Really great conversation with Sarah Nolet, founder of both the agtech focused VC firm Tenacious Ventures and AgThentic an agtech strategy and advisory firm, as well as the host of the “AgTech…So What?” podcast. We discussed the how agtech in the US and Australia differ, the importance of a translating values and points of view between tech entrepreneurs and farmers, why we need measurement and verification in regenerative agriculture, the importance of getting the business model right in complex supply chains like agriculture, what the most promising technologies are in agtech and more!

Here is the audio. The excerpts below are lightly edited:

MCWALTER: Could you tell us a little bit about AgThentic?

NOLET:  We are a strategy and advisory firm working at the intersection of technology and agriculture. The reason for being is we want to help more innovators have an impact in food and agriculture. And we know that technology alone isn’t enough, because we’ve seen too many technologies be developed and pushed into the industry, because they’re exciting, cool technologies, but unfortunately, maybe no one wants them or they don’t solve a real problem. So we bridge the gap between these new technologies and the business models that can help their adoption and ultimate impact. We do that in a range of ways from working on projects and in an advisory capacity with different clients.

MCWALTER: Are entrepreneurs selling into the ag sector not talking to people enough?

NOLET:  There’s that classic issue of customer discovery. People don’t know what farmers actually need or want. It can be really tough to bridge that gap. So you’ve got people in cities who have ideas for technologies and new businesses, but maybe they didn’t grow up on a farm or they haven’t spent a lot of time on farms. So while their idea seems good, when they’re having a latte in a city, it doesn’t actually stack up when you’re on the farm or somewhere in the supply chain. I don’t know if you’ve ever tried to call a farmer and say, “Hey, can I come talk to you about your problems”, but you know, they’re busy. And they speak a different language about farming, not about tech. And so it’s not easy to overcome some of those barriers.

MCWALTER: I grew up on a farm in Ireland and talking to farmers can definitely need a bit of translation…

NOLET:  Yeah, it’s a totally different language. If tech people go deep on tech stuff, and farmers go deep on farming stuff, neither is actually understanding the other.

MCWALTER: How does your background help you bridge that communication gap?

NOLET:  I guess my background’s kind of in this translator role, and I’ve done it in a few different areas. But specifically, so I grew up in Silicon Valley in California, nothing to do with farming. We had a bit of a hobby farm in my teens that I spent time on, very much not a commercial farm. I always say that we grew rocks and squirrels because there’s nothing commercial there. But it instilled in me a passion for the environment and for those kinds of communities and that kind of lifestyle, but I was very much told and followed the advice of first go off and make money, and later do something that’s good for the world.  So I listened to that advice for a bit and ended up working in the defense industry and have degrees in computer science and systems engineering.

I realized that I liked technology but also started to plan a bit of a translator role. I was working with deep technical people on new radar systems and remote sensing systems, but translating it back to what users actually needed. How do we build systems that use this technology to solve real problems and communicate that wel? But it just wasn’t cutting it for me in the defense industry and I wanted to do something that I was more passionate about. I spent a bunch of time on farms in South America, it was initially a holiday that turned into more like an accidental gap year. And that really connected all the dots for me and was why I became so excited about agriculture and ultimately brought the technical background and translator capabilities into this sector working across farmers and entrepreneurs and∑ investors in agriculture.

MCWALTER: And then you moved to Australia?

NOLET:  We moved here about five years ago for my partner David’s job. I got really lucky in that Australian agriculture is as powerful and high potential as it is. At the time, Australia didn’t have much in the way of an agtech startup ecosystem. And so it was an opportunity for someone like myself, who had been doing that kind of work in the states to help build the ecosystem here and bring a lot of those best practices to Australia. 

MCWALTER: How do the US and Australian agtech sectors differ?

NOLET:  The US is just much bigger. And so there’s more capital and culturally starting a startup is more part of the cultural norm than it is in a place like Australia. In ag-tech five years ago Australia didn’t have much. But nowadays, any startup solving a problem along the value chain in the US means there’s going to be startups doing the same thing here in Australia. So we have quite a vibrant ecosystem here now, but it is smaller. We also have some nuances here, there’s farming systems like mixed farming and extensive pastoral systems in the Northern Territory that doesn’t exist in the US. Agriculture here also isn’t as subsidized so there’s different dynamics here. But a lot of the innovations are, definitely spanning that breadth and definitely the same quality as you’re seeing in the US as that ecosystem has grown in the last three to five years.

MCWALTER: How are farmers adapting to new technologies?

NOLET:  When you think of innovation, if it’s hacking away at a terminal writing software, then there’s some farmers that do that, but a very small minority. If it’s innovation in farming systems and in business decisions, then farmers are incredibly innovative. They are truly pushing the envelope in innovation as much or more than the tech entrepreneurs coming into this space, because they’ve been living and breathing it and seeing the challenges for decades.

Also, agriculture is super broad. Are we talking about specialty crops and perennial systems? Are we talking about irrigation or are we talking about really extensive systems where you’re using helicopters to manager cattle or are we talking about intensive indoor horticulture systems in greenhouses? So entrepreneurs need to get out and spend time with farmers. Though, many of the entrepreneurs we work with are increasingly coming with some kind of Ag background, maybe they grew up on a farm or worked in an agronomy role. And so it’s not just people from the outside coming in. And in fact, in many cases, it’s farmers themselves who are solving their own problem and then thinking about how to scale those businesses. 

MCWALTER: The traditional tech startup has very rapid iteration whereas with a farm you might be talking 12 months before you can iterate. How can agtech iterate rapidly when dealing with that timeline mismatch?

NOLET:  It’s a real challenge and actually was some of my early interest in this space. Because when we look at innovation programs, like accelerators and incubators, they expect you to come in and three months later, you launch an MVP and raise money. Well, in agtech, if those three months didn’t coincide with planting and harvesting maybe you didn’t try anything at all in those three months, and so does that really work to support innovation? That said, there are lots of ways to get feedback on your product and to work early and frequently with users, whether that’s trialing in different geographies, whether that’s getting feedback on versions of the product that aren’t the actual product. Or get trials in a field and see what happens over a 6,9,18 month period, then it’s much more about managing and communicating those expectations. The worst outcome is when you over promise and under deliver, whether that’s to a grower or to an investor and so if it needs to take that long, then you should build your business plan and runway and milestones around that need and manage risk as much as possible. But if it needs to take that long, it needs to take that long and there’s no use hiding it because you are working with a natural system and some investors will get that and others might not. But they’re probably not going to be a fit for you anyways

MCWALTER: What about the large agri businesses, how do they interact with new agtech players? 

NOLET:  One of the big challenges for entrepreneurs is how do you get your product to farmers. So you might meet your first couple customers at conferences or on Twitter or on podcasts because they’re out, actively searching for and engaging on the tech side. But after your first dozen or a couple dozen, where do you find the rest and often you’re going to need to go through some kind of channel. So there’s a big role for the existing agribusinesses to play by being that distribution channel to farmers. And it’s really interesting now that we see the business model of those players starting to shift whether it’s more to biological inputs than chemical or more to digital offerings instead of hardware. There’s lots of room for growth and innovation in that space. And that’s where we see a lot of corporates really focused.

MCWALTER: Is there an issue with a lack of connection between consumers and farmers? 

NOLET:  Yes though technologies and increased access between the consumer and the farmer are really starting to shift those dynamics. One example would be carbon. There are lots of people looking at carbon markets and carbon sequestration through farming practices, and big companies are paying real money to offset their carbon footprint and offer these things to their consumers. And farmers can play a role in that soil carbon sequestration is one of the cheapest methods to pull carbon out of the atmosphere. And so you get this really interesting connection between a consumer who says I want to buy this product and I want to know that it wasn’t harming the environment. And increasingly, I want to be able to recognize the farmer who made that possible and ideally reward them, whether it’s through a premium or some kind of other mechanisms, like a carbon market, or offset or a label on the product. We’re seeing tons of innovation in this space that goes well beyond the old questions of whether a product is organic or not.

MCWALTER: What are your thoughts on regenerative agriculture?

NOLET:  We’re doing a series right now on our podcast on regenerative agriculture, and it’s been fascinating to understand how controversial and polarizing that term can be. And it’s for exactly that reason, whereas some people have used regenerative agriculture to say, you’re a good farmer, and if you’re not doing this, then you’re a bad farmer. But that is overly simplified and the farming practices that are good in one area might not be the farmer practices that are good in another area. And yet you still have the challenge of giving consumers something where they can make a snap judgment and buy the carton of eggs and not have to understand 17 things about how eggs are produced. So it’s really quite a complex issue. But I worry a little bit about oversimplifying from a marketing perspective, without that underpinning of truth and so the key for me is in how do we validate and verify things like carbon sequestration. 

MCWALTER: And are there particular business models in the space that generally work better than others?

NOLET:  The two things we coach and emphasize and look for is how do you acquire customers? How do you create a kind of acquisition loop? And then how do you retain customers? What is your retention loop? And how do you make your business model such that those are reinforcing loops that grow over time? And obviously, that’s how you can get to high growth and to sustainable growth is through thinking about how you’re creating and capturing value in both the acquisition process and the retention process. So no different probably than any other industry, in terms of the fundamentals of business models, but definitely some nuances around as we said before distribution and channels and supply chain and natural systems and timelines.

MCWALTER: What are your views on the more advanced type of agtech technologies such as cellular meat or vertical foods and their impact on decarbonization?

NOLET:  It’s a question worth millions, if not billions of dollars. My view is probably that we’ll see a food system that has many different kinds of production. And that will include cellular agriculture and fermented products, it will include indoor farming and outdoor farming. So we’ll see hybrid systems and increasingly mixed types of production increases, because again, the challenges that we face are really large and we need all kinds of systems to solve them. In particular, we look at it through an investment lens. When you say, do we want to see this change in the world from an impact perspective versus would I invest in that as a business? Those can be different answers.

We also talk about, replacing certain types of agricultural production for example animal farming. But there’s lots of good research that animals used as part of a rotational grazing system can sequester carbon in the soil. And so do we want to replace those animals with cellular systems and lose those decarbonization advantages? Where I end up on these issues is there’s no one answer and it’s much more about creating a food system that has diversity and resilience and different business models and different forms of production. And the only way we’re going to do that is through more innovation and technology and investment because otherwise those new systems won’t be as efficient and have the decarbonizing potential that they could. We definitely need more super smart people and capital thinking about these problems, but there isn’t likely to be one answer.

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