In October, the fund announced the second close of its Capagro Innovation Fund adding €66 million, ($78 million) and bringing the fund’s total to €124m ($147m).
We caught up with Bénédicte Monpert, a partner at Capagro since 2015, to find out why Capagro is looking at more robotics investments ahead of the International Forum on Agricultural Robots in Toulouse, France November 29 and 30 where he is a speaker.
Capagro is currently only invested in one farm robotics company – Naio Technologies. Is Capagro evaluating more robotics companies or was your investment in Naio a one-off?
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We are evaluating every robotics firm. I will meet another team in the coming days. [Blue River’s acquisition by John Deere] was one of the successes, and I hope that we, not only Capagro, but every VC in agtech will have a unicorn in the robotics sector. We are at the moment when the farmers are ready to invest. They are looking for new technologies to manage their farms, which are bigger and bigger, with a labor shortage. There are good opportunities for robotics that can create the opportunity to have a unicorn – I hope so!
What is your first consideration when evaluating a robotics startup?
The first thing we look at is the team and that’s not only for a robotics investment, that’s for every kind of investment. Having a great team with good technology is important, but also – and this is rare – good knowledge of the agriculture sector, which means agricultural practice and knowledge of farmer mindsets is essential.
Entrepreneurs in robotics have to have in mind that selling robots to farmers is hard. You have to know their habits, practices, and methods of cultivations. That’s why some startups take a long time before going to the market because a lot of startups have prototypes but they don’t sell. They maybe have one or two robots in the field.
One of our criteria is does the startup already have significant sales, not a mere prototype? Have they already tested the market? A lot of startups can lose money and time because they don’t know the final customer.
Do you require that of all of your investments?
Yes. It can be small revenue, but we want revenue in the coming year. We want significant sales. We want companies with user-friendly robots for farmers. And one very important thing is customer service. When you sell robots you have to keep in mind that a lot of farmers will call you because the robot is not working as they want. The company has to have strong customer service and it can be expensive because it cannot only be on the phone. But it is crucial because if you sell a robot to a farmer and he can’t use it, your authority is coming down and one of the main assets in the robotics sector is the brand. You can compare it to the tractor sector; the brand is really crucial.
Do you see a lot of consolidation coming in this sector?
Yes. I have seen a lot of startups looking for money in the last month [to make acquisitions]. It is a very fragmented sector with a lot of small companies with specific IP. There is definitely an acceleration in M&A coming.
Blue River was the first success story for robotics. I saw a lot of VCs looking at the sector and just one year ago they weren’t aware of the potential.
Do you think these brands are going to survive all the M&A?
It depends if the startups are raising money from a VC or family office or if the startup is raising money from a corporate. If it is from a VC they could keep their brand, but if they are acquired by a corporate they might lose their brand. I don’t know what John Deere is going to do with Blue River. It will be interesting.
Photo: Naio Technologies