Editor’s Note: Deere & Company has acquired ag robotics startup Blue River Technology, according to an agreement announced at close of trading today. The tractor giant is acquiring the Sunnyvale, California-based Blue River for $305 million. (AgFunder Research can reveal that’s a roughly four times increase on the $87 million post-money valuation the company fetched at its last round of funding.)
Blue River has developed a farm robotics technology using computer vision that can see, diagnose, and execute actions such as deciding to spray a weed with herbicide – avoiding the crop – or to thin the crop. Just this summer the company released its “See & Spray” weed control machine. The company claims it can reduce agrochemical use by 90% with this technology.
Blue River last raised funding at Series B stage in a $17 million round led by Pontifax AgTech, joined by Monsanto Growth Ventures (MGV), Syngenta Ventures, and existing investors Khosla Ventures, Data Collective Venture Capital, and Eric Schmidt’s Innovation Endeavors.
“Robotics stands to solve some key issues in agriculture including sustainability concerns, such as reducing chemical loads, labor shortages, and the use of data to allow for the more precise and efficient production of crops,” said Phil Erlanger of Pontifax AgTech. “John Deere is acquiring a best-in-class robotics company in Blue River; they are unambiguously the best technical team in the sector. They have created a compelling and disruptive technology that can truly change the face of crop production.”
“This is the start of the next chapter in agriculture,” says Kiersten Stead from MGV.
AgFunder Co-Investment Fund III is now open for investment. Closing June 15, Spots are limited.
Below Stead offers more thoughts on Blue River’s key attributes and why it’s an attractive investment for John Deere.
While the agtech market is awash in companies selling capabilities in remote sensing and providing advice on this information — which is no doubt needed — Blue River is the first integrated technology that can see-diagnose-and-execute at full speed, and in real time. We (MGV) initially invested in Blue River Technology when the company was prototyping lettuce thinning machines. They did so by precisely spraying nitrogenous fertilizer on lettuce seedlings, leaving only lettuce rosettes that were computationally determined to maximize lettuce head development and yield. While the company was thinning lettuce fields and helping farmers cope with the critical labor shortages that have received much press, Blue River was also quietly learning, and hiring wisely. Although not without some growing pains, the company got busy combining Silicon Valley AI and engineering with real-world agronomists and ag industry veterans. Today, Blue River Technology’s robotic implements are weeding in cotton fields using contact herbicides with high accuracy, and over a 90% reduction in chemistry applications. “See and spray” will clearly be another tool for farmers who need to cope with weed suppression of yield and herbicide resistance. We can now see a legitimate path to a utopian time-not-too-far-away, where “see and spray” fungicides, microbes, and, of course, weeding combinations of selective and non-selective herbicides, can be used to tend each plant individually.
Blue River is still a young company and its full effects are years from the general market, nevertheless there were a few important reasons the company has been successful up to this point:
1. Emerging ML/AI science capabilities in a poorly digitized vertical. The interplay between these sectors is just beginning take shape. In a world dominated by AI talent flocking to solve problems for the Googles, the Ubers, and the Amazons, less digitized sectors like the life sciences and production agriculture, are left simply dabbling. For this reason, MGV is supporting other disruptive technologies of this ilk like Resson andUnderstory Weather. As I imagine, this is just the beginning.
2. A focus on building value in a hard technology, not necessarily driving revenue or acquiring customers. While the tradeoff is a difficult decision to make in real-life, when your livelihoods feel at stake, Blue River got behind the idea that they needed to demonstrate value by getting fully functional machines out into the wild. The team embraced the idea that anything outside their core expertise could be done with others, later. Getting the machines into production fields revealed to the company a cascade of product concepts, technical issues, and efficiencies that they may not have seen otherwise.
3. Talent. Fundamentally, this was a bet on founder Jorge Heraud and his team. Investing in agriculture is made more challenging by the fact that less than 2% of the US population is involved in agriculture today. This means that the talent pool of people who have asymmetric information in agriculture and who can start companies is lower than other industries. Jorge is an entrepreneur with prior experience at Trimble Navigation, and so was likely to understand what a commercial ready-agriculture implement needed to embody. Moreover, Blue River retained AI/engineering talent amidst the constant pressure of other AI talent siphons. Attracting and retaining this breadth and depth of talent early in their trajectory is a hallmark of many successful early stage companies.
4. Working openly with strategic partners. Blue River took advantage of working with the best-established chemistry and agronomic partners to find the first practical agricultural problem to go and solve, first in vegetables and soon-after in row crops. Finding great dedicated partners is highly enabling, as they provide access to both foundational test cases and product concept candidates, as well as deep expertise and resources. Blue River consciously pursued this strategy, understanding that their first use-case in row crops needed to work. The hardware business, like biotechnology, leaves little equity capital wiggle-room for retrenching.
As is evident in the details of this deal, Blue River delivered an attractive return on our investment. Having raised just over $30 million of equity capital in seed to Series B funding, the payment of $305 million represents a nice multiple.
Why would MGV invest in a company reducing herbicide applications?
This might be a question of some of your minds. From the beginning, Blue River’s objectives, if met, looked like a fulfillment of many of Monsanto’s key objectives for precision agriculture and integrated solutions. More than anyone, Monsanto knows growers will receive the full benefit of its technologies when they work optimally together. Today, each seed is a complex package containing decades of breeding, several traits that enable no-till farming and insecticide reductions, plus the~$140M in regulatory costs for each trait, microbes, chemistry coatings, and a Climate Corporation digital package that can help farmers reach their desired yield potential. Blue River’s technology opens the door for plant-by-plant observations, different chemistries, and enables real-time, closed-loop precision agriculture. As summarized from our original investment memo:
“Blue River’s successful outcome could enable yield improvements by acre and farm; a reduction in required pesticide, herbicide, fungicide, and fertilizer, on an aggregate acre/farm-wide basis; Potentially the commercialization of active ingredients too expensive to apply today, and in multiple combinations; Ultimately, it could complement and enable per meter genomic recommendations and per meter custom planting, asadvances in mechanization and genetics have been successful when developed together; All in, economic benefit for the farmer, and a public good.”
Blue River’s story isn’t over. This is the start of the next chapter in agriculture. The industry, as if anyone needs reminding, is a $5 trillion industry representing 10% of global consumer spending, 40 percent of employment and 30 percent of greenhouse gas emissions globally. At MGV, we know that anything that helps agriculture to be more precise, more efficient, and more productive, is impactful to humanity, changing both the size of our population, our quality of life and, a better future for our fellow global species.
To Jorge, Ben, Jim, Mac, Lee, and the team, and to Deere for investing in an exciting future: we are all mighty proud.