Ag Tech Sunday - Lessons for Aussie Ag Tech from Israel, the Startup Nation

By: "Farm Tender" News
Ag Company News
May 26, 2019
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By Sam Duncan - FarmLab.

Background

I recently returned from an intensive ‘Bootcamp’ in Israel, where we were introduced to the Israeli Agtech ecosystem with presentations from investors and local entrepreneurs. A very special thanks to Bridgehub in partnership with Austrade for sponsoring the incredible visit, and to Sosa for hosting out of their awesome coworking space.

The delegation getting introduced to Sosa, the briefing space for the duration of our visit.

To help consolidate my experiences, I decided to document a few of the observations and recommendations I thought would be relevant to our own Australian Agtech ecosystem. The below is a summarised version of those notes.

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Disclaimer: These are my own views, and were probably heavily influenced by my own experiences during and prior to the visit. The purpose of this article is to share a few important talking points that came out of this for me in relation to our own Agtech ecosystem.

Observations

* Israel has a large amount of startups per-capita, but not because they excel in any specific tech-related research. Their strength lies in commercialisation and extension of their available research into the market. Whilst many of the companies we met with had good technology, it was their ability to take it to market, trial it and iterate that helped them grow.

* Due to it’s small local market in Agriculture, Israeli agtech companies focus on overseas expansion very quickly after development of their prototype or MVP. They then go offshore to the US or Europe, which can be problematic if the startup’s product hasn’t been properly market tested (or tested in a market that doesn’t reflect that of the one being entered into).

* Israeli entrepreneurs are not risk-averse. They understand that if their idea fails in the market, there are a thousand more out there. This is probably a function of their environment; most have served in the military and, much like military veterans in other countries around the world, they have a much more grounded understanding of what actual failure entails.

* The Israeli government take a wholistic approach to startups, fostering an ecosystem that encompasses entrepreneurs, investors, researchers and government agencies. This tightly knit ecosystem helps foster the rapid prototyping of research and ideas and creates an innovative (and sometimes eat-your-young) startup culture.
Jerusalem is a mixing pots of religions cultures and old and new ideas

Jerusalem is a mixing pots of religions, cultures and old and new ideas.

Recommendations

* We need to get better at extension. Australia has some amazing institutions producing world-class research, but no clear path for the commercialisation of most of it. In 2016 Australia only created 0.7 startups for each Australian research organisation (university and government), despite many of those same institutions being frequently ranked in the top 100 globally. This feels like a wasted opportunity, and government institutions and universities need to play a bigger role in commercialisation of their own research with start-ups and entrepreneurs outside their organisations. Whilst difficult, the research-extension model needs to take into account cost of production, market size and projected revenue. The model needs to balance against the cost of IP and royalties associated with accessing the research. Of course not all research is destined for commercialisation either.

* Support mature agribusiness to go global. The similarity in industry and demographics between our farmers and the US makes our startups who succeed in Australia (or reach product-market fit), far more likely to succeed in the US/Canada. We need to take better advantage of this by promoting and assisting established Agtech companies in global expansion.

* Work together to increase value for the end user. I spoke to half a dozen investors (both Israeli and US) during our visit. Nearly all of them believe there is going to be a big consolidation coming for Agtech companies over the next 5 years. This will probably result in many more exits for existing startups, probably to established agribusinesses (as previously seen with the sale of Blue River group to John Deere, and of Climate Corp to Monsanto). However I also suspect it will pose more barriers for new entrants when it comes to getting their products into the hands of farmers who may have all the tools as their disposal through the larger agribusinesses. Bottom line is that if you’re technology is one of several your customer needs to use as part of their operation, make sure you can integrate well with the others.

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Finally

Australian agtech entrepreneurs need to think global. We are often stuck under our own self-imposed glass-ceiling, content with the revenue we have in our local market which prevents us from taking our idea global. Israel has little in the way of resources, and so it’s main export are the technology that it’s companies produce. For Australia to move forward as a nation of entrepreneurs we need to get better at exporting the ideas and technology we have, and the only way to do that is to take our ideas and technology to the world stage.

The Australian Agtech team

Picture - Tel Aviv