Improved Communication Helps AgTech Start-ups Compete for Investments in 2021
February 16, 2021 As adoption of new technology continued from plant to plate, AgTech investment remained strong in 2020 despite challenges. While many investors focused first on ensuring existing portfolio stability, opportunities for start-ups to attract new investors existed but within a more competitive virtual ecosystem. While 2021 brings renewed optimism, the virtual shift requires management teams to implement a strategic communication plan that amplifies more relevant and impactful networking activities.
The confluence of shifting market demands, competitive investment landscapes, and new due diligence processes will continue to impact investor relations in 2021. In their October report, Finistere Ventures found that 82% of late stage deals were in crop protection inputs management and indoor ag; illustrating response to Millennial/Gen Z food demands, climate change, and the pandemic. In addition, CropLife’s recent AgTech Venture Capital Roundup reported that of all the [late stage] capital raised last year, 61% was raised by just 28 companies. To compete for available funds, start-ups must clearly communicate their relevance.
For example: seemingly overnight the hard-fought data science space changed as demand for applied analytics became urgent due to coronavirus restrictions and consumer demand. No longer could ag data just be big, it had to be actionable.
“Market demand shifted from data capture solutions to technology that connects insights to action,” said Vonnie Estes, vice president of technology at Produce Marketing Association. “For example, while sensors have been used to collect data on everything from grain to honey, companies able to show how they redeployed this technology to solve labor management issues fared much better last season.”
Responding to these shifts is critical for start-ups. Yet, a challenge both investors and entrepreneurs reported was the ability to effectively communicate in a virtual environment.
Estes continued, “Within ag and food tech, I believe simple elegant solutions that deliver ‘half steps’ will be more attractive today versus big, bold complex technology. It’s up to start-ups to communicate how they are delivering insights verses just interesting technology.”
Attracting Investors Virtually
Interest in new investment opportunities has increased as the new year and economy adjusts. Start-ups who can clearly communicate their brand as well as their strategy to capture and defend white space will be better prepared to attract investors.
“As we look forward to 2021, we see opportunities across the spectrum to evaluate risk and use new tools to complete due diligence,” said Johnny Ream, principal at Stray Dog Capital.
That starts with a clear brand story: what problem is solved, who benefits, and how will it remain competitive over time. Sounds simple, but a memorable, engaging brand story requires careful crafting.
“Understanding a company’s sustainable competitive advantage is key. We look for a clear path to capture white space – be that clean label, unique proteins, or other protectable elements that make the technology unique,” Ream said. “After that, it’s about demonstrating the ability to move faster than others to be relevant to consumers.”
In addition, start-ups who can clearly tell their story across multiple channels – including earned/owned media and speaking events – can more quickly generate interest.
Old School is New Again
“Agriculture and venture capital are still old-school relationship businesses. Unfortunately, when you have a pitch meeting over Zoom, it is easy to lose all the essential ingredients that builds trust. It’s like making a sandwich but removing all the good stuff between the bread,” said Ingrid Fung, principal at Finistere Ventures.
As a solution, start-ups are expanding their communication toolkit by reinventing the basics, including:
- Leveraging traditional media interview skills to bring messages to life virtually.
- Using soft skills to “read the room,” then pivoting as needed.
- Following the “rule of 3” to keep pitch materials concise and comprehensive.
- Crafting creative solutions to replicate in-person experiences.
As virtual conferences and one-on-one Zoom meetings continue to be the norm, management teams must remain adept at using new channels and technology to communicate with investors, and effectively connect (at all hours) through enabling tools on various digital platforms.
“For those start-ups we invest in, we need to like and trust them since we’re going to be working together for the next 5-10 years. Now more than ever, it takes soft skills, flexibility, and active networking to build these relationships virtually,” Fung said.
As market demand for innovation continues in 2021, management teams who can demonstrate relevancy, deliver value across the supply chain, and successfully communicate their brand story will engage today’s AgTech investors. While there are many factors to securing investment, an often-undervalued asset is the ability to communicate.
Subscribe Today For
