costs and as much as 40 percent of costs in labor-intensive crops such as fruit, vegetables, and nursery products.
  15. 15. Startup of Interest – Waste Tech Copia  Overview: Easily connect businesses with surplus food to nonprofits in need. They help businesses reduce disposal costs and save money on taxes.  Funding: Copia has raised $140k over two rounds. Key investors include Y Combinator.  Opportunity: Food businesses operate on razor thin margins. Allowing for even a % in savings could mean the difference between sustainability and closing down.
  16. 16. Sources Organic Consumers Harvard School of Public Health Agriculture Marketing Resource Center Organic Consumers Forbes Worldwatch Institute Ajit Niranjan TechCrunch BCG Sustainability: Science, Practice & Policy University of Illinois Federal Reserve Bank of Atlanta Kansas State Newco Shift Takepart Union of Concerned Scientists Pew Charitable Trusts Food and Agriculture Organization of the United Nations Bloomberg Vishal Vasishth OECD Scientific American Scientific American New Haven Register Foodtank Natural Resources Defense Council Union of Concerned Scientists Agfunder

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