In September 2015, we reported that food and agtech companies have been taking a big bite out of general tech competitions, accelerators and more. And if Y Combinator’s recent Winter 2016 Demo Day is any indication, this trend is not only continuing — it could be expanding.
Some of Y Combinator’s biggest graduates in recent years include grocery delivery service Instacart, document storage and sharing service Dropbox, room and home rental service Airbnb, and social networking and media site Reddit. The roster of Y Combinator participants at the 2016 Demo Day last month included, at least, six food and agriculture companies alongside startups that could be the next heavy-hitters for their respective industries.
For agtech entrepreneurs, this should come as a hearty dose of encouragement and a good reason to start filling out tech comp and accelerator applications.
Among the top eight startups from the Demo Day was Iron Ox, a company developing robotics for greenhouses. This was the company’s first foray into the tech competition and accelerator world.
“It was a great experience, and I want to emphasize that it was the best decision that we have made,” Iron Ox co-founder and CEO Brandon Alexander told AgFunderNews. Alexander and his team were on the fence about applying to the program, feeling as though their robotics-meets-farming angle was not Y Combinator’s typical cup of tea.
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“We did not feel like a typical Y Combinator company and weren’t sure about how they’d be able to help us, but we applied anyways,” he explained. “We are farming, yes, we have robots, yes, but at the end of the day we are a business, and a startup and those are things YC knows very well.”
One of Alexander’s highlights from the program was having an opportunity to meet fellow founders, entrepreneurs, and startup industry folks who were experiencing the same growing pains as Iron Ox. “It may be a different industry or different type of company, but they are going through the same ups and downs. Sharing that experience helped me get through it a lot,” he said.
There were, of course, plenty of challenges. According to Alexander, YC pushed Iron Ox to accomplish a great deal in a short amount of time, including building two robots and a center platform. “It was a lot, but we got it done. We thank YC for that!”
Copia, a startup aiming to help businesses earn tax breaks for donating leftover food, was also ranked among the top eight companies. Restaurants and other food businesses can call Copia, which will send a truck to pick up their leftovers. The truck then delivers the goods to homeless shelters and handles all the tax-related paperwork. Copia charges 25 percent of any tax break the company receives in addition to a pick-up fee.
The other food and ag startups that presented at Demo Day included online Indian agriculture marketplace Kisan Network; food delivery mobile app startup Rappi; peer-to-peer lending platform and farm insurance provider WorldCovr; and grocery cart touchpad tech startup Focal Systems.
“Y Combinator was awesome,” Focal Systems founder and COO Michael Cantalino told AgFunderNews. “It’s getting bigger, so it is getting specialized. Companies are separated by what their vertical focus is and what partners are best paired with them to make the organization run as efficiently as possible and for each team to get the most out of it.”
Cantalino’s company provides smart devices or tablets for grocery shopping carts. The devices act as a map and help shoppers locate items on their grocery list while discovering other products that they may want to try.
When it comes to the pace and intensity level, Cantalino says Y Combinator is definitely a no-nonsense program. The companies mostly only interact at a weekly social dinner held on Tuesday nights where they talk about progress and network. For the remainder of the week, Cantalino says it’s a “heads down” attitude.
“The approach is a strong one, and I really admire it. No opportunity to waste time with meetings, comparing notes, or getting caught up in the glitter and glam of startup life,” said Cantalino.
Cantalino has a few words of advice for agtech entrepreneurs: only pick your head up for your customer and only pay attention to the people for whom you are working. Alexander echoes that advice, noting that his company spent months speaking with farmers and other industry professionals before they built anything.
“Know your market and your potential customers and when you do apply to YC or another tech incubator, you’ll have a better understanding of your market,” said Alexander.” They definitely push you on that at YC.” And for companies who may be on the fence about throwing their hat in the Y Combinator ring? Alexander strongly encourages them to apply.
Located in Silicon Valley, the early-stage accelerator invests $120,000 in a large number of startups twice a year. Selected companies move to Silicon Valley for the three-month program where they work around the clock to sharpen their business models and perfect their investment pitch. Demo Day is the final culmination of the program when the companies pitch their products to a carefully selected, invitation-only audience.
YC’s involvement with its companies doesn’t conclude after Demo Day. Instead, the accelerator and its alumni network continue to assist founders with bringing their business ideas to life.
As for the continued surge of agtech startups in general tech competitions, Cantalino thinks this comes down to the US and other developed countries prioritizing efficiency. “If you can confirm financial returns as well as social impact, I think it’s a beautiful thing,” said Cantalino. He also thinks that business models that are holistic in nature and focus on longevity will fare the best.
Alexander believes it’s the intersection of two trends that’s making agtech a popular space. “There are a lot of issues surrounding sustainable farming, including labor scarcity and water scarcity,” he explained. “On the other end, tech is advancing at a point where you have cheaper sensors, processors, and other things outside the lab that you can apply to the real world.” As these two trends collide, Alexander thinks we will see more advancements in food and agriculture technology. “I think agtech is going to be a big thing.”
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