Happenings: I will be joining a panel on AI in agriculture hosted by Co-Bank on August 7th. You can register for the free event here. AgTech Alchemy is hosting an event in Chicago called “The Soy-Bean” on August 14th. You can register for the event here.
Was the dress blue and black, or white and gold? Should you buy or lease a car? Should you rescue or get a dog from a breeder? For many such questions, the answer is “it depends on your unique situation” (I do have to admit I am a strong proponent of rescuing dogs and not fond of breeders.)
A similar version of the debate is prevalent in AgTech.
As an AgTech company should you go direct-to-farmer or through a distribution channel to get your product to market?
The expected and frustrating answer is “it depends” as there is a lot of nuance.
For example, Patrick Honcoop talked about the importance of distribution through channel partners for a startup to scale on his viral LinkedIn post last week. He highlighted a few reasons why most startups who tried to go direct-to-farmer struggled to move forward.
❎ High costs to build and maintain a dedicated salesforce
❎ Lack of local knowledge and relationships
❎ Farmers aren’t waiting for another company knocking on their door
❎ It takes years to become a trusted partner
To his credit, Patrick did lay out a few exceptions to his general heuristic.
- You’re selling a high-ticket, complex solution with enough margin to justify building a network
- You have a very low-cost software product with a lean team and it solves a clear pain point (though very few Digital Ag companies have cracked the “online only" model)
- You can build your business in a small, dense territory that eliminates the proximity challenge
- You’re selling to enterprise customers, not directly to farmers
This advice is not very different from what I give to young startups.