Distribution is not the agtech startup secret sauce

When I was an agtech founder, I made the mistake of thinking distribution was everything. 

I'd rack up thousands of miles driving from region to region, just to get our product in one more ag retail outlet. Each new dealer felt like a victory—proof that we were building something real, something that would make it obvious to everyone that every farmer needed what we had.

Here's what I got wrong: I thought I was building leverage. I thought each new channel, each new geography, each new relationship was creating something differentiated. That all those miles and meetings and margin-sharing deals were building a moat.

They weren't. They were just showing incumbents something they already knew—that distribution drives sales. And worse, I was burning precious capital to prove a point that nobody questioned.

Our recent coverage of Syngenta's acquisition of Intrinsyx Bio got me thinking about this again—and the feedback showed I wasn't alone in this misconception.

The distribution mirage

Distribution feels like differentiation, but it's actually the opposite. When you're building to get acquired, you want to offer something the buyer can't easily replicate. Distribution isn't that thing—it's their core franchise.

Think about what an acquirer actually buys. They're looking for two things:

Unknowns they can't confidently price or de-risk quickly. FMC's acquisition of BioPhero enabled them to rapidly accelerate their biological solutions pipeline and add a core competency that now represents a significant chunk of their product portfolio. BioPhero brought technical capabilities FMC couldn't build internally.

Proof points they can drop into their existing systems tomorrow. When Trimble and AGCO acquired Bilberry's spot spraying technology, they weren't buying distribution—they were buying validated technology they could immediately plug into their existing equipment and dealer networks.

Incumbents already have the hammer—they're looking for better nails, not more hammers.

The brutal economics of distribution

There's also an inherent asymmetry that makes distribution particularly punishing for startups. The economics simply don't work in your favor.

Establishment costs are eye-watering. Dealer onboarding, trust building, training, field staff, territory management—these are effectively sunk costs for incumbents but massive capital investments that startups fund from equity financing. Every dollar you spend here is a dollar not spent on actual product development.

Operating costs get worse, not better. Once running, incumbents amortize operational costs across hundreds of product SKUs. Startups bear the full cost against every sale. The incremental cost for incumbents to add new products to existing networks is nearly zero—a structural advantage new entrants can never match.

Incentive systems work against you. Incumbent networks run on rebate schemes that strongly incentivize retailers to keep recommending established solutions. You're not just competing on product merit—you're fighting against financial incentives baked into the system.

This isn't a fair fight. And fighting unfair fights with limited capital is exactly how startups waste their most precious resource.

Where your startup dollars actually create leverage

Capital scarcity means every dollar must create disproportionate value. Here's where agtech startups can efficiently build leverage that acquisition teams actually care about.

Technical risk removal. Directly address the core uncertainties that make potential partners doubt whether something is even possible. This is about proving the impossible, not scaling the possible.

Clear product-market fit. Show repeat usage, sticky renewals, unit economics that improve with scale. You don't need to get all the way there—just close enough that an expert from an acquisition team can clearly see the remaining work is straightforward.

Concentrated evidence. Dominate a micro-market and squeeze it for proof. Bilberry exemplifies this perfectly: despite being a French company, they specifically chose Australia's west coast as their exclusive focus because it was cost-effective to serve while providing strong evidence of their weed detection technology in representative crops.

When these boxes are ticked, an acquirer can say, "Plug it in and watch margins improve." That's leverage—and they'll pay for it.

The systems view

This isn't to say building distribution never makes sense for agtech startups. Distribution makes sense when you're building a standalone business that needs to reach profitability independently. It makes sense when your technology is easily replicable and your only moat is channel access. 

But if acquisition is your target, understanding when and why distribution matters is key.

The most successful agtech acquisitions happen when startups recognize their core strengths and focus relentlessly on building leverage that incumbents can't easily replicate. That's rarely distribution—it's usually deep technical capabilities, validated product-market fit in focused segments, or proven solutions to problems incumbents haven't solved.

Let incumbents keep their channels. Build something so compelling they'll be forced to plug you into them.