Ag Showcase Panels: Understand Growers, Due Diligence
While presentations by ag bio startup companies highlighted the North Carolina Biotechnology Center’s recent Crop, Animal and Food Tech Showcase, two panels also provided food for thought.
“The Voice of the Grower” panel, moderated by Rick DeRose, Ph.D., of Raleigh-based TechAnalytics, agreed on two central premises. The panel included Andy Curliss of the North Carolina Pork Council, Pete Nelson of the Ag Innovation Development Group and its AgLaunch Accelerator, and Leah VanRyn of Raleigh-based Growers.
Curliss noted that a lot of N.C. hog producers have engaged in innovative methods to manage manure for the last 20 years. “We’re just now seeing breakthroughs such as capturing methane gas from the manure and placing it in the energy pipeline.”
He noted the first of two main points the panel emphasized: “There has to be an economic reason for a grower to innovate and improve. That’s always the biggest factor.”
VanRyn emphasized the second point the panel saw as critical. “It all comes down to relationships and trust,” she said. “Honesty is very important in the agriculture community. Farmers do want to be better and are willing to change. They fail all the time, so they understand. But you need to understand the farmer’s problem before you deliver a solution.”
She added, “You have to experience what the farmer is dealing with. Every year is new for the farmer, new equipment, weather, problems. We see so many solutions to things farmers don’t care about, apps that solve some teeny-tiny problem that doesn’t move the needle for the farmer.”
Moderator DeRose concurred. “We fundamentally believe you have to address real problems in agriculture,” he said. “Talk to farmers. After about the fifth one, you’ll have a better idea of what they’re looking for.”
The Pork Council’s Curliss noted, “So many people come in with ideas they don’t even know have been tried already. Be familiar with that and how you solved what didn’t work.”
DeRose added, “You have to build relationships with growers. A big problem is lack of understanding how the whole thing works.”
Going back to the question of how new technologies might affect a farm’s economic health, VanRyn said, “You have to tell a farmer, ‘It’s going to cost you this. Here’s what it will require in your operation.’”
Nelson of AgLaunch pointed out that new technology that doesn’t work can make growers wary. For instance, he said, “Soil sensors are piled up all over the industry. Some growers have a closet full of ones that didn’t work.”
Two of the most game-changing technologies for farmers have been such things as air conditioning and GPS, said VanRyn.
Nelson agreed. “Lots of tech is too advanced for the market. They’re pretty technologically savvy, but they think for the long haul.”
Due Diligence: Are you ready?
The risk assessment panel examined what a startup ag bio company needs to consider when doing due diligence for raising money.
The panel, moderated by Steve Sarussi, McDonnell Boehnen Hulbert & Berghoff, made it clear that startups should “get ready early” for the due diligence process. Panelists included Matt Bell of Cultivan Sandbox, Sharon Berberich, of Plastomics, Rob Schwartzman, JD, Ph.D., of Myers Bigel, patent attorneys, and Scott Uknes, Ph.D., of AgBiome.
Sarussi, an attorney, said, “You should think about it (due diligence) the entire time (a company is in business).”
“When you have to raise money, due diligence is huge,” said Berberich. “When we raised money at Plastomics, we had to fix things along the way.”
That required “a huge mound of work. Set up your document index from day one. They may want to see every document you ever produced.”
Uknes of Agbiome suggested, “Set up a data room.”
Bell added, “Venture capitalists do due diligence at all times. The process is running every day. They’re constantly looking at technologies and management teams. Then they do a deep dive. For VCs, it’s a holistic process.”
If a company does a good job of putting its due diligence room together, thinking through the details, “the trust level goes up,” he said. “It’s a two-way process.”
Schwartzman warned, “Don’t exaggerate. You may have to back up everything you say.”
Bell pointed out, “You’re going to spend a lot of time to get financing. It’s a marriage for you as well as for them. You’re going to be working with them closely for the life of your company. Is it someone you want to do business with going forward?”