AgTech Innovators season 2

Speaker 1:

Welcome to AgTech Innovators, keeping you up to date with information from Agriculture Victoria.

Drew Radford:

Robots working in horticulture are literally a few years away. One of the world leaders is an Australian company, Ripe Robotics. G'day, I'm Drew Radford, and years of development have got them close to making robots in the orchard a reality. What has also got them to this point are a number of investors. Navigating the funding process is Ripe Robotics co-founder and CEO, Hunter Jay and he joins us for this AgTech Innovators podcast. Thanks for your time.

Hunter Jay:

Thanks for having me.

Drew Radford:

Hunter, you've got quite a mixed background. You're an engineer by trade, but you've designed games and all sorts, haven't you? And now you're in the robotics game.

Hunter Jay:

Yeah, a big mix of stuff. I started in physics and maths at uni as an undergrad and moved to computer science, worked in software engineering and then built a game website and now a robot. Yeah.

Drew Radford:

Yes. And now robotics, but you're focused on a very unique area of robotics, solving, I would argue, would be a future labour skills shortage. What have you been building?

Hunter Jay:

So at Ripe we're building autonomous harvesting machines to pick apples and stone fruit. So it wasn't possible to do this five, 10 years ago because computer vision wasn't good enough to recognise and assess the fruit on the tree, and now we can pick fruit with machines.

Drew Radford:

You say that very simply, but it's been a bit of a process to get to here. Your robot's called Eve, you're up to incarnation what? And how's it sort of work? Just describe how that actually picking process works.

Hunter Jay:

So we're on the fifth main version of the robot and I think the seventh or eighth version of the arm. There's cameras on the robot which look at the tree, that takes pictures of it, measures the distance to the branches and other obstacles in the apples, and then that goes through a computer vision model, which sort of assesses the size and the quality and how it should actually pick the fruit. And then that chooses which fruit to pick and the arm moves in, uses a suction cup to attach to the fruit, twists it off the tree and puts it in a conveyor which goes up and into a normal fruit bin, and it just crawls along the row picking the fruit.

Drew Radford:

It sounds very simple, but there's been a lot of work to get to this particular point. Did you start this at university or was this something you've been doing as a small startup since those days?

Hunter Jay:

No, this is the independent thing. Yeah. So I left uni years before starting Ripe. There was a university program where they put in a $5,000 grant and let us use an office there.

Drew Radford:

But this takes money. So initially, where were you getting that money from? Because there's a bit involved here. There's a lot of computing power and building stuff.

Hunter Jay:

That's been a consistent thing for us. We've been really tight on funding. For the first year it was me and my co-founder putting a little bit of money in and keeping it going, plus that $5,000 grant. I think we spent maybe $10 or $20,000 in the first year. So very, very low cost. And then the next two years after that, we raised a small $70,000 round plus we got a $25,000 government grant, so that's $95,000 for the next two years, including salaries and the robot cost. And then we raised a bigger pre-seed round of $610,000 in 2021, which is really where we scaled up and got going and had a bigger team working on it.

Drew Radford:

Yeah. Well, they're quite leaps in terms of money that you've been getting into it. So what sort of investors do you go looking for, for that sort of cash originally?

Hunter Jay:

Well, at the scale we were at, it was mainly angel investors, which are individuals who have a little bit of money to invest in private companies. The cheque size from $5,000 up to $20,000 with the first lot, and I think the largest we had in the second lot was $100,000 from an individual. For the next stage, we're raising around right now, which would be corporate investors, like big VCs who have access to much more money and would be able to scale it up much further.

Drew Radford:

I imagine though, Hunter, it was a little bit more involved in that. I mean, how do you prepare for meetings with potential investors? What are some of the most important things that they look for in your startup?

Hunter Jay:

It's a tricky one. You have to know a lot about what the company is, where it's going, why it makes sense now. If you can actually show something, especially something physical, live demos with the robot always are really cool to do in investment calls because it shows that there's a real thing. You hold up an apple and it goes and picks it out of my hand and they're like, "Oh wow, that exists. That is working. It makes sense."

I suppose just knowing everything, showing a demo and talking about the bits that are exciting about it, like, hey, this is getting easier, the problem's getting worse, and it's so much more than just fruit picking. You've got all the data, you've got all the other tasks you can do in the future. You can fully automate the entire orchard with the same machine once you get data and can keep upgrading the software and build the infrastructure around it. It's really exciting.

Drew Radford:

Well it is exciting. Competition for labour is becoming greater and greater, and those costs are going up, so you're actually potentially offering a solution where down the track, farmers can pretty much do that for a set cost every year, I'd imagine.

Hunter Jay:

Yeah, pretty much. I mean if we succeed, the starting point is, okay, we go and pick fruit for the growers, we should be able to do that with less wastage and at a lower cost and picking fruit at a higher quality. It's causing less damage, picking it at the right time. Assessing the fruit as we pick it and sharing that with the growers, that's exciting. That's the very first thing.

But if you keep doing this year-on-year, you can use the same machines to gather data during the off-season. You might be able to do pruning and thinning and spraying and all of that linked together. So the same machine has the information about how good the harvest was and is able to link that back to how much pruning was done, when it was sprayed, how the fruit looked six months earlier and make really good predictions about what next year's fruit will look like or what the fruit in three months’ time will look like if you're looking forward towards the harvest. It's really exciting.

Drew Radford:

And I can hear the excitement in your voice, and you're putting across to me a very clear value proposition. But then how do you translate that into determining what your valuation is of your business and negotiate those investment deals you're doing with angel investors and the like?

Hunter Jay:

Working out the value of the company is really tricky for a company like ours. If we succeed and hit the big proper goals in 10 years time, it would be worth $10 billion. It could be huge. But there's a very high chance that we don't succeed because there's tech risks, there's scale up risks, building hardware, and it takes a little bit of money to do that. It's very hard to work out.

The main way we work out valuations, I suppose, is really just looking at competitors. What were they valued at now? What were they valued at at the previous rounds when they were at roughly the same scale as us? How much money, if we succeed in the current round, what would our next round be valued at if we hit the near-term goals? Which is for us hitting gross profitability and getting ready to scale up, what would we be valued at then?

You get all these different numbers. Then you basically can point to those when you're talking about valuation with investors.

Drew Radford:

And so what do you think some of the biggest challenges were that you faced during this investment process, and how have you actually really overcome them?

Hunter Jay:

In our previous investment round, we didn't do a great job, didn't really know what we were doing. So we go and chat with someone, then they'd say no, and then we'd start with the next person, or we'd find people as we went along. And that was a bad way of doing it because you get to the second or third or fourth person, they'd say, "Hey, are you chatting with group X?" And we'd say, "Oh yeah, we did. They decided not to invest." And then they'd be like, "Hmm. They'd decided not to invest. That's a bad sign’. All at the same time is one of the big things I learned from the previous round versus this one.

Drew Radford:

That does sound like a really valuable learning for want of a better description, to understand how you really need to deal with all the players in the market.

Hunter Jay:

I learned so much from raising the money previous time and what we're doing now with the current raise. It's also interesting to work out why would this person be interested or not interested in investing, and that's been a lot more tricky.

Drew Radford:

And obviously, the investments are crucial to your growth trajectory. So, the last round, the $600,000 investment, what did you manage to achieve with that round of funding?

Hunter Jay:

When we started that round, we had a prototype machine which could kind of pick fruit indoors under some conditions, and we took it outside and we did some tests outside as well. From then to now, well, we've redesigned the entire machine, actually. We had a big elephant trunk suction tube, and we realised as we started to scale that up and we picked hundreds of pieces of fruit at a time, we started finding issues with it, so we had to redesign that and moved to the suction cup system, which meant redesigning the rest of the arm and the rest of the robot as well. We got the autonomous picking running much faster and much more reliably, much more robustly in different conditions.

We updated the vision models, we updated the drive system. It's able to drive over much more sorts of terrain now. The remote access and control of the robot's a lot better. It's a lot smoother. The plans for scaling up got a lot better. We got way more expressions of interest from customers, as well as signed some actual contracts for picking. Lots of things got bigger and better, and plans got a lot more stable for the next round as well.

Drew Radford:

Well, the next round, so how do you plan to continue to raise capital to fund your startup growth in the future, if you can share that with me?

Hunter Jay:

We're chatting with investors now. We lay out what the plans for the company are and then present that to the investors and we try to convince them that, okay, this is both likely to be successful and when it is successful, we'll be in a really good position long term, and there's trends that are helping us making it get easier and easier, and there's a lot of value both to be captured and to generate for growers and the investors coming in.

Drew Radford:

Hunter, what advice would you give to other AgTech startups that are seeking investment, based on your own experience?

Hunter Jay:

If I was going to do it again or recommend it to other AgTech companies, I'd be like, okay, choose something where you can get to market very quick. You're not reliant on investors, and then if you want to get investment, then it's the investment to speed you up or scale you up, but you're not just trying to get investment to keep going.

Drew Radford:

Hunter, you're clearly pretty capable when it comes to the engineering side of things, but you've also had to become this business person in the process. Is that something that you end up spreading yourself very thin, or is that just the nature of the game? You've got to be one and the other as well?

Hunter Jay:

I don't feel like the business side of stuff is really that different to the engineering side of stuff, but I suppose I approach it as an engineer would. Here's a problem, I'm going to try and figure out how to solve it.

Drew Radford:

Well, Hunter, I think you're actually doing a pretty good job of telling the story of what you're trying to do and trying to achieve, and all the best for the road ahead with it. It sounds like an amazing product to solve a range of problems for orchardists across the country and across the world. But for now, Hunter Jay, CEO and co-founder of Ripe Robotics, thank you for taking the time and joining us for this AgTech Innovators podcast.

Hunter Jay:

Excellent. Thanks for the chat.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback, so please leave a comment or rating, and share this series with your friends and family. All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on farm.

This podcast was developed by Agriculture Victoria, authorised by the Victorian Government, Melbourne.

Speaker 1:

Welcome to AgTech Innovators, keeping you up to date with information from Agriculture Victoria.

Drew Radford:

For a livestock producer, the ability to track individual animals in real-time from an app on a phone would be a game changer. G'day, I'm Drew Radford, and that technology is not just theoretical, it's actually being produced in Australia by an Australian company called Smart Paddock. The journey from concept to production has so far taken five years. Crucial to that have been investors who understood the problems this technology would solve. To discuss that process, I'm joined by Smart Paddock founder and CEO, Darren Wolchyn.

Darren Wolchyn:

Oh, thanks for the opportunity to have a chat with you today.

Drew Radford:

Darren, I'm really fascinated with this story. I get to look at some great tech doing this series, but Smart Paddock is something that I haven't seen before. You've basically got a solar-powered ear tag, but it does a lot more than capture solar energy. Why have you got a solar-powered ear tag?

Darren Wolchyn:

So, we've developed these ear tags for basically tracking livestock. So, the simple answer is we GPS track your livestock so we can let farmers know if the animals are going stray or if they have a problem with them. That's really what we've done with them, but then using solar panels as their primary source of power.

Drew Radford:

It's fascinating tech. And what sparked your quest to create this?

Darren Wolchyn:

Well, actually it's been a few years ago, but I was doing a GPS fleet management systems for golf carts and I was out at a friend's farm, who has cattle, and I was telling my friend, "Oh, I'm GPS tracking golf carts these days." And he said, "Oh, that'd be really handy if I could GPS track my cows." So, I asked him, "Why would you want to be able to do that?" And he's just saying, "Oh..." It was calving season and this was back in Canada, where I'm originally from - and he's out there 24-7 keeping an eye on these cows, and being able to locate them quickly and easily would be very beneficial.

Drew Radford:

What is your background? You mentioned briefly, "I was working on providing GPS tracking for golf carts," which is pretty unique in itself, but how do you even get into that space? What's your background?

Darren Wolchyn:

Originally, I was raised on a farm up in northern Alberta, Canada, so I kind of get that whole farm life. But I went off, like a lot of young people do, from the farm to university and became an engineer and I worked in all different small companies to some of the biggest companies in the world, but I always liked doing my own thing and being an entrepreneur. So, that kind of set me down this path with Smart Paddock.

Drew Radford:

Okay, Darren, so you've got the background to develop this tracking product. It's solar powered, so it can send out a signal all the time. But not everywhere has got easy internet access. So, how did you solve the connection problems so producers can easily receive updates on what their livestock are doing?

Darren Wolchyn:

So, our ear tags have this radio technology called LoRaWAN, which is quite popular in the AgTech industry, and our ear tags will talk anywhere from 5 to 10 kilometres to a central gateway on the farm, and that gateway will talk to the internet. Now, normally if we can use 4G connections, if there's coverage, then we'll use that because that's the simplest and cheapest way of doing it. Otherwise, we'll just have to look at what's available, whether it's satellite, NBN, or whatever kind of technology is available we'll take advantage of.

Drew Radford:

Okay. So, you've got the concept and you've started developing this. This sounds a lot harder though than just having the concept.

Darren Wolchyn:

It's been many years in development. We started four or five years ago, and we did start out building ear tags originally as a proof of concept, but to make something commercial, it's taken us that many years to get it right. And even today, we still do iterations on the hardware.

Drew Radford:

And in this process, unless you are funding it yourself, I assume you're going down the path of fundraising. So, how'd you go about seeking investment for your AgTech startup?

Darren Wolchyn:

Initially, because we only really had an idea and my friend who owns a farm asking if could we do this. I got into Telstra's muru-D accelerator program, and I got in really just with the concept and the idea, and that allowed us to build this first proof-of-concept and do a bunch of market research, and that really kind of started us down this path. From there, I've done other accelerators for that pre-seed investment.

Drew Radford:

And so, you were just constantly on the hunt for people that might match your tech? Is there criteria you go through to select those sorts of investors or target them?

Darren Wolchyn:

In the early days, we were pretty much looking at all the different options for getting funds. Because at that early stage, I don't think it's as important or it can be as important, but you got to take what you can get. But once we've moved past that early pre-seed stage, now we've done most recently a seed investment round, we're starting to target more investors related to the industry or who could support us. So, for example, we had Telstra reinvest in us in the last round, and Breakthrough Victoria support us as well. So, those are some key investors we did in our current round. And then, we've had some VCs with some agriculture background investing as well. And it's really good for them because for them, it's almost an easy sell because they already understand the industry and if they believe in your product, it's much easier to get them on board.

Drew Radford:

Well, that does make sense. They do sound like the easier ones to get on board. But how do you though go about preparing for those meetings, especially for those that might not be quite in that space? And what do you need to tell them to try and get them over the line?

Darren Wolchyn:

So, if they're not in the space, you do have to convince them on the market need, and you’re going to have to show the customer draw for this type of product. You got to show that you have customers waiting or you have customer interest. You got to show a good business plan, how you're going to turn this interest into an operational business. So, when we do pitching to these kinds of people, we definitely target for the type of investor. So, for example, when we look at like a Telstra or a telco we go, "How could they help us? And what's really in it for them?" And we kind of go... They want to show more of a presence in rural Australia, so if they're investing in companies like Smart Paddock, it shows these rural customers that Telstra cares about them and they want to be involved. And because we have to talk over networks, there is that network connection.

Drew Radford:

How then, Darren, do you determine your valuation of what you've got, your business, and then try and work around negotiating investment deals off that?

Darren Wolchyn:

That can be very challenging. Again, you have to do it for each investor, you have to take a different approach, but you do normally start with a lead investor that will help you set that valuation for your company. So, we did do that with our just finished round, and we went down this path of looking at the market size, looking at the market opportunity and what we could reach, what's the return of investment for the farmers to implement our systems? So, then you can kind of set pricing models for your product. So, it's really pretty standard startup process, and just going down that path and doing all the maths. But being able to back it up with some real data on customer need, customer size, to show that that market is there.

Drew Radford:

Showing that market is there and showing that customer need there, is that one of the biggest challenges you faced during the investment process, actually trying to validate the market need? And if so, how'd you overcome that?

Darren Wolchyn:

We did pretty good on the market need, but it didn't just come magically. I went and displayed at different ag shows. So, the biggest one would've been Beef Week up in Rockhampton. That happens every three years. And that's really the main livestock trade show that happens in Australia. And I went up there for several events and the first event I went to, I set up and pretended to have a product, just to get that feedback from customers. And then, the next time I went and set up again and started pre-selling our product. So, basically if you show that interest level, how many farmers you talked to, how many farmers signed up for newsletters, and how many pre-orders you can get, you're really demonstrating that you have a customer need and that there's a pull from the customers for your products. And you just got to document that to show to your investors.

Drew Radford:

And along that path too, I imagine it's a fine balance, Darren, between, well, I'm trying to attract money into the business, but I'm also trying to develop my product. Is that really what you're mapping out? We've got to stage one of the product, we need X amount of cash to get to stage two?

Darren Wolchyn:

Yeah, you definitely raise funds based on major milestones. So, those early money that I raised from accelerators I went through was proof-of-concepts, market research, some early working prototypes. Now, with the larger raises, it's more about getting production up, getting out to market, getting partnerships with companies that can help you sell your product, and building those features that will give that return on investment for these farmers to use your products and services. So, that's really what we're focusing on now, and that's actually even more challenging than before. So, it's interesting that every stage, it's really difficult, but the next stage is just as difficult or more difficult - but at least in the latest stages, you can hire staff to help you through this process as well.

Drew Radford:

I was going to ask that. You said that's more difficult now and it's just, what, more things to try and corral and more data needed and more markets to access or what?

Darren Wolchyn:

Oh yeah, absolutely, because the more success you have, the more interest you get. We're getting a lot of interest from overseas, all different markets, and we're getting interest from partners that want to resell our products and services. We get more leads in all the time. So, we have scaled up our team, but again, we're still not to the point where it's easy. We've still got way more work to do than we can handle. So, that's definitely the challenge is as you scale up is how do you scale up without going too fast that you have the support to support your customers, but you still got to scale up to meet your investors, what they're thinking, why they're investing in you? The idea is to scale up and have a really rock-solid product to be offering across Australia and overseas.

Drew Radford:

It sounds like a bit of a careful juggling act, to say the least, Darren. What advice would you give to other AgTech startups that are seeking investment based on your own experience so far?

Darren Wolchyn:

One is if you can find the most specific problem to solve that's going to make your life so much easier. In the early days, we were still trying to determine, what's the best problem to solve? If you have something very specific to solve, that's just going to make your life much easier when you start to raise funds. And then, really, once you are getting that problem sorted out, getting those customer pre-sales, interest levels, commitments, expressions of interest, and really show that demand is there. And then, you got to make sure you can do it. So, even the early days, you still got to build up a small team that can show that you can solve this problem for these customers.

So, if you can find a good problem to solve, get a team to be able to solve it and show that customer demand, that's really key. And also, being persistent. I mean, I still consider it to be a very early stage startup, but it's been five years. We've still got a long way to go. So, you need to have that drive and commitment to see it through if you really believe in it, and you have to really believe in it. If you don't really believe in it, you should get out now. Get out early while you can. But if you do, you just got to persist through it.

Drew Radford:

Well, Darren, clearly you do believe in it. I mean you've been punching away at this for five years now, and it's growing and growing. So, what's next for your startup? Where are your plans heading for the future?

Darren Wolchyn:

Well, definitely we are looking at that scale-up and scaling up production, scaling up operations, to really start to hit some of the bigger customers overseas. The overseas markets are definitely something we're looking at as well. The problems in Australia are very similar to problems in North America and South America, and even parts of Europe for livestock. That's the good thing about our industry, the livestock industry, problems are the same but different, but at least the core problems exist everywhere. We have a really good base platform, we have some good hardware, our sensors. Now, it's really going about, "What can we do with the data we're collecting? What are the blue-sky type features that we can develop that really take us to the next level?" And we have a lot of opportunities around that, whether it be environmental, ethical treatment of animals, production issues. It's kind of still that the sky is the limit for us, and that's really what we're focusing on over the next couple of years.

Drew Radford:

Darren, it's a great solution. How much of it though is actually being created in Victoria?

Darren Wolchyn:

That's a great question. We actually have a real focus on developing everything in Victoria. So, the whole team engineering software team is based locally, and we actually even manufacture our products locally, which can be quite challenging. But again, because our customers believe in the product more made in Australia, we've really done a lot of effort to keep it made in Australia, which is, I think, great for jobs here, great for our customers and great for us.

Drew Radford:

Darren, it's a remarkable product, something to be very proud of and thank you for taking the time and sharing the story of how you've got to this point. Smart Paddock founder and CEO, Darren Wolchyn, thanks for joining us for this AgTech Innovators podcast.

Darren Wolchyn:

Oh, thank you. Appreciate it.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback, so please leave a comment or rating and share this series with your friends and family. All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on farm. This podcast was developed by Agriculture Victoria, authorised by the Victorian Government, Melbourne.

Speaker 1:

Welcome to AgTech Innovators, keeping you up to date with information from Agriculture Victoria.

Drew Radford:

Sometimes the adage with startups is ‘build it and they will come’. This though is not always the case as failure rates can be high. However, if you approach it as an experiment in the scientific sense of testing a hypothesis, then you won't fail because you're always learning. G'day I'm Drew Radford, and that's the perspective of Paul Voutier from Ambit Robotics. He's taken a very scientific approach to building his startup and to discuss it, he joins us for this AgTech Innovators podcast. Paul, thanks for your time.

Paul Voutier:

No worries.

Drew Radford:

Paul, you work in a fascinating space, but you've done a few detours to get there because I understand you're an engineer/international developer by trade.

Paul Voutier:

Yeah, that's right. I started out working in agriculture in Southeast Asia doing work with aid programs, international development programs, but then pivoting into working with commercial businesses as well.

Drew Radford:

That's quite a long way from actually developing your own robotics. Why that leap?

Paul Voutier:

Well, I guess I wanted to step outside of consultancy and really build something that would scale and have an impact. And I'd been an engineer, as you said before, by training and really wanted to take those skills and build something that farmers could use.

Drew Radford:

And some of that work, I understand, started in Southeast Asia. You saw a problem there that you were trying to solve.

Paul Voutier:

Yeah, that's right. We did what the textbooks will tell you to do as a startup founder. We went around to farms and spoke to growers about what their problems were and really tried to tap into those issues. And then we started building minimum viable products. So we had robots out in India spraying potatoes. We had robots in Indonesia being trialled while simultaneously we had robots here in Australia and we really did all the things you’re meant to do, put those minimum viable products out onto farms, demonstrated them, and got feedback from growers. And it took us quite a lot of different directions and trying different types of robots, trying different market segments and trying to find a problem and where we could generate that magic market fit and build something that would scale.

Drew Radford:

And that was around spraying, wasn't it?

Paul Voutier:

Yeah, initially we started with crop spraying, but then we discovered that we had growers coming to us and talking to us about imaging. So we had, for example, a celery grower here in Victoria who wanted to understand where on his farm there were areas of poor nutrition. We had a tomato grower coming to us and saying they wanted to understand what their yields would look like in a weeks’ time or a months’ time. We had potato growers coming to us and wanting to understand what was happening in terms of pests and diseases within their crop. And at the same time, you had this whole trend happening around generative AI.

So you had growers coming and saying, "We really want to understand what's happening to our plants." And at the same time, you've got this generative AI emerging where you can feed in enormous amounts of data into these models, and they really allow us to look around corners. They allow us to predict the future in ways that we've never been able to do because you can feed so much historical data into these models that they really come to understand what the plants doing in a really nuanced way. So to us, it was the intersection of what we were hearing from growers and what was happening in the technology space that opened up an opportunity we thought looked really interesting.

Drew Radford:

Well, in terms of that opportunity and seeing into the future, if you go to your website, there's quite a remarkable robot there that is scanning tomatoes and what is that? What's it doing?

Paul Voutier:

Yeah, so as I said, we borrowed from this idea of generative AI. So we're all used to generative AI when it comes to text. So what a model like ChatGPT is doing is it's collecting millions of sentences typically from sources like Wikipedia, and it's predicting what the next word in a sentence is going to be. So it's trained on massive amounts of data. We think about plants in exactly the same way. So to us, a tomato growing on a vine represents historic information.

So we can image hundreds of thousands of tomatoes over months and months, and they start to follow patterns in the same way as language does. Those tomatoes, what they were doing yesterday is highly predictive of what they're going to do tomorrow, and that allows us to collect images of lots of tomatoes, build models that map how that plant's growing and what it's doing, and that allows us to predict what's going to happen next.

Drew Radford:

How are growers applying that? I've got a vague idea, but just elaborate.

Paul Voutier:

There's really two things that growers are looking for when they're wanting to predict what's going to happen with a plant. They're wanting to optimise their operation. So, if they know what the plants going to be doing over the next week, they might change how they water, they might change the number of pickers that they employ that week, they might order more or less trucks to come in and collect produce. So there's a whole lot of operational decisions that happen around understanding what that plant's going to do in the next week.

But really, when you're talking about the bottom line and their business, it's about price. So, a grower that knows what their plant's going to do over the next week or two weeks or month, is able to enter into contract negotiations with buyers in confidence, knowing exactly what their plants are doing, and that allows them to get better prices. So at the end of the day, we help growers make better operational decisions and we help them secure better prices.

Drew Radford:

Those operational decisions would be important as well, in terms of actually minimising or controlling your costs.

Paul Voutier:

Yeah, that's right. If you're making all your decisions at the last minute, that's when things get expensive. But if you know what's going to be happening over the next time period, then you can minimise those costs and make smarter decisions.

Drew Radford:

Paul, at the start of the conversation, you mentioned the work that you were doing in India, Southeast Asia generally, with some of your early robotics and in Australia, and you're saying, "We followed what all the textbooks tell us." How did you go in that particular phase in terms of fundraising, and even now?

Paul Voutier:

It's a two-part journey, isn't it, with investors? I think investors do want to see founders who are willing to run experiments, put out MVPs (minimal viable products), and have conversations with customers, but you can't get stuck there forever. Investors will tolerate that at a pre-seed stage, but if you want to move on and do a, say, series A round, you really need to be able to identify a customer and a solution and show a scale-up pathway. So I think that experimentation phase for us was really important. And I think there were pre-seed investors that were willing to fund that and saw in us the skills and the aptitude to really run those experiments and find market fit. But eventually, we matured away from that and we had to, to finding a customer base and a solution that could be scaled.

Drew Radford:

I really appreciate the way you described that because I'm sitting at the outside and I'm going, "Well, hang on. You started off with a product over here, now you've got this product over there." It's almost been a case of, "Well, yeah, we've got the skills, but we've been prepared to learn from. That's not the fit, that's not working, let's develop something that is." They talk about people being prepared to fail, you haven't failed, but you've certainly reinvigorated and reorientated.

Paul Voutier:

That's right. And I think if you set out as an experiment and you design as an experiment when you start, then it's never a failure. You're always learning. If you build something expecting it to work and you say to growers, "Here it is, do you want one?" I think that is failure because you're not listening to growers and you're not building things they need. So, I'm really clear with the team here when we're building an experiment, why we're doing it, why we're running a trial with a grower, and what sort of feedback we would take to be convinced that there's actually a market here that's scalable on the other side. And we ran enough experiments that we believe we have found a market that's a really good early-stage market for us.

Drew Radford:

Paul, before we started recording, you were talking about the comparison of startups between the consumer market and the AgTech startup market. To me, it was a very good analysis because I think in the general population's head, well, you start up, you go out, and you have a go, but dealing with AgTech and primary producers is a different space.

Paul Voutier:

It is different. I think VC has become synonymous with software and the development of software business models that can scale really quickly. And in a way, that's what VCs have got used to. In agri-tech, those really fast-growth software solutions are pretty unlikely. They're very few and far between. In agri-tech, I think we're probably on safer ground when we talk about science-based solutions. So if we look at the history of agriculture, you've got these really big waves of invention. So you've got the invention of nitrogen-based fertilisers, which transformed the industry, genetically modified crops, hybridised seeds. These science-based discoveries are really scalable and really impactful.

And VC does have a history of investing in science-based discoveries that can really have an impact on industries. So I think if we take our mindset away from the high-growth consumer software space, which is where a lot of VC money has been really successfully placed, and really anchor our thinking in the science-based discoveries that have delivered really good returns to VCs, the drug industry and other industries, and have really transformed agriculture in the past, I think there's really fertile ground for investment in agri-tech.

Drew Radford:

It's a really interesting perspective because a lot of people I've spoken to in this space have got great ideas, but I haven't always got the sense that they've been putting the science first and foremost and breaking it down is a problem via that route.

Paul Voutier:

Yeah. I think it's a good approach because I think if you can build a unique technology that you've got some intellectual property, either a secret or a patent over, that really becomes attractive to investors because you've got some monopoly, some control over that technology, and then you've got an investible business model. And that's what I hope Ambit’s doing. I hope we're building this model of imaging plants and generating models of what the plant's going to do.

We hope that's a scientific discovery of importance to the industry that we have some control over and therefore, we become investible. And that's really important because that's what allows us to scale. You really need a technology that's somewhat protected so that you can capture investment around it and take it to the industry and really scale it.

Drew Radford:

And, Paul, where are you in that journey now?

Paul Voutier:

Yeah, we're at an interesting turning point where we've really finished that experimental stage. We're really confident in our technology now in terms of the tomato industry. So we've segmented out an early-stage industry for us that's really prospective. So for tomato growers, predicting what plants will do is absolutely critical to pricing their product and contracting their future supply. So we're really clear that that's where we want to start, but it's not where we want to stop.

We really want to build generative AI models that are able to model all sorts of different plants.

Drew Radford:

And focusing on tomatoes, does working in a semi-controlled environment like a greenhouse make these experiments easier, more manageable?

Paul Voutier:

Absolutely. Our robots are autonomous. They wake up each night and go out and image the crop. That's really important because we want to image the crop every 24 hours so we can get a really good sense of what's happening to that plant. And as the self-driving car industry has discovered, building something autonomous is really challenging. Autonomy is great in 90 to 95% of the cases, but occasionally, it does go wrong. And for us, the controlled environment inside a tomato greenhouse is just ideal to prove up our technology. All the rows are really straight, everything's really flat, and that's just ideal for us in terms of an environment to gather the data that we need to build the models.

Drew Radford:

So, Paul, based on your own experience, what advice would you give to other AgTech startups that are seeking investment?

Paul Voutier:

I've alluded to it already, but I think my recommendation would be to break the opportunity down. I think you really need to be situated within a really big opportunity. That's what investors are looking for. They're looking for a market that's worth hundreds of millions if not a billion dollars. And for us, modelling plant behaviour is that size of market. It's applicable across a whole range of different crops and applicable to a whole lot of different problem statements around pest and disease and around yield estimation. So, we've situated ourselves within a really large market. The other really important thing about that opportunity is it's got to feel almost inevitable. And I think that's why we're really excited about generative AI in crop modelling because in 10 years, I just can't imagine a grower going out onto a farm and counting crops by hand.

AI is just so good at modelling behaviour. It's so good at counting accurately and predicting based on past behaviour that to do this by hand in 10 years just seems completely unfathomable. I just can't imagine anybody doing it. So there's a certain inevitability about that really big opportunity. But I think the other piece of advice is to try and find a smaller opportunity within that that's near-term. And for us, that's been tomatoes and it's been tomatoes, as you said before, because of the consistency of the farms, and that really helps us with automation. But it's also a really important short-term opportunity because it's such a pressing problem for the growers. The growers of tomatoes are really interested in yield estimation because it dictates price. And like any business, they want to control price and they want to maximise price.

So yeah, I think it's about situating yourself within a really big opportunity, but then finding something smaller that can help you generate revenue and also show that you can find customers, get them on board, and that you can build a viable business within that bigger opportunity. I think it's particularly important in agri-tech to have both those really bigger and smaller visions for the business, and that really helps communicate to investors where you're going to end up, but also where you're going to set out from. And I think both of those have been really important to us in talking to our investors.

Drew Radford:

Paul, I've been musing while listening to you that you were talking there about basically setting out your boundaries and parameters and what you're aiming to achieve, is that reflected in your name, Ambit Robotics?

Paul Voutier:

Yeah, it is. We did want this idea of fully covering a farm and being able to see across a full site, and yeah, that was where the name Ambit came from.

Drew Radford:

And lastly, Paul, where do you see your AgTech startup, Ambit Robotics, being in the next 5, 10 years?

Paul Voutier:

Yeah, I think we need to get customers on board with our tomato solution, and I think we've got an excellent prospect of doing that now. I think the results that we're getting from the model are good, and every day, our models get better. But in terms of where we want to be in five years, we really want to generate models that are plant agnostic or crop agnostic where we can monitor a crop over, say, a week or a month or a year and really build an understanding of what that plant's going to do next. And that could become a very general model that's able to work with lots of different plants.

And that really excites us, the idea that we could build something that you could put onto a farm, and then within weeks start generating insights that reflect the growing conditions on that farm and what those plants are doing, and just the plethora of different things we could do around yield estimation, disease monitoring, and helping farmers with operational decisions and pricing. There's so many different ways we could go and we really don't want to get distracted by all the different things we could do. We want to focus on that near-term market and build something out first, but always holding that potential for the scale of what we could do and the impact that we could have across multiple industries. Keeping that in mind, but also being focused on what's realistic now.

Drew Radford:

Well, Paul, I've been left with a very clear impression that you have a laser-like focus on the near future, and importantly, the potential beyond that through scalability. All the best with your journey. For now, though, Paul Voutier from Ambit Robotics, thank you so much for taking the time and joining us for this AgTech Innovators podcast.

Paul Voutier:

No worries. Thanks for your time.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback, so please leave a comment or rating and share this series with your friends and family. All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on farm. This podcast was developed by Agriculture Victoria, authorised by the Victorian government, Melbourne.

Speaker 1:

Welcome to AgTech Innovators, keeping you up to date with information from Agriculture Victoria.

Drew Radford:

If you mentioned startups, you can be pretty sure that the term venture capital is soon going to pop up in the conversation. However, is the VC model the best fit for AgTech startups? G'day. I'm Drew Radford and not everyone is convinced it is. That’s because AgTech is servicing a unique market compared to the broader consumer focus of VCs. Cal Archibald is a director at Beanstalk, an organisation that takes a different approach in helping AgTech startups find success. To find out how he joins us for this AgTech Innovators podcast. Cal, thanks for your time.

Calum Archibald:

No worries, Drew. Yeah, thank you.

Drew Radford:

Cal, we want to talk about the work you and Beanstalk do in assisting startups, but I'm curious to know how you got there, because I see you've done a lot of development work in places like Rwanda and Nepal. What's your background?

Calum Archibald:

I guess it was a bit of a wild journey to kind of arrive at where we are today supporting AgTech startups in Australia and across Asia, but I was studying corporate investment finance at university and was really passionate about this idea of using business as a force for good. So I did the only logical thing, which was to get a bunch of friends together and start an NGO (Non Government Organisation) that was focused on supporting small holder farmers in Nepal to build community agriculture projects. So yeah, spent five or six years doing that. We were privately fundraising in Australia to fund these projects and then working in some really remote villages across Nepal, and the model we were trying to use was basically coming in behind some of the NGOs who were funding schools and health posts and supporting them by funding basically community owned agriculture projects, which would generate profits to fund schools and health posts.

Through that, we tried to develop a sustainable funding model for some of these really remote villages and support the small hold farmers there. So I guess that's where I fell in love with agriculture. I didn't really have a background in agriculture, but it was just a really logical area to focus on given the people out in these villages were really, really good at growing stuff. And I guess my love of AgTech came about when we were bringing some pretty simple technologies actually into these villages like drip irrigation and polytunnels and that sort of thing. Then we came back a year later up to one of our really bigger projects, which is a couple of thousand tree apple orchard up in a village called Ghiling, which is up near Tibet, and a whole bunch of the villages around actually adopted the drip irrigation that we'd brought in for our project and started developing their own little commercial apple orchards.

And so that was my kind of aha moment where I went, "Oh wow, okay. So it's actually not necessary to go out to these villages and be so hands-on and build all our own projects. It's really just about finding the right technology and getting it to the hands of these farmers and they'll see the commercial opportunity themselves." That's where I got really excited about the opportunity for AgTech. I guess at the same time, I was getting pretty fed up and frustrated with constantly having to raise money from philanthropic donors, so I saw a big opportunity to bring a more financially sustainable model with the impact that we were seeking. So I guess that led to the next iteration or some of the inspiration behind what we're trying to achieve at Beanstalk.

Drew Radford:

Well, what is Beanstalk and what are you trying to achieve? It seems a lot closer to home, but you've still got tendrils stretching out into Southeast Asia as well.

Calum Archibald:

Beanstalk is an agriculture innovation agency. We work quite a bit in Australia and up into Southeast Asia, in particular in Indonesia, Vietnam, and we've got some people in Singapore as well. Essentially what we're looking to do, we recognise that there's this huge need for the world's largest agriculture companies to adopt new technologies to allow them to be more sustainable and more profitable, and all around the world, there's a whole swell of AgTech companies that are really on the leading edge of providing solutions into agriculture, but the gap between these two groups is just absolutely vast, and so we play a role as a bit of a translator, matchmaker and advisor in that space to help large agri companies as well as groups of smallholder farmers across Asia to understand and access better technology to help them become more profitable and more sustainable farmers.

Through that work, we end up working with large agri corporates. We work with large NGOs and we also work with federal and state government and RDCs (Research Develop Corporation) as well as of course AgTech investors and helping them figure out how to invest into the sector, and then also directly with startups as well.

Drew Radford:

So just to be clear, you don't actually provide seed funding though?

Calum Archibald:

No, so we don't invest directly. We run programs to support startups in different ways such as we work with them on market entry programs where we'll take say a cohort of 10 startups from around the world, including Australia, and support them with go-to market, everything they need to get started in say the Vietnamese industry. And so on the back of that, we meet lots of really, really interesting startups. So with those startups that we really connect with and think have a really great opportunity ahead of them, we end up doing some direct advisory work with them, and it's usually as a blend of fee for service as well as sweat equity. So we are building a portfolio of startups that we really love and want to support further, but we don't specifically have a dedicated fund to invest in startups yet.

Drew Radford:

Sweat equity. It's a term I haven't heard before. Can you clarify that please, Cal?

Calum Archibald:

Sure. So essentially the startup could raise some money from an investor and then contract us to do anything from help them to build out a financial model, help them to with a go-to-market strategy, the support they need, or they could come to us directly and say, "Hey, we don't have the money to pay your market rates for these services, but we'll agree on what they're worth and that'll convert to equity in our business." So they essentially pay us either directly an equity or a split of fees and equity at discounted fees.

Drew Radford:

Can you give any examples of relationships that you've built with startups and how that's gone on and progressed and helped?

Calum Archibald:

Sure. So what we feel like is our kind of secret weapon in the space is that we obviously work with a huge number of large agri companies and we advise them directly on a whole range of things. And so when we choose the startups that we really want to work with closely, a large part of that is because we feel like we can connect them into prospective customers and early adopters of their solutions. And from that lens, we've got a really clear understanding of the fact that they've got a good product market fit. An example of that is a group called EverCase, which is actually the research came out of Hawaii University and was since commercialised into a Delaware company. Essentially, this technology allows you to put food or anything really into a freezer, bring it down to sub-zero temperatures, and without it actually ever freezing hard.

Why that's interesting and useful in agriculture is because if you can put a lettuce or a whole bluefin tuna or stone fruit into a freezer and leave it in there for months and bring it out, and it's never gone hard, it's never formed a crystalline structure. It means that the cell walls have never ruptured, and so you get this pristine piece of fruit, veg, meat, or of course embryos and blood and that sort of thing that can come out of this until months, months later, and it completely makes us rethink the way that we grow fruit in a season and then transport it around the world chasing seasonality windows. Actually for the first time, a nectarine grower can grow all the fruit they need for the year, and rather than selling it into a glut market, they can hold an inventory and slowly sell down that inventory over the rest of the year. So for food miles and for food waste, we think this is going to be a really game-changing technology.

Drew Radford:

Game-changing sounds like a bit of an understatement. How did you actually work with them?

Calum Archibald:

They reached out to do a customer validation study. This is where we basically help them understand, is this a cool science experiment or is this actually a really commercially valuable piece of technology for the agriculture and food sector? So we went out and spoke to about 75 different customers. We spoke with people who had prawn trawlers, we spoke with people who were selling frozen pizzas. We spoke with fruit growers and cherry growers, and basically the overwhelming response was, "When can I buy one of these things?" So we were very heartened by the response that we got from that piece of work.

When we do this work, often it's halfway between convincing people something's useful and trying to also have an unbiased conversation about the value. But yeah, EverCase, it was very, very clear that the market really, really wants this thing if it can scale up and if it can hit certain requirements they had. At that point, we decided this is something that we think is really cool and we want to spend a bunch more time working on. So we've worked with EverCase on a sweat equity basis.

Drew Radford:

It sounds like remarkable technology. So what attributes does Beanstalk look for in an AgTech startup?

Calum Archibald:

There's probably a couple of things. We really like the B2B (business to business) space. We think B2C (business to consumer) is hard, whether that's selling directly to farmers or whether that's selling directly to consumers, that's a space that we are probably less familiar with and we find very hard and possibly capital intensive. So we really love B2B and it fits our network and the work that we do connecting into large NGOs, governments and into agri corporates around Australia and up into Asia. So that's probably one theme that we look for. The other is really around impact. So a lot of the businesses we work with, the big driver for them around innovation and why they're adopting new technologies is about trying to improve their sustainability of their business. So whether that's figuring out how do they draw down more carbon in their operation, how do they process waste into valuable products or how do they remove plastics from their supply chain and that sort of thing.

Then there's a bunch of technologies that we see that are ahead of the pack in terms of helping these companies there. So if we bring those two things together, it's sort of those sustainability enabling B2B plays. And the third thing probably really is around applicability across Asia. We obviously have a big presence across Asia and access to a whole bunch of corporates and investors in that region, and our personal view is that there's going to be 5 billion mouths to feed in Asia by 2050, so that's one of the regions they really need to get agriculture right, if we're going to do it in a way that's going to be sustainable going forward. So seeing these solutions that are coming out of Australia and have the ability to scale across the rest of Asia are really exciting for us, and we think that space is kind of a bit underrepresented in terms of support for businesses that can scale across Asia.

Drew Radford:

What do you see as the role of AgTech in addressing global challenges such as climate change?

Calum Archibald:

We do actually see it a little bit differently though in terms of our purpose statement at Beanstalk is that I believe that agriculture has the opportunity to be the leading force for good in the world. So we actually think that through AgTech and new business models that we're actually entering into this phase where agriculture's going to be a positive force if we get it right and the more food we eat, the more soil carbon we should be building up just through the growth of those plants and the right business models and technologies should support increasing biodiversity.

So yeah, we actually see a world where AgTech allows agriculture to be a net positive in the world, and that's not just environmental. There's also a huge social element to that as well in terms of we know that most of the world's farmers are smallholder farmers that have a huge upside ahead of them if they can increase their profitability on their operations, and so there's a huge social element to the potential for AgTech, particularly across Southeast Asia and some of those Sub-Saharan African countries.

Drew Radford:

Do you see any notable trends or emerging technologies that you find particularly exciting in the AgTech space at the moment?

Calum Archibald:

I guess one big trend, which we've been conscious of for a while and trying to better understand how we can play a role or support, but we see lots of point solutions being developed that solve one really specific problem really, really well, and particularly corporates we speak to don't necessarily need just one problem solved really well. They need a platform that can do multiple things for them, and so we're seeing pressure from the customer side, I guess for some of these point solutions to come together into a more integrated suite of solutions. And then also, we've just recently seen venture capital money is seriously drying up. Startups are finding it really hard to raise at the moment, so there's another pressure there around consolidation or there's big opportunities for startups to think about how do we partner or how do we think about different opportunities to continue building our business that don't necessarily rely on doing a new round of venture funding every 12 to 18 months.

Drew Radford:

What are some of the biggest obstacles startups encounter in the AgTech industry and how do you navigate those when working with startups?

Calum Archibald:

I think we see a lot of the best founders and a lot of the best technologies exist so far away from their customer. Actually, one of the big things we see is that just the sheer time and effort required to drive down all the driveways and go and speak to all the farmers or go and get into all the large agri corporates who are potential customers and R&D partners is really, really hard. If you think about, say, FinTech (Financial Technology) or some of the MedTech (Medical Technology) industry sub-verticals, basically you've got your customer right next door to you. If you're based in the city, you are kind of right in the heart of exactly where your customer is. The same's not true in ag, and so for an early stage company who doesn't have 200 customers already on their books that they can pick up the phone to, when they're trying to validate a solution and try and get some early buy-in, particularly if they're a technical founder that's built software before or has come out of Biotech (Biotechnology) or something like that, then we see that as being a really simple but huge barrier to new talent coming in and quickly scaling up ag solutions.

Drew Radford:

Lastly, what advice would you give to entrepreneurs who are seeking to develop their own AgTech startup?

Calum Archibald:

We're huge on this notion of customer before capital. We actually don't really think that the venture capital models is particularly fit for purpose for AgTech. If you think why VC typically invests using the general kind of Silicon Valley model of venture capital, it's probably because you want your company to scale quickly and within five to seven years you want to see either an IPO (initial public offering) or a merger or an acquisition. We think the pathway for an IPO for a lot of these AgTech startups is quite unlikely. And so building with the end in mind that it's most likely that you need to be gearing your company towards being acquired by either a much bigger player who's in a similar space of service delivery to ag companies, or potentially even being acquired by one of the big ag and food companies is more realistic.

And so starting with that in mind, rather than necessarily jumping down the venture capital pathway as a kind of assumption of that's the only way to raise money, but actually starting from the point of engaging with customers and trying to get large customers to co-fund your R&D and bring them on the journey as well. It's a hard thing to break into, but we think probably partnering with large companies early and customers early, and really building your product directly for them is not only a better way to hang on to some of your own equity, but also it is probably a more likely pathway for your business down the track. So real focus on customers and building rapport and delivering services to them early rather than necessarily raising VC money and going out hiring a sales team and trying to then go and validate.

Drew Radford:

Cal, you've got a lot of dirt on your boots from traipsing around the world. It’s given you great insights about the importance of AgTech. For now though, Cal Archibald, director with Beanstalk AgTech, thank you for taking the time and joining us for this AgTech Innovators podcast.

Calum Archibald:

Thanks, Drew. Thanks for your time.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback, so please leave a comment or rating and share this series with your friends and family. All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on farm. This podcast was developed by Agriculture Victoria, authorised by the Victorian Government, Melbourne.

Speaker 1:

Welcome to AgTech Innovators, keeping you up-to-date with information from Agriculture Victoria.

Drew Radford:

Pioneers of new agricultural technology are a unique breed. Not only do they need the vision and technical skills to tackle the problem they're trying to solve, they also require the business nouse to access capital for development and commercialisation.

G'day, I'm Drew Radford, and what I'm describing is pretty much the juggle most AgTech startups face. The solution is often found via some external help and funding. Tenacious Ventures works exactly in this space. Sarah Nolet is their co-founder and she joins us for this AgTech Innovators podcast. Thanks for your time.

Sarah Nolet:

Thanks for having me.

Drew Radford:

Sarah, you've got a Master's in system design and management from MIT (Melbourne Institute of Technology) and also a Bachelor of Science in Computer Science and Human Factors Engineering. They're fairly substantial qualifications, but they seem a long way from primary production. How did you get involved with agriculture?

Sarah Nolet:

Yes, definitely more background on the tech side than the ag side. We do have a bit of a hobby farm, although I think truly we grow more rocks and squirrels than anything else. So, it's not commercial at all. I ended up in agriculture because in my early twenties, I decided to go overseas to South America on what was supposed to be a holiday and was living on a beautiful farm in Argentina.

Something just clicked in the back of my head about farming and agriculture and really saw how technology was starting to change the industry, how climate was impacting the industry. I was pretty hooked on spending the rest of my career, or the foreseeable future, thinking about new business models and new technologies and how that could help bring more resilience to the sector. So, I ended up staying for a year in South America, and that was now about a decade ago. Ever since, I've been thinking about innovation and technology and agriculture.

Drew Radford:

Sarah, you've probably answered my next question, but I just want to venture a little bit further. I've seen you described as a food systems innovation expert. That's a term some people might be unfamiliar with. Can you explain it a bit?

Sarah Nolet:

When I think about a food system, it's really recognition that we need to appreciate things that happen at pre-farm gate, inputs, advice, transport, all the way through to, of course, what happens on farm and then what happens into the value chain before a food or fibre product actually gets to the consumer. That's a complex system with reinforcing loops and different incentives and business models and natural systems as well.

We can't really think about it as just a linear model. So, that's one is it's not just food, it's not just ag, it's the agrifood system or the food system. In terms of innovation, again, that's not just technology. If we have great widgets, that's one thing, but who's actually using them and why? So, thinking about the business models, the incentives and things like that. That's really the whole picture is how do we get more useful stuff having an impact along the value chain and some probably buzzword-y, jargon-y ways to say it.

Drew Radford:

It's also a space where there's a lot of terminology in trying to get your head around it. Particularly, we want to understand Tenacious Ventures and your role in the AgTech startup sector. I've seen Tenacious Ventures described as a high support, high conviction, sector specific agrifood tech venture firm. What's that mean to somebody who doesn't understand the sector?

Sarah Nolet:

Yeah, sure. We have raised capital from a range of investors. Some of them are primary producers, some of them are agribusiness executives, impact investors, financial investors. We manage and deploy that capital into a portfolio of companies. So, we actually take minority equity stakes in technology companies and those technology companies are solving problems all along the value chain. So, pre-farm gate, farm gate, post-farm gate, different kinds of technologies, software, hardware, biology.

We find support, invest in those companies. So, we spend a hundred percent of our time thinking about, what will the future of food and agriculture look like? How are different technologies and business models changing it? Which companies would we want to partner with, and how would we support them to develop their business, build that technology, get those customers in a range of ways? We support them to do that beyond just the capital that we give them.

Drew Radford:

You've explained that very well, and I understand that pretty clearly now. When you're evaluating a potential AgTech startup, what are the most important factors you consider when making an investment?

Sarah Nolet:

There's a whole range of them, and it does vary, but I think the easiest, highest-level framework is team, technology, and traction. The team's really important because we do invest pretty early. They might not have a lot of customers yet or the technology might not be fully developed, and so really understanding, who are the humans in this business? What drives them? What qualifications do they have? What experience do they have from the same or other industries that's going to help them to be successful and frankly, that's going to help them get out of bed every day and keep fighting what is a pretty hard slog, when it does get tough?

Then technology, what are the innovations? What's the intellectual property? How does it actually work? Why is it going to deliver value to the customers?

Then traction, who are those customers? What value does it deliver? How are they going to pay for it? How many of them are there? Is it a big enough market to have the economic upside that we're looking for? So, that's the simple framework is team, tech, and traction.

Drew Radford:

That's a fairly simple set of criteria when you spell it out like that.

Sarah Nolet:

Yes, it's not easy to assess and pretty nuanced. Like I said, with the team, it's one thing to look at LinkedIn profiles or resumes, but how do you actually know that they're going to be able to build this thing that doesn't exist yet, or that they're going to be able to sell it to people who have never heard of it yet, or they're the ones that are going to hire the right team and raise more capital and be able to talk to customers well?

Those are pretty challenging things to assess, especially when in Australian AgTech, a lot of the founders haven't done this before. Some of them have, but a lot of them haven't. So, you're not able to say, "Oh, well, they've done this six times. They were an executive at these other companies. They'll just go be an executive here." Often, it's quite a new journey. Maybe, they were a researcher before or they were a farmer before. So, you're having to translate between skills and attributes they might have in other contexts and how they're going to apply to running this business.

Drew Radford:

So, that's your risk management side of it when it comes to trying to work out the risks and challenges that you're looking at in startups.

Sarah Nolet:

Yeah, absolutely, and that would apply to the technology and the traction part, the market part as well. Again, it's one thing to be able to build the widget, but if no one wants it, then you don't have a business, or it's one thing to identify the problem, but if you can't solve it, then you don't have a business. So, how do we balance the set of unknowns and the set of risks that we face in the early stages? Recognising that if we do get in at the early stages and those risks pan out, they are able to do it, there's huge upside in terms of impact to industry and financial returns ideally.

Drew Radford:

Working with these companies, how do you then help them grow and scale their businesses? What kind of support do you give them beyond, "Here's the cheque"? Which is obviously a very exciting thing for them, but it's more involved than that, I'm sure.

Sarah Nolet:

Yeah, indeed. It's been a really humbling journey too because I think a lot of investors say they're high conviction or high support, and that can mean, "Oh, we'll get in and do this for you. We'll build that for you." Ultimately, if we wanted to run their businesses or build their technologies, we're in the wrong business. It's more of investing in them to be able to do it. So, it does take a good degree of humility to even figure out when can you be helpful and is asking for help actually just creating more work for them?

But some of the key ways that we do help is really translating to that tech and venture capital side of things. Some of our founders, again, come from the farming world or the research world. So, they're not fluent in how to build their next pitch deck or the kinds of investors they need to talk to offshore to grow or how to build those next level financial models or whatever it might be. So, that fluency with venture capital is something we can help a lot with.

The other one is because we spend a hundred percent of our time in food and ag and we don't just look at software, you can't eat software, we have quite a bit of familiarity with and connection to different technical experts and different industry experts. So, being able to connect those dots to whether it's potential customers or advisors or team members that are food and ag specific, that's really our bread and butter and where we spend all of our time.

Drew Radford:

The way you describe it also sounds very satisfying in terms of, "Look, we're here to help you grow as opposed to take control of your business." You're enabling and watching people prosper really and maybe fulfil their dreams.

Sarah Nolet:

Oh, well, ideally, there's truly nothing better than going out to visit one of these companies and see something that six months ago or two years ago was just a sketch on a piece of paper and has truly come to life. There's robots actually spraying or harvesting or managing waste, or there's traps actually detecting pests, or there's coatings going on paper. It's astounding to see these things come to life. If I ever get disenchanted or frustrated, I just have to go visit one of these companies and see how amazing it is in real life.

Drew Radford:

Well, you've alluded to it there. What are some of these companies doing?

Sarah Nolet:

Our first investment was a company called Goterra. They're a waste management business that has built modular infrastructure. So, think of a 20-foot shipping container that's fully environmentally controlled and manages organic waste. What comes off of our plates or out of our hotels or out of our office buildings or in the back of a supermarket right now gets trucked to landfill and buried in landfills. That trucking is costly and those landfills are filling up and it has quite a significant emission footprint. Goterra's modular technology, those units, manage that waste onsite using a biological process.

That's one investment on the food and waste part of the value chain. At maybe the other end would be someone like SwarmFarm Robotics who is a farming couple, Andrew and Jocie Bate, who founded the company and said, "We're really running up against the limits of current equipment and need to find a better way." So, they've built an autonomous platform, robots that go through the paddock and do different jobs like precision spraying. They are managing now over a million acres commercially in Australia with things like see and spray technology, saving up to 98% of chemicals, reducing soil compaction, saving on fuel, or solving labour challenges. So, pretty astounding technology homegrown on the farm out of Queensland.

Drew Radford:

Sarah, truly remarkable technology and game-changing technology by the sound of it. What advice would you give to entrepreneurs who are seeking funding for their own AgTech startups, and what are some of the common mistakes you think they should avoid?

Sarah Nolet:

I think the first one is understanding what you need the money for and what's the business plan? What's the use of those funds and then what's the right kind of capital to partner with? We're venture capital investors. We've really only got one tool in our toolkit. We look for a certain return profile, we look for a certain risk profile. But that doesn't mean that we're the best investor partner or that it's the right fit for you. So, I would say start with, what do you need the money for? How are you going to deliver that money back, if at all? Is it a philanthropic investment? Is it, you're going to pay back dividends?

What's the plan? Who is the right investor partner? Then it's about going through those possible partners and connecting with them, and I would say qualifying them just as much as they're qualifying you. There's this narrative that investors are assessing you and they get to say ‘Yes’ or ‘No’. Well, you also get to say ‘Yes’ or ‘No’ to whether they're a good partner. So, don't be afraid to ask them questions and put them on the spot to see if they're going to be a fit for you, just like they're seeing if you're going to be a fit for them.

Drew Radford:

That's very good advice. Most people view it as a one-way street.

Sarah Nolet:

Indeed, which is pretty silly, right? Because it's absolutely not. As investors, we don't succeed at all unless our companies succeed. So, it really has to be that partnership and it is going to be a give and take. We're going to ask for reporting and information, and we'll be annoying sometimes. Other times, we'll be super helpful and we'll give you money and we'll make connections and we'll open up networks and we'll run support groups. There's tonnes of stuff we do, but it is a partnership and there is give and take. So, it's worth qualifying whether it's a fit early on.

Drew Radford:

Sarah, you said earlier on in regard to trying to check out the bonafides of some of the startups. You alluded to the sector being somewhat early in its development in Australia. So, how do you see the AgTech industry here evolving in the next five to 10 years, and what are some of the most exciting opportunities and challenges you see on the horizon?

Sarah Nolet:

Australia is truly a unique and remarkable place, and I wouldn't have stayed here. I'm American originally, as you can tell by my accent. I would truly have gone back to the US if I didn't think this was a world-class place to be commercialising and growing agriculture technology companies. We have a great food and fibre industry because we've invested in research and technology, and it's an exciting opportunity to think about how we commercialise those innovations and scale up those companies and create those jobs as well. That's really what we're all about.

So, I think there's tonnes of areas around sustainability and resilience, around natural pressures, around supply chain pressures, and then all different kinds of technology stacks, from biologicals to robotics to different kinds of software innovations or material science innovations, manufacturing innovations. So, it's truly limitless in terms of applicability along the value chain and Australia's strength as a food and fibre producer to also become an agriculture technology producer and exporter. That's really exciting to us over the next five to 10 years.

Drew Radford:

You've alluded to it there a little bit. I get the impression you see AgTech as a very important part of addressing global challenges like climate change, food security and, you've used the word quite a bit, sustainability.

Sarah Nolet:

Absolutely, that's part of our mandate. When we screen for companies, we equally look for their financial upside and their impact, as we call it, upside. For us, that's a combination of ecological resilience, de-carbonisation, or an adaptation in resilience. We believe those are the key trends really driving the sector forward.

Drew Radford:

Sarah, you work in a fascinating space. You're helping people achieve their dreams in terms of their business outcomes, but you're also involved in helping solve some of the problems that are facing the planet.

Sarah Nolet, Co-founder of Tenacious Ventures, thank you for taking the time and joining us for this AgTech Innovators podcast.

Sarah Nolet:

Thank you, Drew. It's been a pleasure.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback. So, please leave a comment or rating and share this series with your friends and family.

All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on farm. This podcast was developed by Agriculture Victoria, authorised by the Victorian Government, Melbourne.

Speaker 1:

Welcome to AgTech Innovators, keeping you up to date with information from Agriculture Victoria.

Drew Radford:

There's the old adage of walk a mile in someone's shoes. Maybe it should also be the mantra when it comes to supporting startups. G'day, I'm Drew Radford and arguably, this is the perspective of the guest I have today in the AgTech Innovators studio, Guy Franklin. He's a venture partner with Skalata Ventures. Guy, thanks for your time.

Guy Franklin:

Thanks for having me, Drew.

Drew Radford:

Guy, I've been looking forward to our chat because you've really trod the path of developing your own tech venture and it was to do with mobile phones in the early days and video. What did you do?

Guy Franklin:

Yeah, it was. I guess my journey in AgTech has started as a founder. We developed a very early wireless video streaming product. This was to solve a problem for actually a commercial flower grower in regional Victoria. That product allowed us to essentially raise money and commercialise, and we found that the application for that product actually is quite broad. Allowing us to stream video from remote locations across the country meant that we started opening up opportunities for people who were in remote areas to be able to receive support from people in other parts of the country or around the world. So we ended up spending a lot of time with farmers and I guess support services like veterinarians for farmers, and spent a lot of time at field days talking to farming groups. So that was a really interesting part of the journey. That was through the early 2000s when the technology was very basic, very rudimentary, and connectivity wasn't what it is today. Now it's kind of commonplace to have video on your phone. Back then we were just starting that journey.

Drew Radford:

Guy, that must've given you a really detailed insight to not only solving a problem for one person but then trying to grow that as a business from there on.

Guy Franklin:

It's one of the challenges when starting a company and having a technology solution that is broadly applicable, is that you end up not focusing on one particular area and you sort of start solving everyone's problems all over the place. Not something I'd necessarily recommend that startup founders starting companies now do, and I would always recommend that you focus on one thing first. But it did give us a really broad range of experience into the different industries and understanding what some of the challenges were going into those industries and how we could solve their problems and also what the barriers to actually technology adoption were at the time.

Drew Radford:

You said there, that's not the sort of advice you give somebody now. And that's a salient point because you've got a role now with a venture capital firm, Skalata, and your role is Venture Partner. So what's Skalata do and what's your role within that?

Guy Franklin:

So we're an early stage investment company that invests in startups that are at the pre-seed and seed stage. So really basically getting them up to the series A level of investment capability. What that means is that we invest capital and we also invest time. And so, we invest a smaller amount of money upfront and then we work with the individual companies for around six to 12 months. And during that time, we look at what their funding milestones need to be and we plan for that and then we can provide follow-on funding at that stage.

And we find that really at this early stage of startup life, the founder capability and their competency is one of the most deciding factors on whether they're going to be successful. And so, we want to spend as much time with them ensuring that they're thinking about all the things that they need to think about putting all the systems and processes in place of their business so that they're ready for when they get further down the track and larger amounts of investment injected into them.

Drew Radford:

I just want to take one step back before we drill down a little bit more in that evaluation process, but I'm getting the impression though that with your organisation, that's very important that many of the people in there have actually walked the walk so that they can relate to people in their own startup journey. Or am I being a bit simplistic there?

Guy Franklin:

No, not at all. Well, you see different types of founders. So there's first time founders and then there's second or third time founders and they all have different needs and requirements. We find that having people in the organisation who have done this before can really provide that empathetic experience to the founder and really try and shine a spotlight on areas that they might be missing within their business and really helping them understand what it takes to become a successful company that is going to grow quickly into a large market opportunity.

Drew Radford:

What are some of the key trends and drivers you're seeing in the AgTech industry at the moment and how do they influence your own investment decisions?

Guy Franklin:

Yeah, I think that everything these days needs with AgTech needs to be looked at through a lens of climate change. Every industry is affected by climate change and particularly AgTech. But when we are looking at any business, we're always looking for the fundamentals of what a solid business looks like. And the solid businesses are businesses that understand their customer, have identified a problem that just absolutely must be solved in a market that's sizable enough. So those three fundamentals need to be addressed.

So we look at every opportunity like that. They've got to be close to the problem or spend a lot of time with the customer. They need to be absolutely obsessed with the problem that they want to solve. This problem must be solved. What I mean by must be solved, somebody needs to be willing to pay for that problem to be solved. And then we really look for the founders who have validated these assumptions that they've made. So you've got a problem, they've thought of a way to solve that problem, and then they've gone out and they're actually interacting with these customers deeply and regularly to make sure that what they're actually building to solve that problem is fit for purpose. And that's just a fundamental stage that every startup is regardless of industry.

Drew Radford:

What problem are you trying to solve is such a crucial, yet obvious question. So following on from that, are there other factors that you consider important when making an investment or is it really just come back to those three key points?

Guy Franklin:

That's sort of like the basis of what we look for? You've got to look at founder competence. At this stage of startup life, we look for founders who are capable, who take on feedback, respond to feedback, and ask for feedback because we want self-aware founders. They know that they don't know everything, we don't know everything, and what we're doing is we're on this journey to actually find out where the opportunity lies. But there's also some technical things that we want to make sure. We want to make sure that they've looked at the competition, made sure that this hasn't been done 50 times before. We'd love to see founders who have technical capabilities in the business. It just makes it so much easier to do multiple cycles of testing and iteration and ensuring that your product is fit for purpose. We want to make sure that they have a pathway and a line of sight to profitability or break even.

So high growth businesses can either grow through continually raising money and sort of putting off the point where they need to be actually making money. We like to see businesses that can see how they could make money and how they could become profitable. And not necessarily that they will become profitable in the timeframe that we are there with them, but maybe it's a future state, but we need that they know that they can eventually get there. So we're looking for some financial fundamentals as well. And on that point, we need companies to really think about how they're going to sustain themselves during a cycle where funding is actually harder to get at the moment. And when you're starting a business and you're trying to find the customer proposition and you're trying to find how you're going to sell to that customer, we really want to make sure that they're able to keep the business alive long enough to be able to go through multiple iterations of this cycle so that they are there for when the opportunity actually arises.

So generally, we look for around 12 to 18 months of cashflow runway to be able to take that time to find the opportunity.

Drew Radford:

There's a lot going on in that evaluation process. And I think that's probably an understatement. I mean, this is about risk management as well for your investors probably first and foremost, and also because you generally are invested in the people you're working with as well. So what are some of the key risks and challenges that you look for in startups?

Guy Franklin:

Look, the key risk for any investor is that the company will fail. We are investing other people's money into a business and we want to make the best investment decisions that we possibly can. Us investing in startups that fail, we do know that this is the nature of the startup world. Most companies will actually not make it. And so there is an approach where we need a broad and large portfolio of businesses to ensure that we can return investment back to our investors. But that being said, during this phase, we are trying to do everything to assess those risks of this company not actually succeeding. And those sorts of risks are back to that customer validation phase and making sure if founders don't understand the customer or the market well enough and they're not clear and honest with themselves, that's like a massive red flag.

Companies close because they run out of money and they run out of money because they can't raise money or they can't sell enough product. It's pretty basic business stuff. But when we're in this sort of messy start, we're trying to find these things. So that's where we just need that founder competence and that they've spoken to their customers. And they have some indication and some signal that there is a market for what they're actually doing.

Beyond that and beyond the runway that we need them to have, we look at other things around the business and we try and minimise that during our engagement with the startups themselves. So getting them ready for a series A means making sure that there's strong fundamentals around their governance, around financial reporting, around their internal systems, around frameworks and policies that they have in place. A lot of it's kind of a bit boring, particularly for technologists that want to just get out there and build product, but it's really important to have those sorts of things in place as you're growing because if you start rapidly growing before those things are in place, they're the sorts of things that will sink you. And you introduce things like poor team cultures if you're growing the team. Those sorts of things aren't often thought about at the early stage.

Drew Radford:

You mentioned there that yes, there is a high failure rate, but there's also successes as well. So can you share some examples of successful Victorian AgTech investments that you've made. What were some of the key factors that contributed to their success?

Guy Franklin:

I'll talk about Smart Paddock. That's a local company. I really described them as a data collection and visibility company that's focused on farming and operational efficiency. But essentially what they're doing at the moment, their first products are ear tags and collars that allow farmers to track their animals in real time and analyse their behaviour as well. This is a hardware and software company that went through our first cohort in 2019 and has subsequently been developing their product, getting it out to farmers, raising more money, and have since actually started securing international contracts to supplying their ear tags. They design and manufacture in Australia. The teams in Victoria. This is a really hard thing to do as a small company because hardware is like capital intensive. And so, the approach that they took was really great. They built a prototype, a small version of this product. They started engaging with farmers. The founder had a background growing up on a farm in Canada and started applying some of his knowledge of what they went through when he was out here. And so just really deeply engaged with customers.

The farmers that originally started adopting this are sort of your early adopter customers. They're willing to put up with understanding that this is new technology. They can see the benefit of it, but they will sort of work with the startup to ensure that what they're building is right in the field. There's a lot of challenges when you're putting technology on an animal that is roaming around the countryside and doing whatever they want to do. So that product has to be fit to purpose. The technology then needs to be really accessible for the farmer. So they've just been slowly building out these prototypes and they're now actually recently received more significant funding to allow them to do their first sort of more mass manufacturing and production run. And so they're in the process of rolling that out now. So this is a really exciting opportunity, probably the best technology in the world for doing this sort of work. And also just opens up a world of more opportunities for creating efficiencies on the farm over time.

Drew Radford:

Guy, it's interesting that you mentioned Smart Paddock. I've had the pleasure of interviewing their CEO Darren Wolchyn for another episode of AgTech Innovators. It's remarkable what they've achieved and especially that it's produced here in Australia.

Guy Franklin:

They've had to be very innovative in the way that they've actually built the product. Making something that's really fit for purpose takes time. It takes dedication. It takes a lot of tenacity, patience, and grit to be able to actually get it to the point where you can start mass manufacturing a product and selling it to a broad audience. And when you can do that, you can also then start reducing the cost of that product. And then you've got good quality products and at a reasonable cost that more people in the industry can afford to put on more animals.

Drew Radford:

Guy, what advice would you give to entrepreneurs who are seeking funding for their own AgTech startup? And what are some of the common mistakes you think they should avoid in that process?

Guy Franklin:

Yeah, sure. Well, it's an interesting thing and I look at it with two lenses. One, I think about my business and how I need to talk about my business. And then the second thing is how I need to look at investors. So raising money, the process of raising money is a sales process. You're selling equity to investors, and the investors are your customers in this process. So I would advise startups to treat fundraising as they would treat a sales process. So you create a pipeline of your target VCs, you'd look for introductions. You need to make your pitch simple and clear and you need to focus on the problem with a big market opportunity. There's some sort of broad things that I would say.

I guess more specifically about investors. Some of the sort of pitfalls I would say is like not to approach investors too early. So you need to be at the right stage for the right investor. If you come in really, really early, any of the professional investors are going to realise that very quickly and ask you to come back when you've made more progress. So at that very, very early stage, you might be looking for investment from family and friends or maybe an angel network of groups, but not a professional venture capital organisation.

I would ensure that I don't approach the wrong investors. So, investors generally have areas of expertise and areas that they work with. Skalata Ventures is industry agnostic. We mainly focus on the pre-series A stage, so we're the early stage, but across different industries. So looking for those sorts of companies or looking for investors that might be more targeted to agriculture. Or if you're at the very, very early stage, looking for accelerated where you can go in and they will nurture you through that much earlier stage.

Make sure you research your investors so that when you go into that organisation to pitch, that you are speaking the language that they would expect to hear and that will make them feel comfortable with providing that investment back or that feedback. And on feedback, just being really receptive and asking for feedback. But what I want founders to do is ask the investors, "What would I need to do? Or what do I need to look like to make me investible for you?" Then what you end up with is sort of clear and concrete metrics or structures that they will look for for an investible company. And until you ask that question, you just won't know why you are not hearing back from them or not getting a clear no.

And then obviously, there's a lot of ways that you actually pitch your information, but being really clear on who your customer is, how big the market is, why this is such a big problem, will they buy it, what have you tested, and then coming and showing us that information.

Drew Radford:

Guy, you've given some great insights to actually how the process works and what an organisation like yours or similar looks for. You're a person who's probably spent most of your career looking firmly towards the horizon. What do you see that's exciting in the AgTech industry over the next five to 10 years in terms of opportunities and challenges?

Guy Franklin:

Wow, I mean, that's a big question. I mentioned climate change earlier. That is the biggest challenge for humanity over the next 10 years. And I think that we are going to see the biggest capital injection the world's ever seen into solving this problem or at least managing and dealing with it. Governments, private industry, they're just going to put trillions of dollars into this. So that's obviously an opportunity for innovative companies and innovative people to actually start coming up with solutions to some of those problems.

Access to technology has never been better. Technology that would've cost hundreds of thousands of dollars just five years ago is now accessible to just a broad range of people. So it's really easy to start a business, find a problem, start solving it. Other challenges that we've got are things like our aging population and people living longer and putting more pressure on production systems and labour shortages.

So there's a lot of really large problems out there, and when I look at large problems, I also see great opportunities. So any systems for improving the production and reducing labour requirements, whether it's through robotics or drone technology. Improving animal welfare is going to be massive. There's going to be a big push around lab-grown meat over the next decade and they're going to need to respond to that in a way over the next 10 years as well. I think that the wonderful opportunities at Victoria and Australia, because we have such a steep history in agriculture, that we have the opportunity to actually leverage that history and that access to the markets and be able to foster innovation as long as there's enough incentives provided to make entrepreneurship a viable option.

Drew Radford:

Well, Guy, I really like your perspective there, and it's a positive way of looking at what we've achieved as a nation in the past and where we can go to in the future. But for now though, Guy Franklin, Venture Partner with Skalata Ventures, thank you so much for sharing your insights and joining us for this AgTech Innovators Podcast.

Guy Franklin:

Thanks for having me.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback, so please leave a comment or rating and share this series with your friends and family. All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on farm. This podcast was developed by Agriculture Victoria, authorised by the Victorian Government, Melbourne.

Speaker 1:

Welcome to AgTech Innovators, keeping you up-to-date with information from Agriculture Victoria.

Drew Radford:

The skills to develop an idea into a business can come from a range of sources - life experience, university or, more recently, organisations that support the process of starting up.

G'day, I'm Drew Radford, and it wasn't that long ago that very few people were familiar with the term startup and, if they were, the first thing that popped into their mind was probably Silicon Valley in the United States.

The need to foster the same sort of technological entrepreneurialism in Victoria was recognised back in 2016 with the creation of LaunchVic. Since then, fostering agricultural startups has been very much part of their focus.

To discuss how much so and their role in the process, I'm joined for this AgTech Innovators podcast by LaunchVic CEO, Dr. Kate Cornick.

Kate, thanks for your time.

Kate Cornick:

Absolute pleasure. It's great to be here.

Drew Radford:

Kate, I saw a really interesting and unique term to describe you, a pracademic, and I get the sense that suggests that you sit comfortably straddling both the academic/policy world and also the business world. Is that a fair description?

Kate Cornick:

Well, I've certainly had experience of both, and I reckon I've got more commercial as I've gone through my career. But I started out as a researcher, and I have spent a lot of my career translating between research and industry and government.

So I guess pracademic does kind of coin what I do, but I think I'm probably getting more and more commercial as I get older.

Drew Radford:

That's a good overview and we're going to drill down into your role with LaunchVic.

But a little bit further, you've had a career that's included ministerial advising through to being an MD in IT business, NBN and also working at universities. It's a broad background, and it must give you a lot of insight to industry needs, opportunities, and I suspect also some of the roadblocks.

Kate Cornick:

Yeah, absolutely. I think I've had a career that I think at certain instances people might've thought that I was hopping around between jobs.

But that is actually much more common these days that people don't spend too long in a single career. And the benefit of moving between organisations is you get exposed to a lot of opportunities and challenges, and you can start to see where those opportunities and challenges lie.

Drew Radford:

You are certainly are eating and breathing that now with your role with LaunchVic. For those that don't really know the organisation,can you give me the broad brushstroke of the role of LaunchVic?

Kate Cornick:

Yes. So we are the Victorian Government's startup agency, and our role is to grow the Victorian startup ecosystem. We do that by making sure that founders and investors have got the skills and capability and confidence to start a startup, grow a startup, work at a startup or invest in a startup. And ultimately, through that, we're creating hopefully more viable companies that we then create jobs, create wealth for people and contribute to our long-term prosperity.

Drew Radford:

I'd imagine this has been quite a ride for you because back in 2016, startups weren't really part of the language in Australia. It was more of a US-related term. That's changed a lot since then.

Kate Cornick:

Yeah, absolutely, and we've seen that through LinkedIn, to be honest with you. I think 10 years ago, if you put 'startup founder' on your LinkedIn, you were seen as being the little bit crazy person, who didn't have a proper career trajectory. Whereas now, we see so many people founding companies, starting companies, and it really has become much more normalised, and it is a viable career opportunity.

Drew Radford:

Well, just maybe give us a couple of quick examples since 2016 that you're really proud of in terms of initiatives that have grown from an idea.

Kate Cornick:

Oh, goodness. I mean, it's really hard at LaunchVic because we've seen thousands of startups, so trying to pick one of them is always really hard.

I'm really proud of the work that we've done at LaunchVic to help founders, so it would be putting in place founder programs that are helping founders along their journey, as well as educating and putting in place programs that support investors. So I'm specifically referring to our pre-accelerators and our accelerators and our angel networks here that have really catalysed the ecosystem and help create growth.

Drew Radford:

And that's really about supporting the early stages of the startup funnel, isn't it? It's about giving that support and financial support as well.

Kate Cornick:

It's absolutely early stage, but it's probably more support at the really early stage to help people get the right skills they need and the right processes and opportunities to take advantage of versus investment. We do do a little bit of investment at LaunchVic, including in agriculture, but we really are very much more focused on skills and capability than investment.

Because if you don't have a really credible business that people want to invest in, you're never going to get investments. So you've got to be able to have the right skills to demonstrate to an investor that you are a credible CEO that's got the capabilities and competence to grow a business and make the investors money. So skills are really, really important in this discussion.

Drew Radford:

Kate, in terms of those skills, identifying those skills, do you help try and upskill then?

Kate Cornick:

Absolutely, and entrepreneurship is a muscle. I think a lot of people think that to be a great entrepreneur, it's something you're born with, it's something that's natural in you. And they look at great globally-renowned entrepreneurs like Elon Musk and Mark Zuckerberg and think, wow, they were born with that skill.

But actually, this is a muscle, it can be taught. And it's about risk appetite, it's about being comfortable with ambiguity, and it's about understanding the process that de-risks this really high-risk environment for you. So we definitely see the skills aspect of the work we do as being the most important, and helping people on that journey at the right time is critical.

You mentioned before about whether people should go to university and yes, absolutely, huge proponent of universities and education. But when you're growing a company, you don't have time to step back and go and get an MBA that might take two or three years. You don't have time to do a university degree. You need just-in-time help that's going to help you through the next 12 weeks. So a lot of the work that we do and the education and upskilling we do is really very time-limited and very focused for the particular needs of the startup at that point in time.

Drew Radford:

I was speaking a while ago to the director of a startup, and he was really focused on learning and understanding the language of investors and what they are actually focused on. And his background was actually a physicist, so he was learning a whole new language and trying to identify their thinking processes so he could appeal to them.

Kate Cornick:

And pitching to investors is something that there is this art and a science to it, and I think for a lot of people who haven't worked in the investment landscape, they can often end up focusing on the wrong things. It might be proving to the investor that you've got a really great product, but the investor probably wanting to understand, well, how's this product going to make money? So there's not necessarily about how much time you've put into the product, but what's the potential market offering?

The other thing that investors are really looking for is your skill as a CEO. They are not backing your product, they're backing you as an individual to be able to deliver that product and make money. So I think a lot of people put too much credibility on trying to prove that they've got a great product and not enough time focused on, "Look, this is my skillset. I'm really good at this. This is where I've got some weaknesses. This is how I'm supplementing those weaknesses with the right people who can help me on my journey." So we certainly have run and do run courses on how to pitch to investors, and that is, as I say, an art and a science.

I think one of the mistakes a lot of founders do is going too early to investors and they think, "Oh, I've got an idea. I must now go get investment." But investors want to see that you've got some sort of traction. It's not necessarily customers they're looking for, but they want to know that you've done some work and this isn't just a fly-by-the-night idea that you had last week and, suddenly, you're pitching for money. It's something that you innately understand, and you are prepared to spend potentially the next 10-plus years of your life working on this issue.

Drew Radford:

It's a really astute insight, and it's obviously your job to have that, but in terms of they're investing in you as the CEO and not just purely the product, distilling that down, I sense that is about garnering trust.

Kate Cornick:

Well, it's garnering faith that you can make them money. Investors are great people. We have some phenomenal investors who have really well-meaning drivers. They want to help founders, they want to see them succeed. But at the end of the day, whether they're investing their own money or other people's money, they need you to create a return on investment, so they've got to have faith that you can create that return on investment.

Now, the way venture investing works is that the majority of companies will actually fail. So they don't know which one of their portfolio of 10 might fail, but they've got to give it their best shot that everyone is working their darnedest to get that company over the line.

You know, one of the stats that was told to me a few years ago is the average relationship you have with your venture capitalist lasts longer than the average marriage, and you are working together for the benefit of growing wealth and creating a future. And so it is a long-term partnership, and you do need to pick the right investors, and, equally, investors need to really understand that they're picking the founders that can go on this journey with them over a long period of time.

Drew Radford:

Kate, Victoria is one of Australia's largest agricultural producers, but research conducted by LaunchVic suggests that our AgTech sector needs further support to grow. Can you tell us more about the research LaunchVic conducted and how that's driving some of the work you are doing in the AgTech sector?

Kate Cornick:

Yeah, absolutely. So when you look at a startup ecosystem, you would expect startups to start appearing in areas that you have traditional industry strengths. So in Victoria, that includes agriculture, which is one of our largest export industries, and we are known as the Food Bowl of Australia. So we did a report back in, I think it was 2018, to uncover how many AgTechs were there actually in Victoria, and what were our key strengths in those areas.

What that report showed was actually we didn't have very many AgTech startups at all. In fact, the report showed that there were only 40 AgTech startups, and 80% of them were based in Melbourne and had very little on-farm experience. So we worked with Agriculture Victoria to raise this issue with them, but also work with them to solve it because we do want a really vibrant agricultural industry that is innovating and keeping pace with the world.

If there aren't a large number of local AgTech firms, that means one of two things. It either means our agricultural industries are not innovating at all, and that's really bad for our future. Secondly, it means that they are innovating, but they're using technology that's developed overseas, and that is an opportunity loss. Because those innovative companies who might be based in Silicon Valley or Tel Aviv or Netherlands, wherever they might be, are where the high-skilled technology jobs are being created, which means we're not creating new high-skilled jobs locally for future generations.

So for me, it was really important that we saw the agriculture sector being able to leverage local startups, and that meant growing a bigger pool of local startups. And that's been our work with Agriculture Victoria.

Drew Radford:

Well, in terms of that work, Kate, you mentioned your first survey found 40 startups. Any rough number of what you're looking at now in Victoria?

Kate Cornick:

Yeah, we've certainly seen that more than double, and I think that's a very conservative estimate. In fact, we reckon it would be well into the hundreds now, and part of that is through our programs that were supported by Agriculture Victoria to put in place pre-accelerator programs.

Now, these pre-accelerator programs are programs that help entrepreneurs start a startup. So we get a lot of people coming to us going, "I think I've got an idea, I'm not sure how to get going." Or they might be a founder that goes, "Look, I've had this startup business for a year, and it's not really taking off. I'm not entirely sure what I'm doing."

So pre-accelerator programs are cohort-based, and they're typically six to 12 weeks in length. What these programs do is wrap a group of experts around you that are startup experts, but also agricultural experts to really hone your product market fit and make sure that you are building a company that has got long-term potential.

So we've very proudly, with the support of funding from Agriculture Victoria, supported three pre-accelerators, Rocket Seeder, SproutX and Farmers2Founders, and these three programs are helping well over a hundred entrepreneurs hone their business ideas and hopefully pop out the other end of these programs with viable startups.

Drew Radford:

That's quite a pipeline you've developed there.

Kate Cornick:

Absolutely, it is, and which is really exciting, and we don't expect every entrepreneur to go into these programs to create a startup. In fact, one of the success metrics of these pre-accelerators might actually be telling a founder, "You've got a really great idea, but no one wants to pay for it. Don't waste your time and resources to try and grow this business. Now's the time to stop and perhaps go back to the drawing board and create a new idea." So we see failure as an outcome of these pre-accelerators, but that's a good thing. It means people aren't wasting their time.

Very hard to learn that as you go through that journey, but if you find out that startup entrepreneurship is not for you, you actually don't think you ever want to be a startup founder, or that idea hasn't got a market, the best thing you can do is stop and stop working on it. While we're helping well over a hundred entrepreneurs, we certainly don't see that we will create a hundred or more viable startups because we do expect failure to be a part of this journey.

Drew Radford:

Well, isn't failure part of the learning process, though, as well?

Kate Cornick:

It is, and we would love to replace the word failure with learning.

In fact, there was a study done not so long ago last month by Dealroom, which is a global data house that monitors startup ecosystems around the world. They looked at 150,000 venture-backed startups, so these are startups that have probably had 2 years of growth before they get venture backing and they found 75% actually fail.

So failure is very much a part of this journey, but it does create learning opportunities, and we see that in Victoria where we see second-time founders, people that have perhaps had experienced a failure, coming back into the ecosystem and being more successful second time around.

Drew Radford:

Is that a cultural thing, Kate, that Australians perhaps that doesn't sit quite so comfortably here? Americans, it seems to be like, "Well, okay. Well, what are you going to do now?" It seems to be a very different perspective.

Kate Cornick:

It is, and we've got a very risk-averse culture in Australia. I think there's this persona of the Aussie larrikin that backpacks and skis and takes risks and bungee jumps, you know the Crocodile Dundee. And that's very different from our corporate culture, which is actually is very risk-adverse.

In ecosystems like Tel Aviv and Silicon Valley, you often hear from venture capitalists who will ask founders, "Have you failed? What have you learnt from that failure?" as a question to determine whether they should invest in them. They want to see that they've failed before, they've learnt and, therefore, they're on a journey that's going to be better.

I think that is definitely changed in the seven years that I've been at LaunchVic, but we still are very risk-averse, and there's still this view that if you fail, it's not a good thing and perhaps people shouldn't work with you. And that's not healthy, and we do need to change that culture.

Drew Radford:

Kate, you described the partnership that you've got with Agriculture Victoria in terms of creating those pipelines for startups. You've also got something that's called a sidecar fund, the Hugh Victor McKay fund. Two things, what is a sidecar fund and also the story of Hugh Victor McKay? Kind of interesting.

Kate Cornick:

Yeah. So a sidecar fund is an investment vehicle that co-invests alongside private investors. So the Hugh Victor McKay Fund is a fund that we are operating, investing money provided by Agriculture Victoria into Victorian AgTech startups on a two-to-one basis. So we expect every startup that we fund to get to get $2 from the private sector, and we'll top them up a dollar from the Hugh Victor McKay fund.

So it's a way of making sure that early-stage startups get more capital, but it's also a way of ensuring that the private sector is deeply engaged in those startups. And it's not government-backing business, it's private sector-backing business supported by government, which is the philosophy that we're taking through these sidecar funds.

It's actually our second sidecar fund. The first sidecar fund we launched a couple of years ago. It was called the Alice Anderson Fund. It was set up to support women to access capital, and Alice Anderson was a pioneering female entrepreneur from the 1920s.

Following in that vein, we have named the AgTech sidecar fund, the Hugh Victor McKay Fund, and that fund is named after Hugh Victor McKay, and he was the inventor of the Sunshine combine harvester, which has absolutely revolutionised agriculture around the world. And indeed, Sunshine, the suburb in the Western District of Melbourne, was named after the combine harvester, which is where the original factory was based.

So we are really using and celebrating our phenomenal historical entrepreneurs to help grow the next generation, and we hope the fund will uncover the next Hugh Victor McKay and that will result in a global disruption to the way agriculture is done for the benefit of everybody.

Drew Radford:

It's a fabulous tie-in. And I was also reading that the combine harvester that he developed was in response to a Victorian government funding program back at the turn of the century. There was a competition to try and develop better ways of harvesting, so it's funny how the circle turns.

Kate Cornick:

It is very funny how the circle turns and, absolutely, it's very fitting for our fund.

Drew Radford:

So Kate, how can people get involved with that?

Kate Cornick:

Well, the first thing I would say is jump on our website, LaunchVic.org. You can find all the information about our programs there, including the pre-accelerator programs, the Hugh Victor McKay Fund, and also we're running an AgTech grants program where we are providing up to $50,000 grants to budding AgTech companies. So there's a huge amount of support available there for Victorian AgTech-based companies.

Drew Radford:

Kate, you work in an exciting space. I mean, you're, literally, helping people realise dreams and create wonderful disruption in the process. But for now, though, CEO of LaunchVic, Dr. Kate Cornick, thank you so much for taking the time and joining us for this AgVic Talk podcast.

Kate Cornick:

Thank you for having me.

Speaker 1:

Thank you for listening to AgTech Innovators. For more episodes in this series, find us and follow us wherever you get your podcasts. We'd love to hear your feedback, so please leave a comment or rating and share this series with your friends and family.

All information is accurate at the time of release. Contact Agriculture Victoria or your consultant before making any changes on-farm. This podcast was developed by Agriculture Victoria, authorised by the Victorian Government, Melbourne.