Wednesday, December 6, 2023

Funding flurry in agritech sector

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NZ tech firms have tipped beyond the startup phase to expansion, growing international recognition of this country’s expertise at developing new tech.
AgriTechNZ chief executive Brendan O’Connell says for the agritech sector to reach $8 billion in annual revenue, the industry needs to look at new ways of growing businesses.
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 Stronger global connections, a maturing industry and an appetite for investment in food-related technology are all fuelling a multimillion-dollar surge in New Zealand agritech investment activity

AgriTech NZ chief executive Brendan O’Connell says the past few months have been characterised by an intense level of investment activity across the spectrum of scale and type within the sector.

He cited the likes of Bluelab instrument producers Gallagher, the orchard management company Hectre and electric bike company UBCO among those securing investor input and raising capital.

Bluelab, winner of the 2019 international business awards, is based in Tauranga and produces speciality monitoring equipment and tools for growers.

The company has recently been sold to Pioneer Capital and the NZ Super Fund to expand its business in the controlled growing environment industry.

Meanwhile, electric motorbike company UBCO raised $US10 million in a recent strategic investment with partner TPK Holdings, a Taiwanese electronic component manufacturing company, bringing the company’s total funding to $US23m in the past year.

It is also receiving strong interest in its next funding round through Snowball Effect, an online private equity business that facilitates private and public offers on companies, often as new tech offerings.

Hectre is positioning itself for a global expansion after raising $3.5m in new capital for its orchard management software business. The Auckland-based company uses AI to provide data to growers on their crop’s size, colour and estimated yield. Originally developed for apples, it is now also used in the citrus sector.

In July Seeka, post-harvest processor and the country’s largest kiwifruit orchard operator, also tipped $2.6m into agritech firm Fruitometry, a company providing digital services to orchardists and packhouses to estimate crop size by scanning orchards.

O’Connell says as more NZ tech firms have tipped beyond the startup phase to expansion, growing international recognition of this country’s expertise at developing new tech and stronger connections to the world’s agritech finance sources have gone hand in hand.

Finistere Ventures reported in June global investment in agri-food technology had grown to US$22 billion last year and was expected to be even greater in the coming 12 months.

The company partnered up with NZ Growth Capital Partners in April to launch its own $40m agri-food fund, utilising its experience in venture capital raising within the broader tech sector.

O’Connell says the presence of funding facilitators like Plug and Play here in NZ this year at AgriTech NZ’s Future Series was an indication of how seriously this country was now being taken as an international agritech source.

“I definitely think we are seeing NZ tied more into that global ecosystem, in a new way, we are seeing more opportunity for these connections and more people with an awareness of NZ,” he said.

The sector has been the first to have an Industry Transformation Plan (ITP) to set a pathway to growth for the $1.2b export earning industry.

“In only 18 months of being in place it is difficult to draw a line on the plan’s impact so far, but this activity is indicative of what the ITP wants to exemplify,” he said.

He also pointed to some of the bigger tech players moving places on the investment chess board.

Taxpayer-funded software company FarmIQ has joined forces with AgResearch, while Dunedin company AbacusBio has furthered its relationship with crop treatment company Bayer Crop Science in the field of predictive plant breeding.

He says the move by Gallagher to source technology from an established company through its acquisition of virtual fencing company Agersons in Australia demonstrated a shift to greater acceptance of adopting external innovation into the company fold.

Despite the challenges covid has thrown at the sector, O’Connell says the base demand for feeding more people more efficiently around the world has not changed.

However, the pandemic has proven a challenge here in NZ for companies that have typically relied upon immigration to meet skill shortages.

He says this was proving a challenge demanding a collective approach around training and upskilling in coming years.

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