ESG Looms Large At The 2022 Silicon Valley AgTech Conference
Written by: Roger Royse, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The 2022 Silicon Valley AgTech Conference saw a standing room-only crowd at the Santa Clara Convention Center on October 11, 2022. As in past events, the day consisted of panels, which explored emerging trends and startup pitches that showcased the latest up and coming Agtech startups. Notably, the one theme that came up in every panel was ESG – environmental, social and governance.
AgTech Insight’s Aaron Magenheim summed up the experience by stating, “I have been to hundreds of AgTech events around the globe, but his year's Silicon Valley AgTech Conference brought together the highest caliber of speakers and attendees I have seen at an AgTech event with real experience solving big problems. It was a great success!"
The day started with the always popular investor panel which featured a mix of venture capital, angel and private equity participants. The investors provided some insights on what they find interesting in a potential investment. One panelist stressed that he looks for new models that unlock capital and make better use of resources. Another stressed environmental technologies such as green ammonia, decarbonization and reducing the carbon footprint. Sustainability was a big topic and included technologies that reduce inputs such as robotics. Reducing inputs also may improve margins for growers and farmers, which is an important consideration for an investor.
According to Jaleh Daie of Aurora Equity, “VCs can move the needle by funding mission critical technology, mostly upstream AgTech with the greatest impact on ESG footprint.”
The genomics and biologicals panel also emphasized the need to remove carbon from the atmosphere and the importance of soil health. Agriculture is at the intersection of climate, security and sustainability. Some of the technologies that were discussed include plant stress scouting tools, which let the farmer take early action to respond to an issue (such as pests or fungus), lower input costs and increase yields.
Controlled environment agriculture (e.g., urban agriculture or vertical farming) is a hot area since it reduces transportation costs, which is a major cost factor in the food supply chain. A big problem in the industry is a lack of data sharing; consequently, vertical farms do not resemble each other and the models are not replicable. The next generation of controlled environment agriculture may see indoor micro-farms (200 square feet) and very large indoor farms within ten years. Panelist Jennifer Ong, Executive Vice President at AEssence stated, “Vertical farms are not perfect but have excellent potential for profitability and sustainability, complementing advancements in traditional field agriculture. We see some of the technology may be driven by the legal cannabis boom as it starts to transfer into biopharming and fresh produce.”
There was a time when farm management solutions were hard to finance, but it is a growing area. IoT (internet of things) technology is being adopted much more quickly and many machines and devices now use machine learning and AI (artificial intelligence) to gather data. The challenge is to make that data actionable. The shrinking labor market is also a factor in the increase in farm automation.
One of the larger panels discussed the state of autonomous machines, such as self-driving tractors. One panelist described farming as a logistics problem and noted that farmers have been lukewarm towards pure info or data plays. AV (autonomous vehicles) can leverage AI to automate critical business processes. One challenge is that capital costs in agriculture are high as is the penalty for failure, since farmers may have only one or two crops a year. Another is getting farmers to trust their AI. AI is a growth area given the vacuum created by the shortage of farm labor. We are still in the first inning, and the farm of the future may have fleets of machines farming thousands of acres.
The commercialization of farm data was repeatedly a topic of discussion across all the panels and was itself the subject of an entire panel. The data-driven farm will collect information from many sources such as drones, sensors, and satellites to determine key decisions. Whether famers are using, or will use, the data is not yet clear. Ganesh Harinath, founder and CEO of Fiducia AI notes that, “Low cost and easy to use AI solutions in agriculture is not a want but a need to improve efficiency and help meet United Nations Sustainable Development Goals.”
Farm data is also useful to other participants in the supply chain. For example, grocers want traceability and crop insurers want to confirm losses. The supply chain includes many participants with differing KPIs (key performance indicators) who are focused on different pieces of data. To be marketable, data must be accessible, shareable and cost effective.
Our last panel of the day was focused on ESG. One panelist stressed the importance of bringing trust and transparency to ESG reporting in forestry, utilities and carbon markets. The panelists agreed that private/public partnerships are needed for more ESG awareness and effectiveness. ESG is a new type of risk and a metric that impacts and measures the long-term viability or a business. The panelists also discussed the challenge of gathering ESG data from farmers and note that they must have an incentive, such as improved operations or better decision-making.
The conference closed with our annual pitch event, where several startups pitched their companies to a panel of VC and angel investors. Each year startups meet partners, customers and investors during the conference and they often regard the pitch event as the most useful and popular part of the day.
Roger Royse, Executive Contributor Brainz Magazine
Roger Royse is a partner in the Palo Alto office of Haynes and Boone, LLP and practices in the areas of corporate and securities law, domestic and international tax, mergers and acquisitions, and fund formation. He works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger is a Fellow of the American College of Tax Counsel and former chair of several committees of the American Bar Association Sections of Business Law and Taxation. Roger has been an instructor or professor of legal, tax and business topics for the Center for International Studies (Salzburg, Austria), Golden Gate University School of Law and Stanford Continuing Studies. Roger is a nationally recognized authority on AgTech – the technology of food production ‒ and the legal considerations for companies in this industry. Roger is also the author of 10,000 Startups: Legal Strategies for Success and Dead on Arrival: How to Avoid the Legal Mistakes That Could Kill Your Startup and has been interviewed and quoted in the Wall Street Journal, Forbes, Fox Business, Chicago Tribune, Associated Press, Tax Notes, Inc. Magazine, Nikkei Asian Review, China Daily, San Francisco Chronicle, Reuters, The Recorder, 7X7, Business Insurance and Fast Company.
