The views expressed in this Member News article are the author's own and do not necessarily represent those of Agri-TechE.
There are few pursuits as noble as providing food to feed a hungry world. And while you won’t find them in a field, organizations like YB AgTech, a division of Yellow Brick Capital, are vital to ensuring the future of farming. As the London-based company’s website says, “we are committed to contribute towards a sustainable future for the planet.” Yellow Brick does that by investing in “innovative private equity opportunities concentrating on food security via precision agriculture.”
The company recently named Johan van Zyl as Group CEO, replacing Johnathan Kol-Bar who will remain as Executive Chairman. van Zyl previously served as the company’s Chief Operating Officer. AgriBusiness Global interviewed van Zyl to learn what YB AgTech looks for in a company before it invests, what impact those companies will have on ag, and how it tracks and measures success. The original article can be found here.
Why/how does Yellow Brick Capital/YB AgTech view the agriculture market (why is it important and worthy of investment)?
Johan van Zyl: There is an ever-growing population that needs to be fed. The human population currently stands just shy of 8 billion people, with a growth rate north of 1.1 % year on year. That is double of what it was in 1974.
The answer does not lie in cultivating more land. Available agricultural land is decreasing. It needs to lie in utilizing more efficient, and more sustainable agricultural practices. We need to utilize our ever-evolving technologies and massive amounts of data available to us to educate and empower the more than 608 million family farms.
Governments do not know how to achieve sustainability levels, and need real guidance from role players with knowledge, experience, and the right tools. Various input and supply chain challenges, especially logistics, fertilizer costs, spiraling inflation, and the fragility brought to the forefront by COVID, are forcing countries to become self-dependent on local supply. Growers need affordable tools to empower all of them to become reliable suppliers in the food chain.
There is a need for the holistic viewing of the critical components of agriculture. And the right collaborations will allow these critical components to work in a centralized system allowing real influence on all levels of agriculture.
What makes a particular technology attractive to your organization?
van Zyl: Our specific focus is on education, empowerment, and plant nutrition, but any technology that will revolutionize the industry is always attractive. There are many start-ups, especially in agriculture, and it is a minefield navigating them all, but there are some real gems at the moment, which really do something different. Being able to bring all these services together in a single platform serving the grower, where technologies talk to each other, is a very attractive proposition going forward. We are doing it with irrigation and fertilization, and looking to grow this into other spaces.
Can you talk about your approach to investing (how involved in the management/ownership do you get)?
van Zyl: Currently we have three types of investments in our portfolio. The first is early-stage investments with potential and strong management to support that potential. Typically, these companies have products and technologies outside the scope of the operational aspect of Yellow Brick AgTech. One of our first investments was a company called PhyTech, one we are particularly proud of.
The other is investments into companies with an equity swap whereby we see the importance of the company and its technologies in our plant nutrition ecosystem. Companies such as I-Feeder Technologies and i-Plant Nutrition are examples.
The third is companies we start ourselves to fulfil a need we see in the market in our developments, such as Yellow Brick Indoor Farm, which will act as operational farm and testbed for our technologies, as well as an incubator for other agricultural technologies.
What does Yellow Brick AgTech offer these companies (money, ag expertise, management experience, etc.)?
van Zyl: All the above, and financial experience. With over 50 years in the agricultural market, another 45 years in the banking sector, and the support to invest when required, whoever is part of our portfolio knows they will get the right advice and support to make the company to not only reach its potential but be part of something special in adding value to sustainable agriculture.
What is the long-term strategy/philosophy/expectations for your investments?
van Zyl: A company needs to make money to fund its growth and operations. We will not be involved in a company if 1 and 1 does not make 11. Making 2 is simply not attractive. Although we do not only consider investments based on the balance sheet. If the company has a strong management, competitive advantage, or technology which is in-line with our vision, we will do our due diligence on whether it is a smart investment or not.
We are flexible in our outlook on investments and not adverse to risk and making a quick exit if the opportunity provides itself. Often though, especially if the company aligns with our core vision, we will take a very long-term view on it, delivering constant, predictable returns for our investors. Experience has taught us that if you are not flexible and willing to adapt, you will just be another once-successful company.
How do you measure success of your investments?
van Zyl: If the investment can make a sustainable impact that is a big plus in our eyes, whether it is directly or indirectly. Helping us succeed in this mission is something that is core around our vision. If the company has a net positive cash flow, which can be reinvested to help the company grow and innovate, we are already happy with what we achieve.
Yellow Brick AgTech has invested in Smart Fertilizer, a cloud-based sensor-less technology, I-Feeder Technologies, and PlantMetrics. What attracted you to these particular companies?
van Zyl: Smart Fertilizer was the first in the portfolio of active investments. Our Chairman, Johnathan Kol-Bar, realized that, after all these years in the banking industry, he wanted to help create a world for his grandchildren and their children. Smart Fertilizer (which has recently re-branded to i-Plant Nutrition) is a truly unique tool, where is unparalleled in the world, supporting the grower to use far less fertilizers while achieving higher yields with less risk. Since the first investment in Smart Fertilizer, the company, the algorithm, and the software have been through dramatic changes, and they are now a unique and leader in the nutrition space..
Through this investment, the realization came that it is one thing to have the software, or the “brain” as we refer to it, but you need the equipment to apply the output of the software. I was introduced to Johnathan, and as son of the founder of I-Feeder, a 40-year-old company, knew that to make the next step in the growth of I-Feeder, had to involve revolutionary technology. And that is where the partnership formed.
After the coming together of these two companies under the Yellow Brick AgTech umbrella, it just made sense to close the loop of the ecosystem. And the way to close it is to have the plant “talk” to us and tell us its requirements, while simultaneously using the Algorithm from i-Plant Nutrition, previously Smart Fertilizer Software, to ensure all environmental factors are taken into consideration. From there the start-up PlantMetrics, which was born in-house. We now have control over the whole offering from A to Z and doing so as an OEM (original equipment manufacturer) giving us a very deep level of knowledge.
We had a specific end goal in mind. A product offering with a focus on plant nutrition and built our investments around companies which can help us achieve this successfully.
We have a few more product offerings up our sleeve, which will tie into making this a more comprehensive offering, but this we will share in the coming months.
How will these companies’ products/services affect crop inputs (both traditional and biological)?
van Zyl: To be sustainable in agriculture is not an easy route. We must realize that we are asking growers to trust us to assist them in achieving their yield goals and doing it in a way which goes against what the generations before them did. Failure is not an option.
And sustainability in agriculture also evolves around protecting our natural resources. Open-field agriculture is here to stay, as much as there is a push for indoor farming. Even we are getting involved, through Yellow Brick IndoorFarm. Through i-Plant Nutrition (previously Smart Fertilizer Software), we are giving the growers recipes allowing them to apply less fertilizers, and at the right time. The more precise application has the implication that healthier crops are achieved, leading to less pesticides being required.
Interestingly enough, we just received the result back from one of our clients in Tonga, showing they took phosphorous totally out of their fertilization program after generations of doing it this way. A massive cost saving, but even more, a big win for the soil. And even having an increase in yield on top of this.
The plant sensor from PlantMetrics, will in real time send us the nutritional requirements of the plant. The implication is that no waiting from results from laboratories, getting the information straight from the plant, not soil or water, and giving the plant only that which it needs. This truly is going to shake up the industry.
GroPlant is a powerful tool that provides precise fertilization and sensorless irrigation solutions.
I-Feeder is the only hardware to have these functions integrated. The hardware is already the most efficient and precise way to apply the product and having i-Plant Nutrition as the brain of the system, and the sensors from PlantMetrics closing the loop, will lead to an ever-learning AI allowing the algorithm to become ever more data rich, and thereby more precise in the output.
We are now collaborating with a very well-known irrigation company in building a platform which integrate both irrigation and fertilization. GroPlant is truly exceptional. It is an unbiased recommendation and features two of the most data-rich algorithms available in the field, supporting the output. Along with satellite information incorporating weather conditions, this is the tool governments need to allow them to lower subsidies and achieve sustainability goals.
What other types of ag technology are your company looking to invest in?
We are not fixed in our outlook going forward. As much as we want to support and focus on plant nutrition, any technologies which will empower and educate the grower is an important growth tool.
The future in agriculture lies in finding a way to successfully utilize the data accumulated and apply this to enforce better decision making.
Artificial Intelligence will initially be a difficult sell in the agricultural realm, though various companies are making important in-roads into the sector. It is definitely a direction we are putting a lot of emphasis on.
Then also investing in the transitioning from synthetic fertilizers to organic fertilizers, chemical to biologic pest control. Good results have already been achieved, but a lot of research, trials, and data is needed to achieve this. Our experience with i-Plant Nutrition (Smart Fertilizer Software) allows us to already build our own algorithm, which will support the grower in knowing the right amounts to apply.
What else do we need to know?
Yellow Brick Capital is more than just agtech. We have a diversified portfolio, which includes real estate development, technology, and agtech. Headquartered in London, UK, with branches in the U.S., Brazil, and South Africa, and representation in Europe, Australia and other countries in LATAM, we realize the importance of local partnerships.
The change in how we utilize our resources though, needs to be technology and knowledge driven, and it is up to the people in the know to share this.
Our growth in the near term is focused on collaborating with companies who have the same mission and vision. If you appreciate the path, and know your company or technology can add value, feel free to reach out, and let’s see if we can have 1 and 1 make 11.
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