Agtech Action is a weekly newsletter highlighting current events in the world of agtech, and some light-hearted commentary
Americans are buying less gas, Costco is facing a lawsuit and cheese-scented nail polish (thanks Velveeta). Grain terminals attacked in the Ukraine, John Deere CEO to address CES 2023 and the agtech impact in Africa.
The theme of the agtech week is maintenance. More broadly, with uncertain times in the financial, agriculture and global markets, it’s perhaps a time to maintain what you have. We discuss this and more in this week’s newsletter.
Food and the World:
Agtech in the News:
Agtech can have an outsized impact in Africa (we agree!)
The unsolved problem: water (great newsletter by Janette Barnard)
New Zealand’s livestock emissions tax is a sound idea (no it’s not)
Theme of the Agtech Week: Maintenance
Maintenance is the theme of the agtech week, inspired by the growing fears of a lingering recession, inflation abound among many other external factors affecting food and agriculture. While we traditionally think of maintenance within the context of an industrial operation, your car or other more personal examples, I would like for us to frame maintenance within the context of an agtech startup or founder.
As a startup, founder or innovator, the challenges are well-known: lack of capital, market/customer fit, cash flows, trusted and strategic partners, talent sourcing among others. Compound that with a global recession, poor performing traditional asset classes, and the cost of borrowing money increasing and you have yourselves a tough environment for agtech. This is not meant to be a talk about the problems edition of our newsletter; let’s talk about what to do about it.
In spite of these conditions, investors view agtech as a potentially high performing asset class with food shortages, procurement and inputs becoming increasingly global issues. If you are one of those agtech startups that gets funding, the next task is what to do with it. With this newfound, or existing cash, you may be tempted to aggresively chase growth (e.g. new markets, customers, team expansion or other). What if you used your cash to further refine your offerings, add new services to existing customers, or give your current team more tools to do their job. This could yield you the 2x to 5x return that other paths would have but with more investment. Or what if that extra cash bought you a few more months of runway so you can wait out this tough market and begin planning for your aggressive strategy for the future. Investors can view your ability to get more use out of your cash, i.e. maintenance, as a great sign of your growth potential.
Sometimes staying put is the best course. Stay safe and have a great weekend.
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Brandon Day is the Chief Operating Officer of The Yield Lab Institute, the global agtech think-tank, non-profit arm of The Yield Lab global network of venture capital funds and accelerator programs. The views, opinions and commentary expressed are solely those of Brandon Day.