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4 big barriers to commercialization and how agrifoodtech startups can conquer them

May 31, 2024

After planning, designing, testing and prototyping, the ultimate goal for agtech and foodtech startups is commercialization — that is, getting products into market and finally seeing a financial gain on all the hard work.

The challenge for many startups is the process and cost of bringing a new product to market. Even the most innovative and exciting solutions that solve important real-world problems can fail if the bring-to-market strategy is underfunded or ill-planned.

Blockers to commercialization success

Most new agtech and foodtech businesses will face at least one of the following obstacles when getting a product to market; many organizations will face more than one.

Failing to understand the target audience. Startups should by this point have conducted significant discovery to understand their ideal customers’ needs and demands. They should be able to clearly state how the product will solve customers’ problems and that others are willing to pay for it.

However, the agrifoodtech market is constantly changing, especially with emerging technologies. It is essential that startups commit to ongoing market research that includes competitive research and communicating with early adopters to ensure the continued value of products for customers. For example, precision agriculture tools will appeal more to farmers and ag dealers if they are easy to integrate into existing farm operations and simple to learn.

Lack of marketing. Without investing in activities such as digital marketing campaigns, advertising and public relations, startups can’t hope to adequately educate others about their products.

It is crucial to build this kind of awareness and generate excitement around a product or service. Startups that fail to do this struggle to engage enough customers and close enough deals to scale the business.

Insufficient in-house talent. Agtech and foodtech businesses must hire a range of experts, from scientists and researchers to mechanical and software engineers. And that’s only for product development.

Once the initial product is ready for commercialization, a whole other host of individuals will need to be onboard, including marketing, sales and customer service experts, not to mention enough skilled workers for a production line.

Without this talent in place, the company won’t be able to grow at a reasonable pace. Businesses must invest in continuous recruiting, hiring and training to ensure they have the foundation in place to scale.

Inability to keep up with demand. In a perfect world, demand for a product skyrockets. In reality, it only does so if startups can keep pace with that demand. Failure to meet this demand could anger customers and hurt the business before it ever truly takes off.

Meeting supply requirements will often require building out a manufacturing facility or bigger lab, which requires costly equipment and people to run it all. It’s vital to have a plan—and the finances on hand—to take this next step as the market demands.

The biggest challenge of all: Investment allocation  

All those blockers have one thing in common: they require lots of money.

When agtech and foodtech businesses are trying to launch, they only have so much capital to work with, and a significant chunk of it goes to equipment and technology. That means there often isn’t enough left over for other vital investments, such as ongoing discovery, marketing, hiring and training. Without those investments, growth is often limited.

Startups must take an honest look at how they are allocating the equity they have raised and make changes to ensure they are giving their product the best opportunity to reach commercialization. That means finding finding alternate sources to fund expensive facility builds, so they have the cash on hand to focus on higher ROI initiatives.

This challenge is especially important now, as global agrifoodtech investment has dropped significantly compared to previous years and capital is tough to come by for many startups. Investors in 2024 want to ensure solid returns, so startups must be as honest as possible about their capital allocation.


Image credit: CSC Leasing

CSC Leasing offers funding that grows with your business

CSC Leasing supports growing, well-run agtech and foodtech businesses with low-cost funding for equipment and technology purchases. Our equipment financing can help you achieve commercialization sooner because you can use your capital on initiatives that ensure a more successful launch.

If you are looking for a cleaner, more flexible source of financing, contact our Regional Director, Jordan Stowe at [email protected] or 706-206-5622.

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