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Happenings
If you missed downloading part 1 of the GenAI report, you can still download it for free. The second part of the report is taking shape and will be out in the next few weeks. The second part will cover the value side of the equation for GenAI in Agriculture. Download the first part of the report “POC to OMG! The Realities of Deploying GenAI at the Farm Gate”.
The false dichotomy of Salinas Valley vs. Silicon Valley
If we look at the US Venture Capital industry as a whole, the VC industry has been a massive force multiplier for R&D spending, innovation, and value creation, according to research published a few years back. The AgTech industry needs to continue to figure out the types of problems which are most amenable to be solved and scaled using venture capital.
Venture capital-backed companies account for 41% of total US market capitalization and 62% of US public companies’ R&D spending. Among public companies founded within the last fifty years, VC-backed companies account for half in number, three quarters by value, and more than 92% of R&D spending and patent value.
The US did not spawn top public companies at a higher rate than other large, developed countries prior to 1970s ERISA reforms, but produced twice as many after it. Using those reforms as a natural experiment suggests that the US VC industry is causally responsible for the rise of one-fifth of the current largest 300 US public companies and that three-quarters of the largest US VC-backed companies would not have existed or achieved their current scale without an active VC industry.
Whither AgTech?
Sarah Nolet wrote a very thoughtful essay “Is Agtech Broken for Venture Capital—or Are We Asking the Wrong Question?” , where she tried to diagnose some of the issues with venture capital and AgTech. Her essay had been brewing in my mind for some time.
When things don’t go as expected, we always look to find a scapegoat. There is no easier scapegoat to find than the “clueless VCs in Silicon Valley” for all the troubles of AgTech.
The “Silicon Valley VCs” have become the you-know-who’s of AgTech.
Many folks make statements, which are reminiscent of the Main Street vs. Wall Street debate and use Salinas Valley as the analog for Main Street. Salinas Valley (which is the salad bowl of the United States) represents farmers and farming communities.
Silicon Valley is a caricature of the “clueless VCs” from their fancy offices in the Silicon Valley and who push certain agendas which are at odds with how agriculture works.
As usual, the world is more complicated than simple binary narratives.
I mean, if you want simple binary narratives, which are not based in facts, you can just go listen to the All-In podcast, though fortunately they do not cover Agrifoodtech.
In order to get to the bottom of this question (and I am still working on it), I decided to go and talk to some VCs (regular and corporate VCs), quite a few entrepreneurs, experienced strategic agribusiness employees, and other experts to get their opinions.
While many people agree that venture capital is not the right fit for many problems in AgTech (and this is true outside AgTech as well), there are many reasons why it might be the case, and why AgTech has struggled to find adoption and scale.
In today’s edition, I will try to synthesize what I have learnt.