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Got Drones? The Ag Tech Explosion Soars

Posted by IFCO Systems
April 27, 2016

When it comes to agricultural technology (referred to as ag tech), one of the more intriguing technologies relates to drones for data collection, or more properly, unmanned airborne vehicles (UAVs.) Equipped with sensors, they can remotely detect crop stress in a particular field location. The resulting data is coordinated with water and soil management resources to direct a location-specific response. More granular field management provides the opportunity for greater yields. UAV and remote sensing technologies comprise a component of the research area known as precision agriculture.

From drones and robotics to e-commerce, the ag tech investment market is booming. This information is welcome news for a world  grappling with global warming while trying to meet the growing need of emerging nations for high-quality, fresh food.

Over 500 individual companies received ag tech funding in 2015, with total investment reaching $4.6 billion, according to a report from AgFunder. This amount was nearly double the $2.33 billion registered in 2014. “It’s...encouraging to see so many entrepreneurs, with a variety of backgrounds, turning their attention towards ag tech,” AgFunder observed. “The sheer variety of technologies hitting the space — we recorded 503 individual companies raised capital during the year — highlights how far innovation has come, but also how much further it could go.”

Investors of note in 2015 included Google Ventures, the Bill & Melinda Gates Foundation, actress Demi Moore, and actor Jared Leto. Other financial backers have included agricultural technology giants Monsanto and Syngenta.

To clarify, ag tech refers to the application of scientific knowledge for practical purposes in supporting agricultural improvements. Leading ag tech investment categories include e-commerce, sustainable farming, drones and robotics (included in the precision agriculture sector) as well as irrigation & water technology. E-commerce was the largest category, which enjoyed investments totaling $1.65 billion.

Drones and robotics, in particular, have garnered attention in the media, as well as from investors. Investment in this area leaped 237 percent versus 2014, with 42 companies raising a total of $389 million in 2015. Aside from data collection, drones are used for a variety of agricultural purposes such as locating missing livestock or herding sheep.

Robotics technologies replace human labor in applications such as driverless tractors, fruit picking robots, sheep shearing robots, or automatic milking machines. One of the robotics startups is Blue River Technology. The California-based company is utilizing computer vision and machine learning to create robots for weeding. Its focus is on optimization for individual specific plants, rather than for an entire field.

Another important area of entrepreneurial activity is the biological solutions category, which saw funding of $120 million raised by 20 companies. These developing technologies relate to the continued development of sustainable farming techniques, improved soil health and the reduction of chemical inputs. 

In spite of the rapid surge of funding for startups, AgFunder does not believe that ag tech is overheated, except for the e-commerce sector. It notes that that the agricultural market represents 10 percent of global GDP while only receiving around 3.5 percent of venture capital funding. This amount stands in contrast to healthcare, which accounts for 12 percent of GDP and receives around 12 percent of venture funding.

Moving forward, AgFunder anticipates that there will be heightened investment in technologies that are currently underserved yet increasingly vital to the food supply chain, such as in water technologies, aquaculture and food safety, and traceability.

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