Cambridge Agritech adjusts model to offer new opportunities for agritech investors

Cambridge Agritech is an expert in finding and evaluating agritech startups for its investor-members; it is changing its offer to members, making membership easier and cheaper for more organisations to engage with.

The original model, developed some ten years ago in collaboration with the original members, was based on providing members with investment opportunities. It was a high-cost model, but worthwhile for members willing to invest up to £50k in startups, who needed to meet companies a few times and be able to rely on a high level of due diligence.

It was also based on the expectation at the time – and until only a few years ago – which was that agritech companies would follow other sectors in scaling and being sold within 6-8 years at a good return for investors.

That expectation has not been realised. The top sectors of five years ago – indoor farming, cultivated meat, alternative proteins – all attracted significant investment and achieved high valuations, before falling back. Even sectors with more modest ambitions, such as robotic pickers and weeders, carbon capture, drones and sensors, have not (yet) achieved expectations.

Agritech is still a good sector, more importantly it is a vital sector if we are to achieve significant progress in soil improvement, yield and quality optimisation, water quality, and environmental improvement. Startups in agritech are to agriculture as acorns are to oak trees.

Of course there will be issues specific to agritech: the seasonality of agriculture means that new products and services can often only be evaluated once or perhaps twice a year; although farmers are interested in getting new technology, margins are often tight so that new products need to deliver real value rather than ‘nice-to-have’ value; agritech does not lend itself to rapid growth rates, so the growth curve is modest rather than steep; agritech companies need investors who understand the market – the rise and fall of indoor farming was an example of investors who for some reason did not understand the basics of farming economics.

Which brings us back to Cambridge Agritech reducing its membership fees.

With a nod to self-interest, agritech investing is still worthwhile, but potential investors still need to look at as many companies and do as much due diligence as possible. By cutting our membership fees, we have made it easier for people to look at a lot of startups and get experience of analysing them before starting to invest.

Members can look out for what startups are not telling them, realise that doubling sales every year is arithmetically appealing but commercial pie-in-the-sky, and ‘must-have’ products may not actually be. By meeting startup CEOs in person (at least, online) members can decide whether they believe them as they present their ‘very conservative sales plans’.

By reducing our membership fees, but still offering pitches from around 8-10 startups each year and still supporting members in analysing the data room, Cambridge Agritech will continue to encourage investment in agritech.

Dr Rob Wylie will be speaking at our Focus on Finance event on 17 September in a talk: ‘Backed by (Agri-Tech) Angels’.

Book your tickets for Focus on Finance here.