The term ‘agtech’ now encompasses so many different types of businesses and innovations, that from an investment perspective, it can look overly complex. However perhaps the opposite is true?
Mark Kahn, Managing Partner of Ominvore, shares his ‘agtech-agribusinesss convergence theory’; where agtech startups eventually grow to look like a more conventional agribusiness company. He argues that if an agtech startup can’t see a pathway to either becoming an agribusiness or at least complementing one, then it’s likely to fail. The recent agtech startup failures in animal protein and vertical farming are an example of this.
So what does this argument mean for venture capital, which is all about high growth potential, disruption, and of course, high risk? Are VCs likely to invest in startups which are going to become ‘just another agribusiness’? And does that even matter?
For important context, Mark Kahn is based in India, which has a vastly different investment landscape compared with western countries. India has an incredibly large agriculture economy, worth about $US600 - 700 billion, with about 50% of the Indian workforce employed in agriculture. If you compare that with Australia, only 2.5% of the national workforce is involved in agriculture. In the United States, it's around 10%.
Mark and Sarah discuss:
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