Upstream Ag Insights - September 18th 2023

Essential news and analysis for agribusiness professionals

September 18, 2023 • Read Time: 14 minutes

Welcome to the 185th Edition of Upstream Ag Insights!

Index for the week:

  1. Technological Revolutions and Learning Curves in AgTech: Investment Notes: Azaneo

  2. Problems Being Solved, Not Technologies Being Used

  3. Indigo Ag Accelerates Proven Sustainability Programs for Farmers and Agribusinesses with $250 Million Fundraise

  4. The Economics of Spot Sprays

  5. InnerPlant Secures $300K from United Soybean Board

  6. MyLand, Soil Health Innovator Secures $23 Million in Series B Funding

  7. Bioceres Crop Solutions Reports fiscal fourth quarter and full year 2023 Results

  8. All-In Summit: Bill Gurley presents 2,851 Miles

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1. Technological Revolutions and Learning Curves in AgTech: Investment Notes: Azaneo - Tenacious Ventures

Azaneo is developing an agricultural appliance that uses pulsed electrification to manage weeds without the use of chemical inputs. Their novel electrical approach will involve far lower GHG emissions than current herbicides or existing non-chemical alternatives. It also operates directly on the target weed, eliminating the risk of spray drift and ecological damage.

We are proud to lead Azaneo’s pre-seed investment round of AUD$1.4m alongside global co-investors Agfunder and IP Group.  

Azaneo is a company working on electric weeding. Plenty of companies have aimed to do the same over the last several years, including Root Wave, crop.zone, and The Weed Zapper.

The efforts surrounding electric weed control are not surprising.

Weed control is still one of the most important considerations of every farmer, every year, in every crop. And herbicide resistance continues to grow every year:

Source: Dr. Ian Heap, WeedScience.org

Plus, the demand for less synthetic pesticides and more environmentally friendly alternatives continues to grow.

These realities drive investment and interest in the electric weeding space.

It’s important to note that this is a pre-seed investment, meaning Azaneo has ideas and concepts for a product along with some greenhouse proof of concept with their technology, but they are not commercial yet. They have a long way to go.

In talking with Tenacious Ventures about the investment, what stood out to me was Azaneo’s focus on the “destruction” aspect— being incredibly good at delivering a precise, high efficacy, low energy means to kill weeds. This means no effort on the AI component of what I’ll call “Seek and Destroy” (vs. see and spray… Metallica-inspired) with electric weeding to identify weeds. They would instead look to partners for that aspect. I think this is smart for the early part of their business, however, I have talked extensively about my views of integrated tech stacks. In the instance of Azaneo, it might say more about their future in being acquired (eg: integrated into a Solinftec unit) if their technology works out.

I can’t help but think about some of the challenges with not only a commercial electric product to date in the electric weeding world but also other practical challenges like fire risk, human danger, speed that the units can go, and the energy requirements of the systems— areas Azaneo is working on.

For a deeper dive into what agribusiness professionals can learn from the Dot Com bubble in regards to agtech, what the energy intensity of current methods of electric weeding are and how we can use Carlotta Perez’s Installation-Deployment framework for just how early we are in the realm of agtech become an Upstream Ag Professional member today!

There are often separate sections for specific technologies when I go to conferences.

And almost every week, I get asked, “What do you think about IoT?” or “How will artificial intelligence impact agriculture?” to which it’s impossible to answer effectively without considering all other technologies out there.

The reality is that many of these technologies need to be incubated on their own. However, where they create economic value for farmers and the value chain is in the practical application of them increasing on-farm production, decreasing costs, mitigating labor needs or decreasing cognitive load as a few examples.

In order to accomplish this, they need to be used in unison with other technologies and processes.

Innovation happens through the connection of disparate technologies into something useful.

Innovating itself is defined as making changes in something established, especially by introducing new methods, ideas, or products.

It is difficult to make meaningful changes without stacking numerous technologies together.

Think about even just a few components of the iPhone— Apple took cellular technology, layered in a GPS technology, then for touchscreen, they added in forms of capacitance for the touchscreen (check out the full article for an image). Then Apple layered on a brand-new type of glass (Gorilla Glass) that was extra strong. Great products and tools come from integrating various technologies together.

Moving towards agriculture— take the below technologies in agriculture as stand-alone, disparate capabilities:

All interesting, all unique, but only so valuable by themselves.

Technology does not get used in a silo. It gets used as part of a product or system.

The more interesting way to think about technology is “What problems can we solve through these disparate components to create a unique product and value proposition?” and then “Can that company accrue a disproportionate level of the value created to themselves?”

To see the full article, become an Upstream Ag Professional member today:

Indigo Ag, announced that it has raised over $250 million to drive innovation and growth in its sustainable agriculture programs and better serve its customers and partners. The successful investment round signals market validation of the company’s strategy and confidence in Indigo’s unique ability to drive farmer and agribusiness success at scale.

Two weeks ago, a report came out regarding the drop in the valuation of Indigo to around $200 million.

Indigo officially announced the raise of $250 million this week (Note: this is the dollars injected into the company, not the valuation. They did not state the official valuation). Worth mentioning is that the release came out on Friday, which is usually a sign that a company isn’t particularly interested in having the news picked up.

Here are a couple of highlights from the release:

The number of registered credits is interesting to reverse engineer into their revenue and margins numbers, plus the total percentage of US acres they touch.

It’s sobering to see the insignificance of “the premier sustainability partner of the agriculture industry” 10 years and ~$1.5 billion dollars into its existence.

To see the revenue breakdown of Indigo’s carbon credit business along with an analysis of the US acerage their Market+ offering touches, become an Upstream Ag Professional member today:

One of the aspects I have emphasized in Upstream from the beginning is that precision see and spray technology emphasizing a cost reduction for farmer adoption is the wrong approach. I understand it, especially for the early encouragement of farmers to adopt, but I do not think it is the most important aspect surrounding the technology. As we know from variable rate/precision fertility, it doesn’t always reduce costs.

I talked about this in more detail in the August 6th Edition of Upstream Ag Professional.

We can actually illustrate that precision spraying becomes an optimization problem where various numbers get plugged in to factor different scenarios to determine where the technology makes sense:

For full access to all Upstream Ag Professional images and deeper insights, become a member today:

InnerPlant, today announces $300K from the United Soybean Board (USB) for the satellite-based detection of crops fluorescing when under stress from pathogens. The funding supports the development, construction and validation of a first-of-its-kind satellite-mounted device to detect optical signals given off by crops engineered by InnerPlant to fluoresce in response to stress like an attack from pathogens or a lack of water or nutrients.

Longtime Upstream readers will know that the potential of InnerPlant has enamored me since learning about them in 2020 (*Disclosure: I am now an investor).

If you want to read more about InnerPlant, my friend Matt Coutts and I wrote about them last year:

However, what stands out about this news has very little to do with InnerPlant itself.

It is notable to me because of how a grower group is allocating their funds to support their grower base.

In North America, the grower groups that steward check-off funds often come under scrutiny when it comes to allocating those dollars in a way that consistently adds value to all farmers.

Historically, the United Soybean Board has focused in three key areas:

The soy checkoff focuses our investments in three key areas: education, promotion and research.

According to the USB website “innovation and technology” are a priority for them to support. They go on to state a goal of theirs is the following:

Optimize farmer control of risk.

KPI: improvement of on-farm practices

A commercial InnerPlant soybean trait would directly enable better risk management.

Identifying companies and technology that can universally support all soybean growers is hard. However, it remains an opportunity to be value-added for the USB and one area that has been relatively untapped by most grower-based groups in North America.

Not only can USB support companies financially to help bring their technology to fruition, but they can also lean into their aim of education to drive the successful utilization of technology.

While I am hesitant to say USB should focus a significant portion of their annual funding in this way, InnerPlant does present a unique opportunity because they are essentially in a class of its own when it comes to creating a value-added tool for all soybean farmers— whether in Georgia, Iowa or Minnesota, big or small farmers, new or old equipment or anything else.

I think efforts like these from groups like the USB are smart and while there are likely only so many companies that have the level of fit that InnerPlant has, it is a new avenue to create value for their farmer members.

MyLand Company Inc., has successfully closed its Series B funding round, raising a total of approximately $23 million.

MyLand positions itself as a soil health company. 

MyLand has patented technology and a unique Soil as a Service approach that enables farmers to implement unique biological applications.

For an overview of the MyLand system, their service offering, and access to why some of their claims regarding soil rejuvenation are a stretch, become an Upstream Ag Professional member today:

Bioceres is one less commonly known public agriculture companies that I pay attention to. They acquired Marrone Bio last year and have some unique genetically modified wheat (HB4) along with an already strong bio business in Rizobacter.

Some highlights:

FY23revenues were $419.8 million, a 25% year-over-year increase, and a 12% increase compared to the pro forma figures, which include historical revenues from Pro Farm. LTM Adjusted EBITDA reached $81.1 million, a 31% year-over-year increase compared to $61.9 million in Baseline Business EBITDA during FY22, and 80% growth compared to the reported pro forma metric, which includes negative profitability from Pro Farm and inventory ramp-up costs during FY22.

Pro Farm business achieved positive EBITDA contribution for the quarter and the full fiscal year, achieving the stated goal for the twelve months post-merger.

HB4 Wheat revenues were $15.8 million, a 28% increase compared to the prior year number. Number of on-boarded multipliers/distributors up 8X, positioning commercial network to meet stated FY24 guidance.

Agreement with Moolec Science to supply up to 20,000 tons of HB4 soy grain enables increased-value recognition of sustainability-linked soy inventories.

EU partnership with Corteva expanded to MBI-306 bioinsecticidal platform in seed treatments. Upon product registration in Europe, Corteva will be the exclusive distributor through Corteva’s sales team and together with Pioneer® brand seed products.

Non-Ag Video

Bill Gurley is a celebrated venture capitalist. In this presentation, he talks about regulation and regulatory capture and it’s impact on innovation and society along with some explicit recent examples.

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