The TerrAvion Collapse: A Warning to Other Investor-Supported Ag-Tech Companies?

Even with how lightning quick many events have occurred during the strange year that has been 2020, the rapid-fire demise of ag technology company TerrAvion was still surprising. And could this signal potential trouble for other agricultural start-ups with heavy Wall Street-type investment profiles?

For those unfamiliar, TerrAvion has been one of the darlings of the precision agriculture/technology sector for several years. Founder/CEO Robert Morris helped the company provide grower-customers with field imagery data to better manage their crops. Over the company’s eight-year lifespan, it drew many millions of dollars from investors outside of agriculture looking to “cash in” on technology innovation. And by many accounts, TerrAvion was one of the market leaders in imagery data management.

Then, late in the day on Friday, September 4, word began to spread in the industry that the Hayward, CA-based company had filed for Chapter 11 bankruptcy. In this filing, the company listed some $25 million in liabilities vs. “far less” in assets.

Now, many companies ultimately recover from Chapter 11 filings. However, it oftentimes takes several years to do so as creditors and new financial terms are hashed out in the courts.

But this was not the case for TerrAvion.

Less than four hours after word of the bankruptcy filing hit the news, I received the following note from TerrAvion’s Morris: “TerrAvion is ceasing our operations today, September 4, 2020,” he wrote. “If you are a client, I strongly recommend downloading a copy of any data you have licensed and wish to retain immediately, as we do not know how long our infrastructure will remain active. I wish we could have given everyone more of a heads up, but we were working and hoping to avoid this until just hours ago. I cannot tell you how disappointed I am in this outcome.”

The letter went on to say that all current TerrAvion employees – Morris included – were now out-of-work, effective immediately, and that any questions from customers should be directed to the bankruptcy trustee. It also pointed out that the company’s business model, to provide agriculture with a modern, open, high-resolution data  infrastructure, had largely been a successful one.

But not in certain eyes, apparently. “Though TerrAvion delivered the most volume in our category – with positive and growing margins – agribusiness and capital markets seem to have incommensurate expectations,” wrote Morris. “TerrAvion was caught in the middle. The team and I did everything possible in our power to make it work.”

This statement makes it sound as if financers in TerrAvion had gotten “nervous” regarding their investments in the company with all the market uncertainty currently being felt, causing its rapid collapse. And that makes me wonder how many other recent agriculture companies with similar investor-supported profiles might be next, given the current economic environment?

As always, only time will tell. But after what happened to TerrAvion, I would imagine there are more than a few agriculture companies out there that might be wondering about their futures.