January 24, 2016

By Elizabeth Penney

Aaron Magenheim sees agtech as the “last frontier in technology” with huge upside for tech companies, growers, and investors. Silicon Valley is always looking for the next big thing, he says, and he believes the agriculture sector offers opportunity for new products as well as fresh applications for existing ones.

Magenheim is co-founder and CEO of AgTech Insight, LLC, a Salinas, California consulting company seeking to spur agtech development. AgTech Insight offers services to all parties involved, whether a farmer seeking to implement a new technology or a start-up company needing to field-test prototypes. They also advise investors about viable prospects. Some of those investors are farmers. That’s a new role for many growers, and one Magenheim feels will provide a vote of confidence for new technology while potentially financially benefiting farms.

AgTech Insight’s facilitation role is unusual and grew out of Magenheim’s background. For over twenty years, his family operated Signature Irrigation, Inc. a design and installation company serving row crops, vineyards, and nurseries. He “grew up in the business,” which gave him keen insight into using technology to solve grower problems and meet their needs. After Signature Irrigation, Inc. was sold, Magenheim began reselling agtech solutions to growers through Signature AgTech Inc. This is where he first became aware of a disconnect between tech and ag.

“A lot of the technology I see is a great solution looking for a problem,” he says. “Start-ups need to get into the ag space, understand how growers operate.” He also says agtech needs to go after the most immediate needs, what he calls the “low hanging fruit.”

The company’s initial efforts included a survey of the emerging agtech landscape, resulting in a database of over 1,000 companies. They also created the Market Map, a graphic displaying 28 sectors and a selection of companies. Out of this, came the AgTech Catalyst to assist promising companies in reaching the next level and access funding. The Catalyst provides tailor-made services including product assessment, prototyping, production, and sales and marketing. 

Now AgTech Insight is taking the next step of supporting start-ups through a $10 million equity fund. The AgTech Growers Alliance (ATGA) expects to make investments this year, between $500,000 and $1 million per company. The funding will take early stage companies with proof of concept to market through a tightly managed process that reduces start-up time from three to five years to one or two, according to Magenheim. Key success factors include the business development experience of AgTech Insight staff and the grower relationships available for feedback and testing. About four to six companies will be selected, and Magenheim anticipates that most of them will be acquired within five to seven years. Two rounds of funding are expected, with $5 million awarded in each.

ATGA is interested in vetted companies in specific sectors, those with scale-up potential targeting the low-hanging fruit Magenheim cites. One of them is imaging, with its ability to help growers get a bird’s eye view of farm conditions. Imaging companies capture aerial views of farmland through airplanes or satellites and use software to filter the photographs, revealing water and nutrient levels and plant health.

In tandem, he sees a need for better weather data and field monitoring systems. Weather stations and forecasting are two technologies that can assist farmers with long-term planning as well as crop management. Monitoring can ensure crops receive the exact amount of precious resources—like water—they need.

With the recent passage of the Food Safety Modernization Act, traceability is heating up as an issue for farms selling to distributors and wholesale markets. Magenheim feels traceability is an area where much “remains to be done.” “Buyers are pushing for it and it’s not just a matter of food safety,” he says. “Consumers want to know where their food comes from.”

Big data is also an area of tech development that Magenheim finds promising. As with other sectors that have embraced it, it’s critical to gather the right data and create a user-friendly interface.

These five sectors are where AgTech Insight and ATGA are focused for now. “There are simple things we need to hit before getting into ‘sexy tech,’” Magenheim says.