Musings from FIRA USA 2024
Our team recently had the pleasure of attending FIRA USA 2024 in Woodland, California, where we met with leaders in AgTech, generally defined as robotics employed in farming applications. Here are our key takeaways from the event:
- Proprietary/Partnership Model versus Agnostic Approach – The event revealed an increasing contrast between companies building their own robots or partnering with the large equipment manufacturers (OEMs) versus those utilizing an agnostic approach, generally software companies, who can integrate with any form factor or even across industries beyond Ag. While the former was still prominent, the presence of companies like Datature and Untether AI—offering disruptive technologies with transformative potential for agriculture—was striking. In contrast, equipment-focused firms, often backed by strategic investors and partners, develop solutions that seem to align more closely with growers’ immediate needs. Although these solutions may lack cross-industry applications, their strategic partnerships foster early adoption and build strong industry ties that could position them for both rapid adoption and a possible acquisition.
- Growers’ Adoption will Catalyze the Market – As is always the case, growers’ adoption and AgTech penetration is a chicken and egg situation. As the technologies are refined and can handle the complexities of sloped and uneven fields, battery life, cost curve improvement, the growers will adopt. As more growers adopt innovative technologies, the demand for further investment will naturally increase, drawing interest from VCs looking to capitalize on the sector’s growth.
- Bridging the Early Funding Gap to Series A – A major theme at the event was the role of AgTech-focused incubators. Historically, the Ag community has had limited access to institutional investors and lacked the know-how required to navigate funding rounds. Accelerators and incubators (such as Reservoir Farms and The Mixing Bowl) are now working to bridge this gap by connecting innovators with the right financial and operator networks.
- Strategics Investors Take Center Stage – Traditional venture capital and private equity firms were notably absent from the FIRA conference although many are clearly active. Instead, many of the strategics walked the showroom looking to determine the winners among the many different technologies. On the other side, the emphasis for many startups was on aligning with such strategic investors, such as John Deere, CNH Industrial and TrimblePtx/AGCO. These partnerships are becoming more critical as startups look to integrate their technologies into the broader goals of established industry players.
- Global Players – We spoke with many companies (such as Robotics Plus and Smart Machine) who are solving labor shortage issues in markets such as the UK, Australia, New Zealand and Belgium similar to what we see in the Ag sector domestically. In fact, in these less-populated nations, such labor issues are even more acute. The rise of AgTech startups in these regions reflects the global scope of the problem. While many non-US domiciled startups are heading over to the U.S. for early customers due to the massive scope of opportunities (in particular, in CA where there are a huge number of orchards and vineyards), they have also seen strong interest from their local countries.
- Navigating the Investor-to-M&A Reality– Many emerging AgTech companies see initial investments from strategic partners as a direct path to acquisition. However, it’s essential for founders to remember that such investments are “optionality” and more like a “peek under the hood” for strategic investors. True M&A potential depends on operational fit and performance, i.e., real results must be delivered before any acquisition discussions materialize.
