Based on our work with dozens of startups and corporates in agriculture and food, we’ve pulled together four tips for how agri corporates can strategically engage with startups to maximize impact.
One of my favorite infographics is Corporate Innovation Theater from CB Insights. It shows 8 common tactics that corporates use to look more innovative and progressive, but that don’t require actually doing anything strategic.
The temptation to engage in innovation theater is especially strong for big food and agriculture companies. As the number of food and agriculture startups explodes, corporates see an opportunity to access new talent, new technologies and products, and new business models. Simultaneously, large ag and food companies are under significant pressure. From public distrust, to climate change and competition for natural resources, to social media-fueled waves of fickle consumer demands, corporates know they need new strategies to stay on top. But change is hard. And so wearing a ‘tech t-shirt’ or taking a week long trip to Israel or Silicon Valley can be an easy way to feel like progress is being made.
The challenge, of course, is that these efforts fail to actually move the needle on strategic goals. However, working with agrifood tech startups can. These startups can help agri corporates:
But despite this potential, finding ways to attract the best agrifood tech startups and build meaningful engagements with them can be incredibly challenging for big food and ag companies. Startups move at different paces. They have different cultures. And for a big company, working with startups can seem costly, stressful, and time consuming, so it can be hard to see why they wouldn’t just develop the innovation themselves.
There’s no silver bullet model for how agri corporates can effectively engage with agrifood tech startups. If there were, we’d just give you an infographic. Instead, here are four tips for how to strategically engage with leading startups to maximize your strategic impact in ag and food.
The prevalence of corporate innovation theater means that startups are weary. They’ve been burned before by big companies who are just kicking tires. So first ask yourself, are you serious about a mutually beneficial engagement, or are you just exploring what’s out there so you can learn? Do you want to actually do things differently, or are you hoping for a quick win that will make you seem more innovative?
Building a reputation as an agrifood company with conviction is important so that you signal to startups that you’re not going to waste their time. Time is an entrepreneur’s most precious resource, and decisions about how to spend it are not made lightly: each hour spent talking to a corporate is an hour that is not spent improving the product, finding customers, engaging with investors, or growing the team. The opportunity cost, and the mental juggle of constantly deciding how to prioritize each opportunity, are significant considerations for a startup. Corporates, in contrast, are only spending a negligible amount of someone’s salary. There’s no urgency and little opportunity cost. Corporates who fail to appreciate the importance of time to startups will miss out on the best companies to work with.
How do you make it clear that you’re not wasting a startup’s time?
The most important thing you can do is to develop a decision making process internally, and then share it with the startups. By letting them know that you’ve thought about what comes after the first meeting, you give them confidence that you’re serious about moving beyond talk toward action: you’re worth spending time on.
Don’t leave the meeting without agreeing on next steps and specifying a timeline for actioning them. Ensure this plan includes at least an overview of the resources that you’re prepared to dedicate, and that an internal champion has been identified who is accountable for, and incentivized to, execute the plan.
The best agrifood tech startups, which of course are the companies that are most strategic and impactful to work with, will be just as discerning about which corporates they engage with as corporates are about startups. The fact that a startup is qualifying you can be confronting for a big company, as it’s tempting to assume that size and time in market equates to power in the relationship. But like any strong relationship, the building blocks are trust and mutual alignment toward a goal, not power dynamics. If a startup is asking tough questions about your commitment and how a possible engagement fits in strategically, take it as a sign that this is the kind of company you want to work with.
If a startup is asking tough questions about your commitment and how a possible engagement fits in strategically, take it as a sign that this is the kind of company you want to work with.
Even better, proactively show startups that you are committed by sharing your strategy and explaining how this engagement can help you achieve your objectives. Are you looking to grow revenue by adding a new offering into your channel? Do you struggle to stay on top of your end customer’s needs, and want a way to reconnect with them? Do you have internal inefficiencies that new technologies can solve? Sharing your challenges and goals with a potential startup collaborator will not only show them that you’re serious, but also lay the foundations for a strong, aligned partnership. Be vulnerable if you can: you’re building a relationship, and trust is key!
Also, where possible, do your homework so that you can explain not only your strategy, but also why it’s strategic to work with this particular startup. Remember, the best companies are evaluating you, so make it easy for them to decide you’re worth the energy.
Building a relationship is hard. There will be ups and downs, disagreements, and issues where you struggle to see from the other side’s perspective. Engaging with a startup is no different, and many of the same relationship dynamics apply. Though it can be tempting to avoid sensitive topics that may cause a deal to fall apart, getting key deal parameters on the table early will help build the foundation for a lasting partnership.
For corporates, this means acknowledging limitations early in the discussions with a startup. These may be key deal terms, such as a need for exclusivity, or constraints, such as approval that may be required, volumes or quality parameters that need to be met, budget limits, or geographical and business unit considerations.
Though these topics can be contentious, getting deal breakers on the table early ensures that any non-starters are identified, ultimately saving everyone time and money. And, like with any relationship, going through a difficult time together (i.e., having a tough conversation) gives you important information about whether you truly want to work together long term.
Often, big food and agri companies are strong in ways that startups are weak. In food and agriculture, big companies often have access to distribution channels, manufacturing equipment and expertise, and infrastructure for testing and trialing products at scale. Similarly, startups may be strong in areas where big food and agriculture companies are struggling. All organizations have processes that are smooth and others that are bureaucratic- the key is finding where weaknesses and strengths match.
To maximize impact for an agrifood tech startup engagement, corporates must first spend time mapping what your organization does well, and can move freely with, as well as where there are problems or inefficient processes. Then, you can map your strengths to things areas where startups are weak, and vice versa. This complementarity is the foundation for a lasting, strategic partnership.
Engaging with agtech startups holds huge potential for corporates in agriculture and food. Though it can seem overwhelming to navigate the growing global landscape of innovators, like with most things, the hardest part is often getting started. By showing your commitment, sharing your strategy, acknowledging your limitations and constraints, and matching strengths to weaknesses, agri corporates can attract and build meaningful, strategic relationships with the best agrifood tech startups. What are you waiting for?
For more agrifood tech musings and the latest on what we’re up to at AgThentic, visit www.agthentic.com
Tenacious Ventures Management Pty Ltd (CAR 001275760), Tenacious Ventures Management Partnership, LP (CAR 001298484), Tenacious Ventures Fund II Management Partnership, LP (CAR 001298483), and Tenacious Ventures Fund II Staple Co Pty Ltd (CAR 001298487) are Corporate Authorised Representatives of Sandford Capital Pty Ltd (ABN 82 600 590 887), Australian Financial Services Licence No 461981, and are authorised to provide advisory and dealing in connection with investments to wholesale clients only.