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Can Australia be a global leader in AgTech?

Last month a large international group of investors and entrepreneurs met in the heart of the tech world, San Francisco.

GAI AgTech Week is an annual event that attracts world leaders in the emerging field of AgTech -- that is applying technology to what is arguably the world's oldest business.

The week was notable for many things but foremost among them was the disproportionate impact of three countries: Australia, New Zealand and Israel.

Technology and agriculture are surprisingly new bedfellows. Clearly many believe this can become a lucrative business and for some it already has. When Monsanto bought the Climate Corporation, they created the first AgTech unicorn. While Silicon Valley unicorns may have lost some of their rainbow sheen, conference delegates universally expressed their belief in the inevitability of technology playing major role in agricultural production.

The new category is here to stay.

Landowners and asset managers have been investing in productive farmland for decades. However, when technology combines with agriculture however, the lines get blurred in a way where no natural leader emerges from the pack. What has emerged is a class of specialist AgTech investors -- investors who are neither straight venture capitalists nor traditional asset investors. Companies like Finistere Ventures, Verdex Capital and Cultivian Sandbox are leading this  new group of investment specialists.

GAI AgTech Week covers a wide range of topics from the perspective of both the investor and entrepreneur, but it is primarily intended to serve as a place where willing capital and innovative ideas can mingle.

Jerry Caulder, Chairman of Finistere and biotech industry titan, in speaking about how to improve the pipeline of research to commercialisation and growth capital, made specific mention of Australia and New Zealand as fertile sources of innovations in the space.

So if AgTech is a good long-term bet for profitable investing, and Australia is already recognized as having high potential, the question must be asked:

Are we making the most of the opportunity?

First and foremost we are not starting from scratch. Australia is already recognized as a world leader in many aspects of agriculture. Amy Kircher,Director, Food Protection and Defense Institute, University of Minnesota says Australia has the best food safety system in the word. Investors such as Finistere already recognize Australia as a world class source of research innovation. There are many companies operating in the field internationally including Observant (the company I cofounded), Agersens, Swarm Farm and AgDNA to name but a few.

Paul Turner, CEO of AgDNA, himself an early innovator in GPS auto-steer (a technology pioneered in Australia and now standard equipment of Ag machinery worldwide) is taking his Australian startup to the US to continue its growth and investment plans. AgDNA launched the investment activities of a novel crowdfunding platform, AgFunder, cofounded by Australian Michael Dean.

It is worth remembering that Australia didn't become a world leader in iron ore in a few short years.
Matthew Pryor, Observant

We shouldn't lament the loss of exciting companies like AgDNA, we should see it as the natural progression for innovative companies and do our best to send 50 more companies in short order.

Founders who take their companies to the US often end up returning to Australia and bringing their experience, skills and networks with them. It makes our innovation ecosystem stronger. Yes it might seem like a long game, but agriculture has always been a realm that requires patience.

Arama Kukutai of Finistere spoke of the seasonal nature of agriculture that makes it like no other investment field -- if you miss by one month, you can miss a whole year.

It is worth remembering that Australia didn't become a world leader in iron ore in a few short years. Securing a long-term and profitable place in the emerging market for AgTech will require both the long view and targeted policy.

Developing an innovation pipeline of technologies and the companies to commercialize them will require focus on some key areas. While the audience at GAI AgTech Week was made aware of exciting research being conducted in Australia and New Zealand, the enthusiasm was tempered by the fundamentally broken approach to commercialisation most research groups have.

Jerry Caulder, the Chairman of Finistere Ventures,had some very specific suggestions for how to address these problems, such as encouraging universities to work directly with startups and venture capitalists, and spending less time writing research grants. Universities need to get used to the idea of taking equity rather than license fees.

During the week, many other problems obstructing the path for AgTech were raised. Firstly, there is a relatively small pool of venture capitalists who work specifically in the field - perhaps as few as 20. Further downstream, there is also a limited number of private equity companies to provide growth capital for maturing companies.

Another obstacle was identified by Mark Carlson of Verdex Capital, who discussed the historical lack of opportunities for investors to get returns in the form of exits in order to draw in more investors . Mario Portela of TPG ART outlined another in concerns among private equity firms that there is a relatively small pool of experienced management who understand both agriculture and technology.

The reality is that Australia does not have everything it needs to solve all these problems; to take these innovations all they way to fully realized successes. So what we need to do is focus.

Focus means getting innovations into startups quickly. It means supporting those startups with infrastructure and early-stage capital. It means being open for business to international investors to help take the innovations global.

We need to incent experienced expats to return home to help build Australia’s innovation ecosystem. And with the impact our neighbour is also having on innovation, cooperate more directly with New Zealand and pool our resources.

It is great to be talking about AgTech in the heart of Silicon Valley, but even better to be excited about the opportunities 12,000km away back home.

Matthew Pryor is the Chief Technology Officer for Observant, a fully integrated farm information management platform founded in Australia.

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1 Responses

    Seems like a great opportunity, but it won't just happen. What is the innovation PM really doing to support this sort of thing?

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