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Skin in the game: Who’s really invested in agtech?

by Agtech Central editor, Sam Trethewey, 19 July 2018
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IN the fast moving, exciting new sector that is agtech, where and who do we look to for the next great innovation?

It’s an emerging, and immature sector, with great opportunities lurking, but the reality is we need to exercise some caution and manage our expectations on who’s actually going to deliver the goods.

Farmers wouldn’t know life without it and startups live and die by it. Researchers are immune to it, and most corporates dodge it. What is it?

Skin in the game.

Innovators in the fast-growing agtech startup world are, like farmers, fueled by purpose, conviction and in the end, are absolutely attached and accountable for the risks they take. This defining feature of the startup space completely segregates itself from ag research and development on this point alone, an area of growing concern in the agricultural innovation community.

But like any new business that’s trying to grow, startups need your support. Whilst they lack deep pockets (or any pockets in some cases), and don’t boast widespread distribution or connections in the industry, what they do have is hunger, speed, agility and the bittersweet fear of failure pushing them. This is where farmers and startups align, and leave the academics and researchers for dead.

Why the mention of academics and researchers? Well there’s a common, justified and growing level of intolerance to the combined round-a-bout $1 billion per year that is spent on agricultural research across RDC’s, universities and national science bodies.

The bang for buck the industry is getting in return is similar to buying a bottle of water from a hotel mini-bar. Extortion. But unlike a mini-bar, where you experience instant gratification, many of these researcher types think in ‘dog years’ – where one year in their life is seven in ours.

Whilst I’m not suggesting these institutions be replaced with just startups and venture investment, we should question the disproportionate amount of cash splashed on people who have no skin in the game and therefore, are unanswerable to any downside on wasted money, useless technology and failure to hit the market with anything more regular than a blue moon.

This is, in essence, why farmers have been and will increasingly be sceptical towards research institutions, and why startups and farmers will in time, share a long, strong and valuable relationship.

Corporates and large organisations are also in a similar situation. Bureaucracy exonerates skin in the game, and there are few who have put their money where their mouth is and invested into the agtech ecosystem or directly into startups.

These standout companies exhibit a behaviour that is distinctly un-Australian in their resistance to our common conservatism, but absolutely in-line with international best practice, so all the power to them. They understand that the corporate world is moving quickly to a time where a large company’s average lifespan is similar to that of a kelpie.

Necessity is the mother of innovation – farmers know this – and startups feel it every day. The hunger to win bread and go big by fixing problems to attract revenue and investment is the sword startups live and die by, and it’s simply an incomparable world to the comforts enjoyed by the thousands who feast on the $1 billion a year levy and tax-funded research pie.

Startups have created trillions of dollars in value around the globe in the last decade and have changed the way we do a lot of things. So I have no doubt that as support grows for Australia’s agtech sector, we’ll see more disruption across the industry by startups who will drive real change for farmers at an unrivalled economic rate of return, better than that of R&D ‘investment’.

So when assessing a tech, team or innovation, ask yourself, will they personally feel the downside of not getting their product right? Because it’s that mutual existence of constant skin-in-the-game that is the bedrock of a relationship between a startup and a farmer. So where possible, embrace startups who just like you, have something to lose and are having a crack.

Isn’t personal accountability a beautiful thing.

 

About Sam Trethewey

Sam Trethewey is from a farming family and has worked across Australia and overseas on most major commodities including beef, wool, lamb and cropping. He co-founded SproutX, Australia’s first and largest agtech accelerator and investment fund where he spent nearly three years developing an ecosystem of support for agtech startups. He has been a regular commentator on agriculture through print, radio and online and has recently started his own food production company whilst also working as Head of Brand for Redhanded, a rural and regional communications specialist.

 

Questions? If you’ve got an agtech topic you’d like Sam to tackle, please email sam@beefcentral.com.au



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Reader's Comments


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  • dyan hughes July 19, 2018

    Consistently challenged & disappointed in technology. Tying to keep abreast of changes – early uptakes in a lot of things. With trepidation embarking on Walk-over-weighing, and keen for virtual fencing. Would like to hear from people having wins, because to date we have only had lost production & frustration from simple things like Maia Grazing & Stockbooks, and that is after removing myself form implementation through delegation to younger & smarter generations, all the while lamenting efficiencies that were a strength, lost to embracing technology. The major benefit to our operation has been Low Stress Stock Handling that has had nothing to do with technology thank heavens!!

  • Mark Orr July 20, 2018

    Being a startup, our opinions are closely aligned Sam! Great to find support from Beef Central.

  • Dick Morgan July 20, 2018

    Startups are great! A lot of them fail but those which survive and make progress often bring very useful innovations to us all. But don’t write off academia. Just imagine a researcher trying to work out how a certain plant can grow and flourish in the desert with little or no soil moisture. If that plants genetic material can be isolated and transferred to wheat or oats or barley, farmers would be able to grow their crops on previously unproductive soils. Droughts would cease to be a problem and food supplies would be ensured despite the weather conditions. In this scenario I don’t think ‘skin in the game’ is that important or necessary.

  • Dougal Gordon July 24, 2018

    You make some good points Sam. However, I’d like to comment in response to your accusation that there is minimal return on investment from ag R&D and that ag research organisation’s don’t have ‘skin in the game’. Numerous independent reviews done over decades universally concluded that there are strong industry benefits from investment in rural R&D. Secondly, ag R&D organisations like NSW DPI are both providers and funders of rural R&D. For example, NSW DPI is currently investing $17.5m in cash towards the Livestock Productivity Partnership, an initiative aiming to improve the productivity and profitability of the red meat and livestock sector. We have also invested significant dollars towards ag tech, both in partnership with start ups but also to ‘ground truth’ ag tech to ensure it truly provides value to producers. Whilst start ups are vital, and there is always room for improvement in communicating the value of rural R&D to relevant stakeholders, we must be careful about ‘throwing the baby out with the bath water’ regarding Australia’s enviable ag R&D arrangements.

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