In my keynote address at the Australian Farm Institute “Digital Farmers 2018” conference, I shared my mission: to help create as many successful Australian startups in agriculture as possible. Startups drive innovation, and innovation is what will decide how our sector fares through the 21st century.
There’s a lot of exciting talk about Australian agriculture becoming a $100 billion industry. But what percentage of the world population would this feed? Maybe one per cent?
I think we can set a bigger and more audacious goal. If we’re up for it, our industry could grow many times larger than this $100 billion target, and feed over one billion people. Not with the bounty of our soil — with the wealth of our ideas.
It’s time to think about agriculture from a different perspective. Our natural resources let us produce quality goods that people want all over the world. But what if our greatest asset is actually our know-how? What if we think about agriculture as a knowledge economy rather than a produce economy?
What if we think about agriculture as a knowledge economy rather than a produce economy?
Creating that knowledge economy will require a lot of different moving parts. That means corporates, research organisations and farmers working together towards the one mission. But one key way we can grow that future now is to integrate and support innovation startups. Here are some important ways that we can help AgTech startups flourish
Australia’s startup ecosystem may be young, but it’s growing. “Ecosytem” might sound like jargon, but it’s a useful way of thinking about the AgTech space — an interconnected system of living, growing parts.
Startups aren’t widgets you can just create and own. It can be useful to think of nurturing them in terms of farming. A successful yield depends on a lot of factors — sun, water, soil, fertiliser, pesticides, technology, timing and more. In the same way, different conditions have to be right for a startup to thrive. So what are these factors?
We all know that you need ideas and entrepreneurs. Most people would also be aware that startups need money, which typically comes from venture capitalists, or VCs.
But VC investing is high-risk, so we need other things to help get the conditions right. Venture capital is attracted to opportunity and scalability. If we want to create a knowledge economy, it’s our job to put those conditions in place and create attractive opportunities for the VCs to invest in.
You can think of investible innovation as a hopper with a series of stages. The early stages help to make sure that:
We need to reduce the risk of failure by getting this stage-gate system working well and at scale. This is the single factor that will determine the number and quality of investors we attract.
For people outside of the VC investment environment, it’s easy to underestimate how important this phase is.
One of the key ways to attract VCs is building team culture. When investors look at an opportunity, they’ll often assess it with what they call the Three Ts: Team, Traction and Technology — in that order.
Many investors will say that team culture wins every time. Everything in my experience with my previous startup Observant, and the many others I’ve worked with, tells me this is true.
If innovation depends on culture, are we getting the mix right? There seems to be a cultural gap between farmers and startup founders. Conventional wisdom has it that startups don’t understand farmers, and don’t get out enough to educate themselves.
This is sometimes true, though the good startups do listen to farmers — they have to. But I also see this as an opportunity for two-way dialogue. Farmers will also benefit from getting to know startups and founders better. In fact, maybe we need more startup founders who are farmers. We’re seeing this start to happen, and it’s a fantastic development. The more we can break down these cultural misunderstandings, the better.
Above all, building an AgTech knowledge economy is going to take courage. That means asking ourselves a question: do we risk failure as a matter of routine and by design?
In a lot of ways, our industry is terrified of failure. This can paralyse us. My experience is that fear of loss and uncertainty leads to inaction. It sometimes seems easier to leave things where they are — maybe slowly eroding in value — than risk something new that might fail. This is the opposite of the ethos that drives modern innovation. Our attitudes are changing, but they need to change faster.
Failure is a natural consequence of accepting risk
Don’t get me wrong — failure hurts, and it’s expensive. But we need to view it as inevitable. Failure is a natural consequence of accepting risk. Failure is the most formative learning experience available. Failure is the true sign of boundaries being pushed past breaking point. There’s no shame in failure; it’s a necessary precondition to success.
Building our startup ecosystem will be a key way to shift the focus of Australian industry from a produce to a knowledge economy. When we step into the twenty-first century and move from focusing on what we grow to what we know, that $100 billion target won’t just be a reality — it will be just the beginning.
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.