Agritech Twitter Chat Recap

27 July 2020
New Zealand Agritech innovation twitter chat

Following the launch of the TIN New Zealand Agritech Insights Report and the Government's launch of the Industry Transformation Plan for Agritech, we hosted our very first Twitter Chat, discussing what’s driving agritech innovation forward in NZ and what’s holding it back. We had a lively and informative discussion with contributions from a wide range of leading voices from NZ’s agritech eco-system.

You can read the tweets below and keep the conversation going by following TIN on Twitter and adding your comments using the #TINChat hashtag.

Q1: What is driving agritech innovation forward in New Zealand? … And what is holding it back?

LIC: New Zealand has a strong reputation for our pastoral farming system, which means we need to develop technologies suitable to our environment, this can also limit our ability to scale internationally and grow into global markets.

Lincoln Agritech: Our farmers are innovators and early adopters. It’s a great market to develop and test new agritech to take on the world. Agriculture is still a prominent part of the NZ economy. Several years ago we recruited a Precision Ag scientist that wanted to come to NZ from Germany. He did this because we were a first world economy where ag was significant; we are not a small player.

Greg Shanahan (Managing Director, TIN): Historically, farming was the crucible for New Zealand's early entrepreneurial and innovation spirit. Today, we have an opportunity to leverage our primary industries even further with the disruption of modern technology.

Pastoral Robotics: One of the things holding it back is the refusal of funding agencies to understand the most expensive part of R&D is the early commercial stage (they generally won't fund). New release products need seriously intense support (that is unless you have a billion $ research budget). At the end of the day the drive to take it forward is that of dedicated entrepreneurs coupled with a usually helpful approach to regulation. Conversely one of the big holdups is the time and cost of bureaucracy, both within government and within large corporates.

Nicky Molloy (Callaghan Innovation): What is driving NZ forward in Agritech is our connection with Farmers and Growers and our ability to easily access the people with real problems and find ways to solve these. Challenges are finding ways to scale and for NZ that means looking at scaling offshore. There is government support in the form of R&D Tax Incentive, R&D Loan scheme, and regional business support – find out what options best suite your business at this time and access the help that you need. Now is the time get your business in order. Are you an investor ready business?

Brendan Boughen (Operations Manager, TIN): As editor of this Report, the thing I clearly saw as the driver of the sector are the people. There are so many committed, smart, enthusiastic folk involved in NZ agritech who are committed to collaboration and innovation.

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Q2: What are the biggest challenges & opportunities for Kiwi agritech companies in a COVID-19 world?

Lincoln Agritech: Not being able visit international markets and customers. It’s going to require innovative business techniques to keep momentum rolling without these in person market visits. It’s not just about using video conference facilities. If you have an exported tech product that needs installation or servicing you are going to have to find a skilled person in market to do that for you. It’s okay if you have a distributor in market, but challenging if you don’t.

Greg Shanahan (Managing Director, TIN): Supply chain management is a key growth opportunity for NZ agritech. Irrespective of economic cycles, food remains an essential, so by utilising tech to lock in international channels of food supply, we can build a resilient business model.

Agritech NZ: Closed borders are impacting on some agritech companies ability to access offshore markets. Plus there is some evidence that funding from offshore VCs is being delayed. Increasing focus on local and regional supply chains will emerge post-COVID-19.

LIC: Opportunities: we have a long term view on agritech and are always on the lookout for new technologies that benefit NZ farmers. Greater demands for efficiency may create new opportunities for time-saving technologies. Challenges: a new sales landscape without travel is posing a significant challenge in creating what would have been in-person engagements now virtual.

Nicky Molloy (Callaghan Innovation):  The challenges - money! We know from the surveys we have done with the Callaghan Innovation companies that there are challenges around accessing money for various reasons i.e. slow down on the capital raising front, offshore market launches delayed etc. The opportunities- never been so much support on offer to help businesses so make sure you are accessing all that you can -

Pastoral Robotics: Both a challenge and an opportunity is the fact that one of the biggest sources of money, the US VC community, understand a different type of farming and often do not see the picture. Another challenge is that investors love to talk about investing in the environment but do they actually like to invest in it? Many NZ opportunities are environment centric. At the end of the day the drive to take it forward is that of dedicated entrepreneurs coupled with a usually helpful approach to regulation. Conversely one of the big holdups is the time and cost of bureaucracy, both within government and within large corporates.

Q3: What are investors looking for in potentially successful agritech start-ups?

James & Wells: We see lots of companies and investors interested in Deep IP opportunities. The trick is knowing how to own and leverage that IP; investors want to see a clear IP strategy and steps to own your tech. We have a helpful checklist:

David Downs: Channels to market, a strong product market fit.

Lincoln Agritech: Unicorns sign! Not every profitable company in the world has to be a Unicorn. There are very profitable investments that can be made that don’t go on to become billion dollar companies. Who wouldn’t want a slice of Gallaghers for instance. They aren’t a Unicorn.

TIN: “New Zealand is a globally relevant centre of excellence with key advantages – high quality publicly funded research through universities and CRIs, and the internationally recognised food and agriculture industry sectors." – Arama Kukutai, Founder, Finistere Ventures

Agritech NZ: The ability to scale globally and address global issues. Disruptive technologies are often more attractive to investors than incremental ones. Deep IP is also often cited as an attractive proposition. Think Robotics Plus

Q4: R&D expenditure by agritech companies was low last year. What needs to be done to make increasing this worthwhile?

James & Wells: This requires a multi-pronged approach. R&D tax credits will make R&D investment more attractive. However, businesses also need to be comfortable with the risk of failure, and plan for longer-term returns on investment. Recognition of the value of R&D is also critical… Plus entrepreneurs should get realistic feedback on the market's willingness to meet their price point, whether the size of the market is realistic, and that their solution meets the customer's needs.

Lincoln Agritech: The companies need to see value and return on investment (ROI) within a reasonable timeframe, but it is dependent on a company’s strategic horizon – near/far. Incentives can help but is often not the main driver.

Greg Shanahan (Managing Director, TIN): With New Zealand's strong global reputation as a reliable food producer, opportunities exist for agritech companies to help the primary industries leverage this in ways that will add more value and help earn more for our produce."

LIC: Applying a commercial lens over R&D to ensure further developments have market appetite

Nicky Molloy (Callaghan Innovation): It’s common knowledge that high-value R&D activity is critical for a faster economic recovery. We have seen that companies that spend more on R&D recover faster in a crisis as it creates new and innovative export opportunities, while lifting New Zealand’s productivity.

Q5: What are the key factors why NZ agritech start-ups fail?

Pastoral Robotics: Time, money, founders worn down by the system...

Nicky Molloy (Callaghan Innovation): Come up with an idea is easy but commercializing is hard! An idea that solves a global problem, determined well connected entrepreneurs and advisors early, understanding scaling and capital raising and IP management and finance, understanding product market fit ... get help.

Agritech NZ: There are many; Failure to understand farmers / growers real needs; under capitalisation; focus on small narrow markets; issues around data interoperability - and many more… There is good evidence that when you get a collaborative framework such as PlantTech in place, startups and early stage companies can benefit from the network effect.

Lincoln Agritech: Accessing capital is still a big issue

TIN: The capacity to scale globally remains a key challenge for agritech start-ups. "Kiwi companies need high levels of active support in moving beyond R&D and transitioning into global markets." – Arama Kukutai, Founder, Finistere Ventures

Q6: What is the “next big thing” in New Zealand agritech?

Lincoln Agritech: It’s in wool and it’s been developed in the lab now, but we can’t tell you any more at this stage…….

LIC: Efficiency drivers, and AI decision support tools

Nicky Molloy (Callaghan Innovation): Big issues with labour around the world – both not enough and the increasing cost and this will be compounded by travel restrictions. How can technology remove the repetitive, manual tasks from i.e. an orchard?

Agritech NZ: An increase in collaboration to address traditional challenges of scaling. The Agritech ITP, just launched, will provide significant support for this over the next two years. Collaboration leads to transformation.

Q7: What can tech firms in other sectors learn from New Zealand’s agritech companies?

LIC: Listen to the market problems and have the confidence to go out and solve them.

Nicky Molloy (Callaghan Innovation): Working early with your end user to solve a problem. Great to see so many Agritech companies actively working with growers and farmers when they are developing solutions.

Agritech NZ: Bringing diverse stakeholders such as industry, research and government together to develop a coherent long term sector strategy. The Agritech ITP is a model for other tech sectors.

Greg Shanahan (Managing Director, TIN): There are plenty of opportunities to learn from the examples of fast-scaling tech companies in other industries. The key is not so much the tech, but the business model; eg. recurring revenue service models with marginal cost of new customer acquisition…. NZ tech businesses have become masters at using technology to address poor economies of scale on a limited budget. This is now helping to create efficiencies in essential services such as food production and healthcare globally.

TIN: Do everything you can to collaborate and find partners with whom you can work – and win. Focus on challenges that are globally scalable, and leverage all the support, people and resources that our amazing NZ tech ecosystem has to offer." - Emma Parsons, CEO of Agrigate

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