One of the goals of the Nebraska Tech Collaborative (NTC), An Aksarben Workforce Initiative, is to facilitate the creation of 300 high growth startups over the next five years. To accomplish this, it is critical that Nebraska build strong overlapping industrial clusters and an ecosystem that supports high growth businesses. High growth businesses export their products from Nebraska – bringing back money and often repatriating Nebraskans who have left or providing jobs to new Nebraskans. To ensure that all of Nebraska benefits from NTC’s work, NTC has placed a strategic focus on agtech, and business creation across the state.
Agtech is an amorphous word that is hard to define as it often is inclusive of virtually all new agriculture businesses – blurring the lines with traditional agriculture. This is quite likely because those lines deserve to be blurred. Twenty-first century agriculture is exceedingly technical and dependent on technology. From bioscience-based crops and livestock, to new sensor technologies monitoring farmland or herds of cattle. The simple reality is that most of agriculture is now technical in nature with a robust foundation based on science, engineering, experience, and family tradition. It’s a blend of traditional agriculture with many generational producers and technology from some of the coolest companies in the country.
But its not all sunshine and daisies, agtech has struggled because elements of the industry’s startup ecosystem are not as strong as some other industries. For example, in 2019 according to Forbes, food and agtech fundings made up $20B – but more than half of that went to eGrocers, cloud retail infrastructure, restaurant marketplaces, in-store retail, and other retailing type software solutions. The simple reality is that relatively little is invested in the production side of the business, sensors and monitoring, and the logistics, and the part that is the agriculture part of the category. This is the part where Nebraska excels. According to Pitchbook, only 4.4% of the $136B of venture capital that was deployed in 2018 was deployed in either the Midwest or Great Lakes regions – the Ag belt. This is not just because capital is centralized on the coasts. This is also because there are not early stage local funders in many of these states – including Nebraska.
However, this does not mean that great companies are not starting in Nebraska and in agtech. It simply means that we need to dramatically increase those opportunities for potential entrepreneurs – particularly those in crop development, farmland monitoring, irrigation, livestock technology, and food supply chain technology. Each of these areas represent deep, rich opportunities for Nebraska entrepreneurs to build special companies. Moreover, most of it is not software as a stand-alone. This will require significantly more capital be deployed away from traditional venture investors. Instead it will require Midwest based corporations and high net worth individuals that understand agriculture to be the sources of funding.
Cheryl Powers, Jord Producers is a good example of how this type of understanding is critical. Her company manufactures mealworms for feedstock – primarily for poultry. There is no software in this process, and yet to produce mealworms there is a significant number of processes that are technical and fit within the definition of technology. Simply put, this is not a traditional venture investment. Powers explained how hard it was to explain her manufacturing program and how quickly a big order will crush her production capacity to investors without an understanding of agriculture. Making mealworms is not liking making software, and it requires expertise, patience, and a deep understanding of how agriculture benefits from innovation. When an order comes in, it takes her 2-3 months to develop the necessary product – and thus, creating a just-in-time cycle requires significant operational expertise and efficiency.
Nebraskans, in particular, have built strong businesses in cattle production and feeding. Mike Timmerman, J.A. Timmerman Cattle Company started a feeding business with his brother, Dan, in 2012. But, he is part of a multi-generational cattle business family. “My family and I have been working in the cattle industry for generations, and of course, Nebraska has had a special role in our family and our firm’s development. We would not be here without Nebraska and its many assets.” Agriculture is in Nebraskan’s blood. As Timmerman said, “You are formed into who you are by your family. The feedlots have been around since we were young, and it really became a passion for Dan. I really couldn’t imagine myself working for someone else and not controlling my own destiny.” Nebraska’s knowledge transfer in agriculture is not replicable by rock star technology wizards on the coasts. Simply put, new agtech is going to come from the Midwest or somewhere else in the world like it – with ties to the land and businesses that run deep.
To support these feedlots and businesses, Nebraska has built an ecosystem around livestock production from feed to pharmaceuticals to diagnostic tools. Much of these providers and technology has come from the American Midwest, including Nebraska. But, we still have ample opportunity to create new technologies. As Timmerman said, “I really think technology is needed to change our industry. The consumers are telling us what we need to produce, and that is different then what it used to be. We need to track the cattle and all the medicine they receive from birth until it hits shelves. It might cost a little more, but most consumers will pay for this type of information.”
So, agtech goes well beyond software into several fields that touch many different institutions and people in this state. For example, center pivot irrigation has been a critical innovation allowing crops to be produced using irrigation and groundwater. Two of the largest players are based in Nebraska – Valmont and Lindsay. These two players represent the cutting-edge innovation of the late 1940s – but they are still drivers of new innovation and change across the world. Moreover, this innovation has helped breed a variety of tools over time that include moisture monitors & targeted irrigation tools. In other words, while Lindsay and Valmont are both large companies, they continue to create or provide a platform for innovation that is new, fresh and lucrative today.
Nebraska appears to be a leader in water and irrigation technology, cattle production and livestock technology, and is beginning to see sensor network and smart hardware companies. These are the bedrock industries upon which a Nebraska agtech ecosystem must be built. That does not mean, however, that attracting businesses won’t also play a role in creating new startup opportunities.
When the Department of Economic Development attracted the Costco chicken operation to Fremont. They also created an environment that was likely to create opportunities for new small businesses. For example, Jord Producers in Lincoln raises mealworms. Mealworms are used by poultry farmers as feedstock for poultry, and the frass (the mealworm “poop” – according to the website) is used for fertilizer and soil additives. The company was part of the 2018 nMotion class and has worked within and around Nebraska Innovation Campus and the Engler School at the University of Nebraska – Lincoln.
According to the founder, Cheryl Powers, the creation of the company was more of a journey of discovery than one that was pre-ordained by a love of a certain part of the value-chain.
Bug Eater Foods [a Lincoln based insect based protein company] introduced me to the concept of insect agriculture about 5 years ago. Prior to that I honestly had not been aware there were people out there who focused on farming insects for feed or food. BugEater utilizing cricket protein for food products was a novel idea and ahead of its time. I looked into farming crickets & really couldn’t get enthused about crickets—I personally don’t care for how they look and was told numerous times they smell fairly bad. So, I asked Julianne from BugEater if there was any other type of insect protein they would like to experiment with for food products and she mentioned mealworm protein. I like mealworms because they don’t jump or fly, and they can’t escape If put into the right container. They just seem like a much better fit for me. I discovered North America is far behind other countries in the world who have been mass rearing insect for years. Canada is also farther ahead of us. Many countries have companies who have been supported by investors for years.
But raising feedstock is not the only way that Nebraska entrepreneurs participate in the livestock technology business. Quantified Ag of Lincoln works with ranchers and cattle feedlot owners to identify sick animals in a herd – using an ear tag that identifies certain signals of sickness. The company began its journey by working with ranchers across the state on product development, ultimately partnering with a client in Broken Bow to beta test the product. As Vishal Singh, the founder of Quantified Ag explained to me: “I was already experimenting with drone imaging and doing some work with NDVI crop imaging. However, there was immense interest in drones in ag at the time, all focused on crop imaging. So, I decided that perhaps I should try to differentiate. I had already worked in technology with the beef industry and had familiarity with some of the problems the [feedlot owner’s] face. Illness detection being a big one. I had also grown up around cattle operations in earlier years so knew of issues from then. I tried to apply thermal imaging to pick out sick cattle. As I did customer development, it was apparent that the problem was a significant one worth solving. However, the way I was going about it wasn’t ideal. So, I pivoted away from aerial imaging to sensors on the animals to get continuous monitoring.” This led Singh and his team to develop a health tool that could be deployed on individual steer’s ears.
Quantified Ag and its core technology is the backbone of a fast growing tech company that according to Pitchbook has raised more than four million dollars. As Singh explained: “Nebraska is the epicenter of beef cattle production in the USA. Nebraska and Texas are constantly changing for the number one spot in our country. So, it made a lot of sense to start and grow the company right here. We have plenty of access to cattle operations and people in the industry. This also translated into fundraising for us. Most of our investors are cattle producers, veterinarians, cattle nutritionists, or other cattle industry professionals. It’s far easier to fundraise with people who already know about the problem and can appreciate the impact of a solution.”
Many would identify the gap in funding for agtech related companies to be a significant hurdle facing not just Nebraska, but the entire Midwest. This may explain why multiple Nebraska organizations are seeking to improve the early stage funding environment for agriculture related startups. For example, last fall, Invest Nebraska began a new acceleration program on Nebraska Innovation Campus called the Combine. This program can be delivered on-demand but also includes a significant focus on mentoring and support for entrepreneurs across the state. According to its website, “the Combine Program assists high growth businesses and entrepreneurs across the state through in person and virtual coaching. Program staff, mentors, and advisors assist entrepreneurs with lean business model coaching, prototype development, commercialization curriculum and fundraising support.”
In addition to a lack of funding, the research revealed a relative dearth of female entrepreneurs pursuing agtech opportunities. This was a national phenomenon that was not Nebraska specific, but it did cause me to ask Cheryl Powers how her core team (of three females) would correct that problem. She suggested, “To get more women in agriculture it simply starts with exposure to possibilities somehow through education, school curriculums, camps, scholarship opportunities etc. Part of Jord’s mission is to educate students and youth about our 21st Century agriculture. We have given numerous talks to various FFA groups and to different summer youth camps.” She continued, “seeing a woman doing something in ag, let’s a young female picture herself doing something similar. I also think it is a unique combo to have a woman interested in both technology and agriculture. It is a unique woman that pursues either one of these professions, much less be in both.” Powers had a number of recommendations regarding the next step for getting more women into agriculture. For example, she mentioned the need for “a very concerted effort through scholarships, internships, and recruitment to get more women involved in ag and agtech companies.”
So, while Nebraska continues to grow companies in agtech, the reality of building a stronger agtech ecosystem is real. Across the state, as NTC does its work, the reality of helping all of the state’s citizens presents real challenges. One specific one is how to ensure that technology jobs and innovation are present not just in Omaha and Lincoln, but in the towns and villages across the state. This means that agtech is a key component of the statewide strategy, and finding more great entrepreneurs and technologies is a high priority. But, through the research for this paper it appears that two key needs are empowering more women and finding new sources of capital.
Innovation is happening here and agtech is in our blood. Thus, NTC believes that Nebraska is ripe for growing a robust agtech economy.