Is scaling ever plain-sailing in agri-tech?!

“Growing pains; the struggle to scale in agri-tech”

The recent announcement at WATIS of the UK’s new “Agri-Scale” programme (with Agri-TechE member MTC as partner) shows the government’s recognition of the challenges of growing agri-tech businesses. But why is agri-tech growth such a bumpy road, and what are we doing to tackle it?

The “scale-up challenge” is a well-articulated issue that isn’t unique to agri-tech but one which is, for various reasons, even harder in our sector. Seasonality (you may only get a data set once a year), the weather, pests or diseases wiping out a critical on-farm trial, and the lack of “agri-literacy” among some investors means the ground for agri-tech growth hasn’t been as fertile as we’d like.

Added to that, some farmers won’t engage at scale without the business having a proven track record. Their (not unreasonable) concerns about working with a small venture that might not stay the course are common and threatening to strangle the growth ambitions of many businesses.

Global from the get-go… or not?

There is often a mismatch between the ambitions of the founders and their investors, and the support structures in place to help them. Investors (especially venture capitalists) – with a keen eye on the size of the prize – might push to “go global” to gain rapid growth in different markets.

But a lack of growth-stage capital or finance for operational scaling – certainly in the UK – might be at odds with that ambition. This can send UK-seeded companies off-shore in search of a more nurturing environment in which to flourish – taking their value with them.

There is also a shortage of mid-market support structures. Companies quickly outgrow incubators and accelerators years before they’re ready for exit, so they turn to non-dilutive grant finance to get them through the Valley of Death.

This can be a lifeline, it can also trigger investor scepticism – demonstrating that they are great at writing grant applications, not gaining commercial traction. So, while it’s a useful strategic tool, it should be deployed with caution.

Over a decade of REAP Start-Up Showcases

At our upcoming REAP conference we’ll be featuring our hotly-anticipated line-up of growing ventures seeking investment, partners, collaborators, and customers.

Looking back over the years, it’s heartening to see some of the businesses who are delivering the technology at scale. Some through strategic partnerships (such as Yagro and fieldmargin who were part of the 2015 Start Up Showcase cohort), Better Origin (2015) is still going strong, as is Dogtooth Robotics (2016), Petiole (2017), Fotenix (2019), Sound Agriculture (2021) and SugaROx (2022), and many more of their counterparts we have featured.

“What are your prospects?”

We like to think we have got pretty good at picking winners – in all modesty!

In other sectors, such as pharmaceuticals, the sole aim of many companies is to grow the value in the business for an acquisition or licensing deal with a big player. We need to get better at developing a long “engagement” with the ambition of an eventual “marriage”, rather than lots of singletons hoping to gain traction one farm business at a time. It might just help with the scaling issue to have a willing suitor waiting.

To discuss this in more detail, Agri-TechE is hosting an event in partnership with Syngenta to discuss global de-risking and scaling – it is invitation only but if you are growing global and would like to apply to join us, please get in touch.