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A surprising agtech entrant?

AgFunder’s 2018 ‘AgriFood Tech Investing’ Report, published last week, documents a 43% year-on-year increase in investment in the sector, with 11% more deals than in other venture capital sectors.

While there’s a growing number of agrifood tech specialist investors, the overall investor base continues to diversify. It’s increasingly common to see agrifood multinationals establish agritech investor funds, accelerator programmes and the like – Alltech’s Pearse Lyons Accelerator, Syngenta Ventures and Tesco’s Agri T-Jam, to name a few – but it’s less common to see corporations with no agrifood exposure moving into the sector.

Showing its hand recently as an agtech entrant was Yamaha. It’s launched Yamaha Motor Ventures. Claiming to ‘accelerate the efforts of teams driving disruptive change’, through access to investment funds, technology, hardware or infrastructure, YMV positions precision agriculture as the only specific industry in a collection of otherwise ‘general purpose’ technologies such as automation, personal mobility, robotics and the Internet of Things.

Nolan Paul, previously head of R&D at Driscoll’s, the global market leader in fresh berries, is YMV’s agtech lead partner. In a recent interview at the World Agritech Innovation Summit, he explained Yamaha’s new-found fascination with agriculture.

“It’s really about moving into adjacent spaces where we can leverage Yamaha’s core capabilities to build entirely new businesses as opposed to new product lines,” he says.

“When you’re a $15bn company it becomes harder and harder to generate competitive returns, particularly when your largest revenue generating businesses are on a lower growth trajectory. To generate alpha, it requires investing in new markets and new technologies.

“In that sense, agriculture is quite compelling for Yamaha Motor. It’s an industry whose products touch every person on the planet, every day, several times over. It’s an industry that is starving for automation, particularly as resources of all types – labour, water, land, chemicals – become more scarce and heavily regulated. And it’s an industry where we think our capabilities can be stretched across the entire value chain, from lab, to farm, to processing, to delivery. So it’s a massive market opportunity with strong customer demand for solutions that Yamaha Motor wants to deliver.

“Our biggest weakness is also our biggest strength: we don’t have a major legacy business in agriculture. So there’s no point in us entering a new market incrementally; we’d never be competitive.”

Yamaha says it has put $100m into the exploratory fund to make direct investments into promising companies.

At Agro Mavens, we’ll be keeping tabs on this development. Will other large corporations with no history of agriculture decide to make their own way as an agtech entrant?

AdrianBell

AdrianBell