CULTIVATING AG TECH: HOW TECH IS RESHAPING AGRICULTURE

CULTIVATING AG TECH
Examining how the agriculture industry is being reshaped by

technology
#agtech
The technology market
intelligence platform.
CB Insights software lets you predict, discuss, and
communicate emerging technology trends using data
in ways that are beyond human cognition.
#agtech www.cbinsights.com 2
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The most publicly reference-able customers of anyone in the industry
“Think of the fundamental value chain of venture

capital … If we play the clock forward, the finding
and assessing of investments will be almost entirely
done by technology, not human beings. And the
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leader in that evolution is CB Insights."
Pat Grady
Sequoia Capital, Partner
#agtech See what other customers have to say at http://www.cbinsights.com/customer-love www.cbinsights.com 3

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From the NY Times to Bloomberg, CB Insights data is used by hundreds of
leading media outlets every week
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1200
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ABOUT THE LEAD ANALYST
Nikhil Krishnan
Research Analyst, CB Insights
Focuses on Healthcare, Consumer Packaged Goods, Industrials,

and VC Trends
Published research and data analysis have been featured in The
New York Times, Wall Street Journal, Financial Times, Bloomberg,
and CNBC, among other major media outlets. @nikillinit
Graduate of Columbia University
nkrishnan@cbinsights.com
TABLE OF CONTENTS
7 What Is Ag Tech?
8 Macro Trends
16 Private Market Activity
30 Role Of Corporates
35 Monsanto Case Study
43 Business Models, Approaches, and Trends
59 Looking Ahead
What are we analyzing in
Ag Tech?
We’ll be analyzing hardware/software companies that

are changing the way produce is grown and
distributed.
Private market funding data will be focused on

companies that use technology as a key differentiating
point where agriculture is the primary use case.
Ag Tech:
MACRO TRENDS
AGRICULTURE IS IN THE SPOTLIGHT
A FARMING REVOLUTION, MINUS
FACTORIES
October 3, 2016
AGRICULTURE TAKES A MASSIVE TOLL ON WATER SUPPLY
The agriculture industry consumes the majority of freshwater, an
increasingly scarce resource in many geographies
#agtech Ceres www.cbinsights.com 10

ERRATIC WEATHER
HARMS CROP
PRODUCTION
Climate changes are

becoming more
unpredictable, taking a
toll on farmers.
Technology allows us to
build better models and
find more weather-
independent solutions to
growing food.
#agtech EPA www.cbinsights.com 11

AGRICULTURE IS ONE
OF THE LEAST
DIGITIZED SECTORS
Agriculture is at the
bottom when it comes to
digitization. The lack of
existing IT infrastructure
could also provide an
opportunity to create
new systems without
extensive overhaul.
#agtech McKinsey www.cbinsights.com 12

In the not-too-distant future, precision
agriculture may evolve to a point that
farmers will be able to monitor,
manage and measure the status of
virtually every plant in the
field…Precision farming is a big deal. It
is an area almost certain to shape, if not
define, the future of our industry.
Samuel R. Allen
CEO, John Deere
#agtech John Deere www.cbinsights.com 13

MOBILE PENETRATION
IS GROWING
Mobile is becoming more

of a staple in countries
around the world,
enabling more people to
use connected
technologies. Most of
these productivity
increases are helping
countries where farming
is a larger percentage of
the labor force.
#agtech GSMA www.cbinsights.com 14

Cheaper, Better LEDS Falling Cost of Sensors
A CONFLUENCE OF NEW
TECHNOLOGIES HAVE
ARRIVED
Several technologies are

enabling the changes in
agriculture today. LEDs
are getting better;
sensors are getting
Better, More Ubiquitous Robots More AI – More Data Handled cheaper; robots are
becoming more reliable;
and new techniques
allow us to ingest these
massive datasets.
#agtech Quartz, Goldman Sachs., IFR Statistical Department, CB Insights Blog www.cbinsights.com 15
Ag Tech Funding Trends:
DEALS, DOLLARS, ACTIVE INVESTORS
THE CLIMATE CORPORATION ACQUISITION
REDEFINED THE SPACE
CB Insights Trends mines

a massive corpus of
media articles to enable a
data-driven, real-time
method to discover,
predict, and plot the arc
of rising expectations
and excitement.
#agtech CB Insights Trends www.cbinsights.com 17

THE CLIMATE
CORPORATION
DEMONSTRATED DATA
DEMAND
29.6x Valuation Growth In 6 Years
The Climate Corporation
proved the demand for
ag data, and grew a
business by nearly 30x.
Major winners in this
investment were early
investors (New
Enterprise Associates,
Index Ventures, First
Round Capital and Allen
& Co.).
#agtech CB Insights www.cbinsights.com 18

Global equity funding since 2012:
$820 MILLION
across
271 DEALS
AGTECH ANNUAL GLOBAL FINANCING HISTORY AG TECH IS PICKING UP
2012 - 2016 SPEED … FAST
70 69
67
Activity into ag tech
companies picked up
noticeably in 2014, with
deal activity more than
doubling and funding
more than tripling
32 33 compared to the prior
year. The last two years
have seen sustained
interest since the uptick,
with both years seeing
more than $200M
$97 $52 $178 $208 $284 financing across 68+
2012 2013 2014 2015 2016
deals.
Disclosed Funding ($M) Deals

2017 HAS BEEN OFF TO
A VERY STRONG START
2017 has already been

the strongest quarter of
funding with more than
$105M invested across
16 deals. This is a
rebound from what
appeared to be a slowing
Q4’16. There were 5
deals above $10M,
including Farmers
Business Network and
FarmLogs.

AGTECH: TOP DEALS
2012-2017 YTD (as of 3/10/2017)
COMPANY AMOUNT/ROUND QUARTER SELECT INVESTORS
New Enterprise
Associates, Index
$50M/Series C Q2'12
Ventures, Founders
Fund
Mistui & Co., Kleiner

$41.1M/Unattributed Q1'16 Perkins Caufield &
Byers, Osmington
OpenAir Equity
$40M/Series B Q3'14 Partners, Thorndale
Farm
Acre Venture
$40M/Series B Q1'17 Partners, GV, DBL
Partners
WP Global Partners,
$30.1M/Series C Q3'16 NGEN Partners,
Catalyst Investors

DEAL SHARE INTO AG
TECH
Early-stage deals into ag

tech dominated 2012-
2014, with Seed/Angel
deals taking off in 2014
and taking 57% of all
deals. Since then the
industry has slowly
matured, with Series A
deal share growing, and
more Series B deals.
There are even some
late-stage deals.

GEOGRAPHY
BREAKDOWN OF
AGTECH DEALS
Even though California

takes the majority of
deals, It’s notable that
more than half of all ag
tech deals happened
outside of the major tech
hubs (CA, NY, MA).
Colorado and North
Carolina had a
particularly strong
showing.

GRANTS BECOMING INCREASINGLY COMMON AG TECH GRANTS
FOR AG TECH COMPANIES
Grants are becoming an

increasingly popular
financing mechanism for
ag tech companies.
While most grants are
small, some are greater
than $4M. The grants
come from the
government at both the
Federal and State level,
as well as some
corporations.

AG TECH HAS SEEN
FEW EXITS
Despite the massive

liquidity event of The
Climate Corporation, ag
tech has yet to see
sustained exit activity.
There have been a
handful of $200M+ exits,
including SCR Engineers
and Precision Planting
(which was also acquired
by Monsanto). Notably
there haven’t been any
recent IPOs.

CLIMATE CORP LEADS
Acquired by Monsanto
Valuation: $1.1B THE WAY, WITH SOME
SMALLER SUCCESSES

has been the largest exit,
but there have been a
handful of mid-size exits
Acquired by Allflex USA in the last few years.
Valuation: $250M Though there have been
a lack of ag tech-focused
IPOs, there are some
large tech companies
that target agriculture,
Acquired by Monsanto among other industries.
Valuation: $210M

YEARLY UNIQUE INVESTORS INTO AG TECH NUMBER OF UNIQUE
2012 - 2016
INVESTORS SEES
119 SURGE
The number of unique

100
97 investors into ag tech
companies surged after
71 acquisition. Since then
the number of active
49 investors has tapered
slightly, though 2016 was
the second year with
triple-digit investors that
made at least one ag
tech investment.
2012 2013 2014 2015 2016

# of Unique Investors

MOST ACTIVE
INVESTORS
Few investors have 5 or

more companies in their
portfolio. Y Combinator
topped the list with 6
portfolio companies.
Several agriculture
focused VCs populated
the list (Middleland
Capital, Omnivore
Partners) alongside
generalist VCs.
Corporates from
different sectors made
up 3 of the top 10 most
active investors.

Ag Tech:
THE ROLE OF CORPORATES
CORPORATES ARE
INCREASING AG TECH
ACTIVITY
From barely any

participation in 2013,
corporates are playing an
increasingly important
role in the ag tech space.
Nearly a quarter of all
deals in 2016 had a
corporate, compared to
less than 5% in 2013.

YEARLY UNIQUE CORPORATES INTO AG TECH CORPORATES ARE
2012 - 2016 17 INCREASING AG TECH
ACTIVITY
The number of
corporates investing is
12 also going up, though it’s
still small in absolute
10
numbers. Corporates
from pharma, tech,
agribusiness, robotics,
etc. are also becoming
active players.
2
1
2012 2013 2014 2015 2016

# of Unique Corporates

AGRIBUSINESS MOVES
IN PRIVATE MARKETS
For a lot of the large

agribusiness corporates,
their private market
activity focuses on
consolidation in their
space. BASF and
Monsanto were the most
active (and have
dedicated VC arms).
Many corporates invest
across healthcare and
food production, given
their interconnected
nature.
#agtech CB Insights Business Social Graph www.cbinsights.com 33

AGRICULTURE CORPORATES ARE GETTING INVOLVED CORPORATES ALSO
WITH ACCELERATORS PARTNER WITH
STARTUPS
Agriculture corporates
have been getting more
involved with startup
accelerators focused on
the ag tech sector. This
strategy gives them
access to early-stage
startups as they develop.
Many of these
accelerators are based
outside of the major tech
markets (or outside of
the US altogether).

Now imagine how the same data technology can improve
decisions farmers make every day. Every square meter of a
field contains hundreds of pieces of data, from moisture and
nutrient levels to real-time weather variables. Like you and
your neighbors, each plant’s day is a little different, and so are
its needs.
Why should we care about each little change in the life of an
individual plant or the soil on the world’s fields? Because each
piece of data farmers collect helps them make more precise
decisions about resources like seeds, water, soil nutrients, and
plant health.
Hugh Grant
CEO, Monsanto
#agtech Source: Time www.cbinsights.com 35

MONSANTO SHIFTS
FOCUS TO INVESTING
Jan 2011 – December 2013 Jan 2014 – December 2016 In earlier years,
Monsanto made an
aggressive move to
acquire companies
across the agriculture
spectrum (genomics,
seed biotech, ag data,
etc.). Recently the
company has ramped up
its investments while
scaling back its
acquisitions.
#agtech CB Insights Business Social Graph www.cbinsights.com 36

MONSANTO PATENTS
Monsanto has stayed

relatively consistent with
the number of patent
applications. The general
gap between patent
applications and patent
grants is small, which
could be due to a host of
reasons, but most of the
patents we tracked
received approval.
*Patent filing process involves a

significant time lag before the
publishing of applications. This delay
can range from several months to
over two years.
#agtech CB Insights Patent Data www.cbinsights.com 37

ANALYSIS OF
OVERALL TOP PHRASES BY SIGNIFICANCE
2009 - 2016 MONSANTO PATENTS
Most of Monsanto’s
patents are focused on
2009 2010 2011 2012 2013 2014 2015 2016 applying different genetic
cultivar soybean soybean soybean soybean soybean soybean wheat combinations to different
corn cultivar corn cultivar corn cultivar corn soybean popular crops. This can
be used to increase yield,
soybean corn cultivar corn cultivar corn cotton cultivar
make crops resistant to
icon cotton container derivative composition composition cultivar cotton
certain pathogens, and
packaging derivative transformation plant trait derivative canola derivative accomplish many
cotton plant derivative culture derivative trait derivative composition other outcomes.
raster canola plant cotton wheat wheat wheat container
gene tissue tissue container container plant composition cell
file complement cotton seed plant cotton dna control publishing of applications. This delay
promoter seed complement tissue canola resistance sprayer dna can range from several months to
over two years

ANALYSIS OF
over two years

ANALYSIS OF
over two years

SOME PATENTS LEND
CLUES TO NEW
TECHNOLOGIES
Monsanto has hardware

and software patents for
some technologies
involved in seed sorting
and monitoring, many of
which leverage machine
vision.

THE CLIMATE
CORPORATION
CONTINUES
MONSANTO’S DATA
PUSH
While Monsanto’s
patents are still focused
on seed types, the
Climate Corporation has
been filing patents
looking more into the
farm hardware space as
well as continuing to use
its data to build more
sophisticated models.

Ag Tech:
BUSINESS MODELS AND APPROACHES
STARTUPS ARE
CHANGING FARMING
Startups are changing all

different aspects of the
farm. How they’re
changing it and what
parts they’re applying
technology to vary. This
market map helps
segment some of the
different areas of ag
tech.
#agtech CB Insights Blog www.cbinsights.com 44

WHAT FARM COSTS ARE BEING TARGETED?
Operational
Expenses
Overheard
Expenses
#agtech Iowa State University www.cbinsights.com 45

PLACEMENT IN THE
SUPPLY CHAIN
Understanding the
different points in the
food distribution supply
chain can help sort who
the buyers of
software/products are
and the specific pain
points that they’re
solving (or how they’re
reformulating the supply
chain altogether).
#agtech The National Academies of Sciences Engineering and Medicine www.cbinsights.com 46

ENABLE, REPLACE, OR
CREATE
REPLACE Do the companies

replace a part of the
existing process, enable
workers in different parts
of the chain to be more
ENABLE efficient, or create
entirely new workflows
that did not exist before?
CREATE
FARM MANAGEMENT SOFTWARE FARM MANAGEENT
SOFTWARE
Dashboards which
aggregate all relevant
information farmers
need to run their
operations. Makes it
easier to spot
inefficiencies in their
systems.

SENSORS SENSORS
Hardware solutions that

provide data streams
about the performance
of crops, machines, etc.

FARM ROBOTS FARM ROBOTS
Robotics being used on

farms. Some of these
automate the more labor
intensive processes in
the fields, while others
are creating new ways to
assess farm health (e.g.
drones).

NEXT GEN FARMS NEXT GEN FARMS
These companies
leverage new technology
to create entirely new
farms or greenhouses.
This is usually a
combination of LED
lights, aquaponics,
robotics, vertical farming,
and nutrient blends.

TREND 1:
DECENTRALIZATION
The dropping cost to

operate farms and the
ability to have farms in
more environments
(especially closer to the
end consumer) means
that produce creation
has become more
decentralized. This
means fewer supply
chain shocks, new types
of farmers, and food
produced closer to the
consumer.
#agtech Harvard www.cbinsights.com 52

TREND 1 (CONT.):
DECENTRALIZATION
Lower upfront and

operating costs for new
farms makes farming
more accessible to the
average person (urban
farms, modular farms,
vertical farms, etc.). This
creates more local
networks and produce
supply that can
supplement the produce
from large farms.
#agtech Freight Farms www.cbinsights.com 53

MUCH CHEAPER THAN THE SMALLEST FARM
Approximately
$7308
Monthly Operating
Expense
VS.
Freight Farms
$1170
*Different types of
farms have different
operating costs
#agtech Iowa State University www.cbinsights.com 54
TREND 2:
ACCUMULATING
LEVERAGE
Software tools are

aggregating the leverage
of small and midsize
farms while also
providing them
necessary tools and
information about other
farmers. With more users
on their platforms, these
companies can negotiate
for better prices and
perform some of the
functions farming
cooperatives currently
fulfill.
#agtech Farmers Business Network www.cbinsights.com 55
TREND 3:
Agriculture Healthcare/ HEALTHCARE->AGTECH
Pharma
Technology trends in the
Gene Sequencing traditional healthcare/
pharmaceuticals industry
and ag biotech run in
Data-Driven R&D parallel. Genomics, AI
powered R&D, CRISPR,
etc. are making headway
in agriculture and seed
Microbiome development. The
Manipulation
technology could find
more applications and
uses in agriculture before
CRISPR
healthcare.
(Gene-Editing)
TREND 4:
VERTICALIZATION
Many companies are

moving from one layer of
the ag tech stack to
another in order to
capture more data per
customer. Companies
that are building
proprietary datasets are
moving into the service
layer, and some
companies are starting
with a full-stack
approach from the start.
#agtech FarmersEdge www.cbinsights.com 57

TREND 5: MOBILE SEES
MOBILE-FOCUSED AG TECH COMPANIES
STRONG FOOTING IN
AG TECH
The number of mobile

users in the agriculture
industry is increasing,
especially in field-related
use cases. This is
important in emerging
markets particularly,
where mobile is the
primary computer.
Mobile plays a variety of
important roles (remote
monitoring, information
dissemination, data used
for ag financial products,
etc.).
Ag Tech:
LOOKING AHEAD
COULD FARMS BECOME
FULLY AUTOMATED?
Robots are becoming

more advanced and
cheaper. As they become
more widespread on
farms, will we reach a
point where they aren’t
needed at all? Many of
the new indoor farms are
near fully automated.
#agtech Youtube www.cbinsights.com 60

COULD FARMS BECOME
FULLY AUTOMATED?
As farms approach full

automation, the skills
needed to be a farmer
could also shift, blending
both knowledge of
agronomy and
technology. This is
important given the
number of people
employed by the
agriculture industry.
#agtech Agriculture.com www.cbinsights.com 61

ALTERNATIVE FOODS
Will food preferences

change entirely,
increasing the need for
specialty farms? Insect
protein as an alternative
is one area that has been
getting a lot of attention
in the media as a more
sustainable alternative to
meat.
#agtech CB Insights Trends www.cbinsights.com 62

ALTERNATIVE FOODS
Will food preferences

change entirely,
increasing the need for
specialty farms? Insect
protein as an alternative
is one area that has been
getting a lot of attention
in the media as a more
sustainable alternative to
meat.
#agtech CB Insights Blog www.cbinsights.com 63

REWRITING THE SUPPLY CHAIN ALLOWS FOR
INCREASED PRODUCE VARIETY
Description: aPeel Technologies offers pre- and post-

harvest coatings made from 100% plant material that
are derived from discarded agriculture by-products.
According to aPeel, nearly 40% of fresh produce is lost
to spoilage, and the company’s natural coatings boast
a 2-5X extension in shelf life.
Effects: Produce that could not previously survive long
supply chains now can. “Local” produce from around
the world becomes more accessible.
#agtech Apeel Sciences www.cbinsights.com 64

GENE EDITED FOOD
CRISPR COULD USHER IN A NEW ERA
OF DELICIOUS GMO FOODS
September 19, 2016
DOES LAB GROWN FOOD TAKE OFF?
$325,000 vs $11
Cost of one cultured burger in Cost of one cultured burger in
2013 2015 (though not yet
commercially scaled)
#agtech
LAB FOODS COULD
REMOVE FARM
DEPENDENCY
Lab-grown foods are

raising more funding to
do things like make
meals-in-a-bottle and
creating animal products.
These labs could
produce food faster and
at a greater scale without
needing a farm at all.

@nikillinit
QUESTIONS? nkrishnan@cbinsights.com
Where is all this data from?
The CB Insights platform has the details on all the
deals included in this report
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CBINSIGHTS.COM
@ cbinsights
+1(212)292-3148
#agtech

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CULTIVATING AG TECH

Examining how the agriculture industry is being reshaped by

“Think of the fundamental value chain of venture

#agtech See what other customers have to say at http://www.cbinsights.com/customer-love www.cbinsights.com 3

CB INSIGHTS NEWS MENTIONS PER YEAR

2010 2011 2012 2013 2014 2015 2016(YTD)

Focuses on Healthcare, Consumer Packaged Goods, Industrials,

Graduate of Columbia University

We’ll be analyzing hardware/software companies that

Private market funding data will be focused on

#agtech Ceres www.cbinsights.com 10

Climate changes are

#agtech EPA www.cbinsights.com 11

#agtech McKinsey www.cbinsights.com 12

#agtech John Deere www.cbinsights.com 13

Mobile is becoming more

#agtech GSMA www.cbinsights.com 14

Several technologies are

CB Insights Trends mines

#agtech CB Insights Trends www.cbinsights.com 17

#agtech CB Insights www.cbinsights.com 18

#agtech CB Insights www.cbinsights.com 20

2017 has already been

#agtech CB Insights www.cbinsights.com 21

Mistui & Co., Kleiner

#agtech CB Insights www.cbinsights.com 22

Early-stage deals into ag

#agtech CB Insights www.cbinsights.com 23

Even though California

#agtech CB Insights www.cbinsights.com 24

Grants are becoming an

#agtech CB Insights www.cbinsights.com 25

Despite the massive

#agtech CB Insights www.cbinsights.com 26

The Climate Corporation

#agtech CB Insights www.cbinsights.com 27

The number of unique

2012 2013 2014 2015 2016

#agtech CB Insights www.cbinsights.com 28

Few investors have 5 or

#agtech CB Insights www.cbinsights.com 29

From barely any

#agtech CB Insights www.cbinsights.com 31

2012 2013 2014 2015 2016

#agtech CB Insights www.cbinsights.com 32

For a lot of the large

#agtech CB Insights Business Social Graph www.cbinsights.com 33

#agtech CB Insights www.cbinsights.com 34

#agtech Source: Time www.cbinsights.com 35

#agtech CB Insights Business Social Graph www.cbinsights.com 36

Monsanto has stayed

*Patent filing process involves a

#agtech CB Insights Patent Data www.cbinsights.com 37

#agtech CB Insights Patent Data www.cbinsights.com 38

#agtech CB Insights Patent Data www.cbinsights.com 39

#agtech CB Insights Patent Data www.cbinsights.com 40

Monsanto has hardware

#agtech CB Insights Patent Data www.cbinsights.com 41

#agtech CB Insights Patent Data www.cbinsights.com 42

Startups are changing all

#agtech CB Insights Blog www.cbinsights.com 44

#agtech Iowa State University www.cbinsights.com 45

#agtech The National Academies of Sciences Engineering and Medicine www.cbinsights.com 46