on ag and food technology funding for 2016. Not surprisingly many in the industry are finding that capital investments have declined significantly from the previous year. The numbers tell us that there are 30% fewer dollars being directed to this market sector overall. On a high note the number of startups was up 10% last year. More companies entered the fray in the hopes of grabbing that big brass ring.
Hit the Reset Button
When asked as to
the “why” for this sharp decline in investments AgFunder CEO Rob Leclerc
stated, "Investors are becoming more aware of the challenges in distribution
and adoption rates. New investors in this space didn't realize how hard
distribution might be. It's raising
risk, it's seeing companies not growing as fast as they'd like them to grow,
and that's a real challenge," he said. https://agfunder.com/
The Influencers Hold the Cards
So two things
here require some further discussion. Adoption rates and distribution. At first
glance one might be inclined to say that without one you cannot have the other.
He is right in separating these two challenges in that distribution is driven
by the gate keepers of technology for growers, or as we commonly refer
to them, “trusted advisors”.
No Such Thing as a Free Lunch
While these
companies understand the need to offer technology services, or any services for
that matter, they are also well aware of the risk involved in not being able to
charge the customer a fair price for them. It may be that in order to prove the
value in using these new tools they may just have to offer them at a discounted
rate or even worse - give them away for free.
Back to the Drawing Board
Investor are
finding that growers have not been convinced of the value, the retailers - not
wanting to lose money on their service offerings - are hesitant to buy and the
tech companies can’t give it away because they told their investors that they
would provide a significant return on their capital contributions in a
relatively short period of time. Thank heavens for the early adopter retailers who are trying to establish an advantage over their competitors!
There are ways
to crack this nut. It might just require some new strategies in order to do so.