These days you don’t have to look far to see that agtech is on the map in Australia.
The agtech startup ecosystem – yes, there’s a whole ecosystem now – is exploding as investors, entrepreneurs, corporates, and government recognize the potential benefits.
Programs to showcase and support agtech startups, such as pitch competitions, accelerators, and incubators, are increasing in popularity.
Agribusinesses and ag research organisations are embracing the new techniques, tools, and mindsets championed by startups, such as design-thinking and customer-centricity. And everyone (or so it seems) is headed to Silicon Valley or Israel to learn about innovation from the so-called world’s best.
Agtech is of course not a phenomenon unique to Australia. Agtech is a new industry that has emerged globally, driven, at least in part, by the accessibility and affordability of new technologies. In Australia and around the world, agtech is attracting new participants (e.g., venture capitalists (VCs), entrepreneurs), and these new participants bring different skills, networks, and areas of expertise than traditional technology providers in agriculture.
New innovators, and the products and services they are developing, hold potential to help Australian agriculture increase in profitability, align with customer demands, reduce negative environmental impacts, and create new career opportunities in regional communities. However, the reality is that thus far the agtech industry has failed to deliver on these promises.
As a result, producers are increasingly skeptical of the value that entrepreneurs and new technologies can bring to Australian agriculture. We are seeing this expressed at conferences, in data showing low rates of satisfaction with technologies, and even on social media.
We are in the downward spiral of the tech adaptation curve, with numerous failures coming to market. I wish we could implement a “cone of silence” over our growers till this passes by.🤣
— John Witter (@JohnWitter_Ag) October 6, 2018
Too many agtech products and services are missing the mark
In some ways, this skepticism is normal and to be expected in a new industry like agtech. Large numbers of new players are entering agriculture, challenging the status quo, and rapidly building and releasing new products- often with imperfect information and untested technologies. For customers especially, new industries like agtech feel chaotic. These dynamics are even more complicated in agriculture, as it is a complex and challenging environment in which to deploy technologies.
But beyond the fact that agtech is a new industry, and that developing technologies for agriculture is challenging, there exists another issue: the value propositions of agtech products and services are missing the mark.
In too many cases, technologies are being pushed into the industry by entrepreneurs who do not understand the complexities of farming, rather than pulled in by producers who see value to be gained from adopting agtech solutions. As a result, the technologies fail to solve real problems in a practical way, leaving producers frustrated and unconvinced of the value that the agtech industry has to offer.
Why is agtech so hard?
Building a successful technology startup is incredibly difficult. So hard, in fact, that most startups will fail. Building an agtech startup is, in many ways, even harder than in other industries. There are several reasons.
1. Lack of domain expertise
Though there are agtech entrepreneurs that come from the agriculture sector and embark on the startup journey to “scratch their own itch” (i.e. build a solution that solves a problem they have experienced), many agtech entrepreneurs do not have agriculture backgrounds. Entrepreneurs that lack deep awareness of the problems that producers face, and the context in which they need to solve them, are extremely limited in their ability to create useful solutions.
2. Lack of industry networks
Entrepreneurs in agtech that do not have agriculture backgrounds also lack the industry networks and credibility that are necessary to connect with producers. Agriculture is an especially relationship-based sector and entering from the outside can be difficult. This presents a challenge for entrepreneurs, who need to check in with actual customers as early as possible, so they can capture feedback on their solution.
3. Producers are being asked to engage with- or buy- products with limited functionality
Producers are increasingly being asked to be part of the product design process, starting at the very early stages when a startup may only have an idea or a prototype. This style and stage of farmer involvement is unprecedented in agriculture: previously, researchers and technology developers from large organisations with large budgets have developed full-featured offerings before coming to the market. To make matters worse, some startups attempt to charge producers for what they are calling a “minimum viable product (MVP),” when in reality the product does not solve a problem. In other words, it’s not “viable”.
4. Iterative product development processes take time, and time is money
In many cases, producers are being asked to give significant support to startups without compensation for their time, or acknowledgement of their input into the development process. On one hand, entrepreneurs are investing significant time and money into their startup, often working for years on low salaries and at great personal sacrifice before any revenue is generated. These entrepreneurs want feedback from users so that they can build better products that add more value. Yet on the other hand, growers are hearing about venture capitalists investing millions of dollars into startups, who are then asking them for what seems like valuable information, and even more precious time, without compensation. This mismatch in expectations prevents meaningful engagement between startups and farmers.
Building more agtech products worth adopting
How can we overcome these challenges and develop more agtech solutions worth adopting? Ultimately, it will take a systems approach. No single group- entrepreneurs, farmers, government, or research organizations- can solve it alone.
In our recent report, Accelerating the development of agtech solutions worth adopting, funded by AgriFutures Australia, we suggest nine practical and actionable opportunities for entrepreneurs, producers, and sector supporters (i.e., research organizations, policy makers, grower groups, etc.). All nine are shown in the image below.
Emerging technologies and the new innovators in the agtech industry in Australia have the potential to revolutionize agriculture for the benefit of participants. But to do so, both agtech and agriculture must come together.
The project “Accelerating the development of agtech solutions worth adopting” is supported by funding from AgriFutures Australia as part of the AgriFutures™ National Rural Issues program. You can download the report for free here.